Legal Market Overview
The Paraguayan economy saw a decline in growth in 2019 in comparison with recent years. This was largely due to a disappointing harvest, as the country remains heavily reliant on the agriculture sector, particularly for soya bean and meat production.
However, pre-coronavirus optimism meant that this slowdown in growth did not translate to a downturn in work in either the banking or corporate and M&A areas. In fact, both continued their healthy development, with major international banking institutions including Goldman Sachs and UBS entering the market recently, and bond issuance continuing steadily.
The M&A market has been maturing year on year in Paraguay. Outside of transactions, the corporate law market has been dominated by the need for legal advice regarding recently implemented anti-money laundering laws; these place greater scrutiny on companies and their owners and require a higher level of transparency in the details of financial transactions.
After promising the public a crackdown on corruption, the governing Colorado Party has passed 11 new laws in a short space of time, resulting in increased compliance work for the leading corporate practices.
Meanwhile, in an effort to fulfil a 2018 election promise, the government also introduced tax reforms in January 2020. There was a resultant increase in work for tax law departments, and queries on the new regulations are now a day-to-day occupation for these teams.
In the projects space, 2019 was notable for the advancement of the country’s first PPP projects. The need for significant investment in infrastructure has seen large-scale improvement of the country’s transport and trade links beyond the already established river system. While there is significant uncertainty now with regards to the coronavirus pandemic, these projects are still seen as a priority and are expected to advance.
The labour law market is also likely to see an increase as the fallout of both temporary and permanent business closures becomes apparent. Other recent trends in this area have included a crackdown on sexual harassment in the workplace and attempts by the government to formalise short-term employment and apprenticeships in the country.
The uncertainty and difficulties thrown up by the coronavirus will likely lead to a change in the services most commonly required from corporate law departments. Small and medium-sized businesses may be hit hardest by the situation, with loan repayments and funding being a crucial issue.
In the landscape of legal practices in Paraguay, an early casualty to the coronavirus situation is likely to be in intellectual property. While increased investment in Paraguay from multinationals looking to base operations there has kept growth in the market steady, non-essential trademarks are expected to see a sharp decline in the near future.
Setting aside the unknown factors for the future, the local legal market has been stable in the last few years, with a group of full-service law firms taking on the majority of the complex, cross-border matters in most areas. The Uruguay-based firm FERRERE has established itself across the board and is matched by Estudio Jurídico Gross Brown, BKM | Berkemeyer and Vouga Abogados, all of which are growing and developing practice areas year on year.
Paraguay also counts a number of notable boutique practices, particularly in the environment, labour and IP disciplines. Standout names include SEA Abogados y Consultores Ambientales, a leading environmental law firm; Irún & Villamayor, which specialises in labour law; tax specialist firm Estudio Nora Ruoti & Asociados; dispute resolution-focused firm Estudio Riera Abogados; and IP law boutiques Zacarias & Fernández and Cervieri Monsuárez.