With one year in office left to go, President Ivan Duque Márquez may have broken records to become Colombia’s least popular president to date. The right-wing leader was the focus of anti-government protests in 2021, after his failed attempt to introduce a US$6 billion tax reform amid the pandemic was met by public outrage. Nationwide disturbances resulted in dozens of deaths and hundreds of injuries, forcing Duque to shave several billions off his original proposal and tone down its austerity.
The tax bill had aimed to tackle the economic woes and social crisis induced by the covid-19 pandemic last year. Colombia’s economy contracted by 7% in 2020, while its tax deficit is projected to reach new highs of 8% by the end of 2021. Yet the extreme measures put forward in Duque’s initial reform – such as removing VAT exemptions and taxing low-wage earners – left with a sour taste Colombians who had endured months of sky-high unemployment rates and increased levels of poverty and social inequality. All of which were exacerbated by several waves of the covid-19 outbreak, which has hit Colombia with greater force than it has some other Latin American nations.
While the newest proposal awaits approval from Congress, Colombia has some decisions to make if it is to get back to pre-covid-19 levels of economic activity. In 2021, popular credit rating agencies Standard & Poor’s and Fitch downgraded Colombia to the lowest rating, breaking the country’s 10-year streak with an investment-grade status. The decision was a blow to the country, which has often handled its debt more pragmatically than its Latin American neighbours. While Colombia has not defaulted on debt since the 1930s, the rating agencies cited the country’s weighty fiscal deficit, static debt burden and financial instability as the main reasons for their decision.
The country is well on track to regain its position in the race though. Throughout 2020 and much of 2021, Colombia successfully capitalised on lucrative pockets of opportunity for foreign investment, particularly in the mining, infrastructure and energy sectors. Italian energy group Enel entered the market through its regional subsidiary last July, and is projected to contribute a profit of 2.7 trillion Colombian pesos (US$673 million) for the country. US investor KKR also injected US$500 million into a project to introduce a wholesale fibre optic network in Colombia by the end of 2021, with Spain’s Telefónica also planning to more than triple the number of homes it serves as one of the country’s leading broadband providers, within the next three years.
Infrastructure, both digital and logistical, is an influential force in Colombian dealmaking. The country’s fourth-generation (4G) programme has long supplied an ample workload for law firms steering infrastructure deals aimed at renovating the country’s road network. That area predictably fed a steady and high-value stream of transactions last year. Meanwhile, a similar trend is thought to be feeding through to the telecoms sector, with the country planning to roll out high-speed 5G internet networks by the end of 2021. International investors are already throwing their hats in the ring for the digital infrastructure assets, after Colombia unveiled its ‘Plan 5G’ initiative in December 2020 to provide access to faster networks across the country. It is a programme similar to those introduced by many other countries in this guide, aiming to close the digital chasm that exists between most Latin American countries and more developed markets.
Project finance departments in this chapter are well-fed, while transactional groups scoop up the decent flow of corporate and finance work fuelled by increasing investor appetite in the mining and energy sectors. The few firms that can offer the anti-corruption investigations and compliance practice know-how have had the advantage in cases arising from ongoing arbitration and litigation disputes (as the fallout from the Odebrecht scandal continues to be felt in Colombia). As venture capital companies and fintech innovation drum up momentum in Latin America, Colombia is a respectable player in that field – with some start-ups even attracting investment from the likes of Jeff Bezos. Local law outfits have pivoted with agility towards more innovative private equity and M&A work.
Competing for that work is a legal market dominated by four large, top-tier firms, which together feature in the lions’ share of transactional work and all of which have highly regarded multidisciplinary offerings. They each have distinct international strategies. Brigard Urrutia is staunchly independent, preferring relationships with multiple top international firms to ensure a healthy flow of referrals. Gómez-Pinzón is part of Affinitas, a network of four leading firms in the Pacific Alliance countries. Philippi Prietocarrizosa Ferrero DU & Uría (PPU), is the first large Latin American firm that has offices in Colombia, Chile and Peru, and is backed by Spanish firm Uría Menéndez. Meanwhile, Posse Herrera Ruiz continues to focus on its international ties after putting an end to a four-year relationship it had with Spanish firm Cuatrecasas at the start of 2020.
The market is blessed with a good number of highly competent midsized firms and boutiques. Baker McKenzie’s presence here gives the top four a good run for their money.
Eight of the 17 firms recommended in this year’s Latin Lawyer 250 are associated with international firms, a higher proportion than in any other country in the region. Of these, CMS Rodríguez-Azuero is the most recent entrant in this chapter and continues to be a growing force after incorporating two local firms within the space of one month in 2021.
While the legal market has expanded considerably over the past decade, there has been speculation that the main influx of foreign firms is over – although Iberian outfit Ecija’s expansion into the Andean country last year served as an indication that Colombia’s midsized market is still on the minds of international players. Dentons’ recent addition of a second Colombian office is further proof that appetite remains. Meanwhile, Colombian law firm leaders are watching the Big Four accountancy firms closely. As in much of Latin America, the Big Four’s deep pockets and considerable manpower are proving a force to be reckoned with, especially when it comes to commoditised work. As a consequence, elite law firms are seeking to distinguish themselves by focusing almost exclusively on high-profile, sophisticated work, while mid-tier players are attaching themselves to the kind of global law firms that can better compete with the Big Four’s resources. This is leading to fierce competition for talent, as well as for clients.
Bogotá remains firmly at the heart of Colombia’s legal community, but expanding into the country’s other main cities of Medellín, Cali and Barranquilla may be an option to consider – particularly after working-from-home restrictions have dispersed a decent portion of city dwellers from historic business hubs. Dentons Cardenas & Cardenas added a Medellín base in 2020. Brigard Urrutia opened an office in Cali in 2017 and in Barranquilla in 2019, and it has a presence in Medellín through a strategic relationship with a local firm. Medellín is also host to Gómez-Pinzón, Cavelier Abogados and Posse Herrera offices. Posse Herrera is also present in Barranquilla, and so is PPU, while employment boutique Godoy Córdoba Abogados, a member of Littler Global, has offices in all those cities and in the capital.