Things are looking up for Panama, which in recent years has been recovering from the reputational blow delivered by the revelations uncovered by the Panama Papers, a leak from a now-defunct law firm in 2016 that shone a light on shady practices in the country’s offshore financial industry. Despite the European Commission’s decision to keep Panama on a blacklist of countries considered a threat because of lax controls on terrorism financing, money laundering and tax evasion schemes, lawyers forecast stability for the coming years.
In part, predictions of stability stem from the election of centre-left candidate Laurentino Cortizo in May 2019 off the back of a campaign dominated by pledges to fight corruption and to tackle Panama’s image as a money-laundering country. Corruption was at the forefront of the presidential race, spurred by scandals surrounding Odebrecht and memories of the Panama Papers. The new President has also vowed to strengthen the country’s trade ties with the US, emphasising that the relationship must improve.
Meanwhile, law firms not implicated in the Panama Papers scandal report they keep doing their utmost to promote high ethical standards and reinforce the message that Panama is a good place to do business. Many have spent the past few years updating compliance structures and know-your-client measures, as well as investing in robust cyber security systems. Another consequence of the leak has been that law firms have moved their focus to local work, with offshore transactions experiencing a sharp drop.
Traditionally, many companies pick Panama for their regional headquarters, which has created demand for business law firms capable of corporate and finance matters and transactional work. There is a good pool of lawyers capable of catering to such needs. Meanwhile, the Panama Canal expansion project has brought significant investment and complex transactions into the country, giving firms plenty of opportunity to deepen their experience of project financing. Most firms in this chapter are involved heavily in cross-border work, as well as projects centred in and around the Panama Canal.
The country saw healthy GDP growth of 4.3% in 2019. Progress is set to continue, with the IMF projecting 5.5% growth in 2020. This is an established market, and law firms listed in this chapter are mostly a quarter of a century old or more, meaning many are firmly woven into the fabric of Panamanian society and have close links to the government.
Panamanian firms are busy enough at home not to feel the need to expand into Central America, a strategy that does not seem to preclude them from working on companies’ cross-border deals. But an increasing number of their counterparts in Central America have included Panama within their regional models.
Instead, Panama’s law firms have long looked further afield. Offshore work in the past drove the opening of offices in an array of jurisdictions such as Bermuda, Luxembourg and London, with the latter remaining an important location for those firms servicing Panama’s strong shipping sector.