Legal market overview in Nicaragua

18 April 2018 marked the beginning of a socio-political crisis in Nicaragua. Autocratic president Daniel Ortega announced his intention to increase taxes and decrease benefits, prompting severe protests in a country which was already in a state of turmoil. Demonstrations in the capital of Managua and in six other cities were met with police brutality, causing more than 300 casualties to date. The Nicaraguan economy was hit hard, as most foreign investors and governments that had previously funded desperately needed infrastructure and development projects halted or withdrew their plans altogether. After the recovery from the global financial crisis of 2008/2009, the Nicaraguan economy had been able to register a steady GDP growth of more than 4% per year but in light of the recent developments, the economy has started to shrink drastically: the World Bank estimates a GDP growth of -3.8% for 2018 and forecasts -5% for 2019.

As a result, the legal market was forced to adapt to new requirements. The hesitant business environment had a major impact on the real estate sector. The usual demand for tourism and residential properties has gone completely dry and firms also noticed a considerable reduction of infrastructure projects. The majority of clients are instead opting to sell their properties in Nicaragua, which in turn has caused a drastic price fall of approximately 20-30%.

In general, legal services are in high demand in troubled waters: law firms report a sudden increase in disputes and litigation. In terms of the financial market, Nicaragua witnessed the first defaults of issuances in the market’s history. Furthermore, there has been unusually high demand for assistance with debt collections and related judiciary proceedings. Industry sectors oriented towards exports were hit less hard, with the agribusiness sector, for instance, continuing operations at a steady rate. Similarly, intellectual property practices are not suffering as much from the crisis – international firms remain keen on protecting their intellectual property rights and do not need a local presence to do so. For many Nicaraguan companies, though, protecting their intellectual property is a luxury they can no longer afford.

As it stands, damage control is key in order not to disrupt the already fragile economy further. Although a national dialogue is well underway, no solution is in sight so far and the situation in Nicaragua remains volatile.

The small, mixed market sees local heavyweights such as Alvarado y Asociados and boutiques including Guy José Bendaña-Guerrero & Asociados, Bendaña & Bendaña and Estudio Caldera, S.A. participating alongside regional players such as Consortium Legal, Arias and García & Bodán. Following the socio-political convulsions of the last 18 months, while the main players in the legal market are operating unchanged, most are to some extent looking primarily at retaining their staff and offices in the country. Bucking the trend, however, was Dentons Muñoz, the Central American arm of the global legal behemoth. Opening its doors under the leadership of Edgard Torres in October 2018, with one associate and three of counsel, the firm then hired Mayra Navarrete from García & Bodán in November 2018 (as head of IP & technology), and has subsequently strengthened the team even further with the mid-2019 incorporation of experienced litigator Oliver Salazar and senior associate Gabriel Alvarado. Other notable market moves saw Expertis Castillo & Fiallos join ECIJA's growing Ibero-Americas network in mid-2018.