Legal market overview in Panama

As a hub for global commerce through the Panama Canal, Panama was severely affected by the Covid-19 pandemic, but the economy began to see growth in 2021, with a 15.3% increase in GDP driven in particular by the country's booming copper mining industry. According to figures from the World Bank, the economy is predicted to grow by 9.4% in 2022 as the tourism and aviation sectors recover.Panamanian law firms have long had active banking practices, thanks to Panama's thriving financial sector, which is home to numerous international and domestic banks. While during the pandemic firms focused primarily on debt refinancing, more recently there has been an increasing number of local financial transactions as well as the financing of large infrastructure projects (something that is likely to increase under the newly enacted PPP Law which will permit the state to enter into PPP agreements relating to public infrastructure).In addition, in April 2022 the National Assembly passed a bill regulating the use of cryptocurrency in Panama, although President Laurentino Cortiz has refused to sign it into law until it complies with global anti-money laundering standards. The progress of the new legislation will undoubtedly affect Panama's law firms, which are seeing a huge trend towards fintech in the banking sector.Another key area of growth, particularly for tax and capital markets practices, is the financing and development of tourism projects, stemming from a new law (which came into force in July 2022) which provides tax incentives for investment in tourism outside the district of Panamá (where Panama City is located).On the corporate front, commercial activities have picked up over the last year and foreign investment has also begun to recover, leading to an increase in demand for advice on M&A rather than restructuring and winding-down. While the domestic market has been slower, firms have been active in cross-border transactions involving the many multinational corporations headquartered in Panama.The impact of the pandemic on businesses has had a knock-on effect for labour and dispute resolution practices: firms are reporting an uptick in insolvency-related proceedings, as well as work relating to restructurings and immigration issues triggered by Covid.The shipping sector also remains key to Panama's economy. Recently, firms have seen an increase in refinancings and restructurings, particularly for clients in the cruise industry, which has been severely affected by the pandemic. Significant developments included the approval of the country's first law on cabotage in June 2022, which is intended to protect local investment by prioritising the ownership of vessels by Panamanian nationals. Panama has also continued to modernise its maritime sector following on from the introduction of electronic ship registration and radio licences during the pandemic.The publication of the Pandora Papers in October 2021 once again shone the spotlight on the offshore work of Panamanian firms, following on from the Panama Papers scandal in 2016, which ultimately led to the closure of law firm Mossack Fonseca, a major provider of offshore financial services. While firms continue to provide corporate structuring and wealth and tax planning services to international clients, drawing on offices in jurisdictions such as Uruguay, Belize, the Bahamas and the British Virgin Islands, there has been a vast increase in demand for advice on compliance and anti-money laundering matters in order to comply with global standards.The legal market in Panama has remained stable, dominated by full-service domestic firms including Alemán, Cordero, Galindo & Lee, Arias, Fábrega & Fábrega, Galindo, Arias & López, Morgan & Morgan, Alfaro, Ferrer & Ramírez, Icaza, González-Ruiz & Alemán and Fabrega Molino. The country is also home to a number of regional and international firms, including Central American outfit Arias, Dentons Muñoz and ECIJA. Boutique firms Estudio Benedetti and Arias B Associates and De Castro & Robles are also sought-after for IP and shipping matters, respectively.