Costa Rica may not have Central America’s largest economy or population, but the legal market’s size and complexity overshadow those of other Central American countries. The country’s strong business community (companies often use it as a regional hub for Central American operations) and political stability have enabled law firms to grow and deepen their specialisations. Indeed, the larger firms in this chapter – BLP and Consortium – are comparable in size to those in far bigger economies.
There is ample room in the legal market for local outfits to compete well with their regional competitors. Still, the momentum in favour of firms having offices region-wide has gathered pace, and much of the regionalisation is led from Costa Rica. Several firms – including Aguilar Castillo Love, labour boutique BDS Asesores, BLP and Sfera Legal – have all used San José as a launch pad to expand into other Central American countries.
Costa Rica has also emerged as the starting point for international firms with regional ambitions. Following EY Law’s merger with Costa Rica-based regional player Pacheco Coto in 2018, the firm is now one of the largest by headcount, both locally and regionally. With access to financial muscle and an abundance of technology, it is in a position to take on larger rivals on their turf. Deloitte Legal is an example of another rising legal competitor from the professional services segment. Its Costa Rica office brought on several experienced lawyers from established law firms in 2019.
Another international firm that has arrived in the country is Dentons. It incorporated the Muñoz side of Arias & Muñoz (the legacy firm that pioneered the regional model) in Costa Rica, and now operates in each of the Central American jurisdictions. Meanwhile, the now-rebranded Arias has rapidly rebuilt its presence in this country while keeping strong in the rest of Central America. Many senior Costa Rican lawyers expect a further shake up of the market as competition heats up.
A few firms still bet on the independent model. One of the country’s oldest, Facio & Cañas, is going through a renewal and snapped up a smaller outfit in early 2020 to strengthen its stand against the regional players. IP specialist Zürcher Odio & Raven is another example, and it remains one of the market’s largest by headcount.
Costa Rican firms compete fiercely in a market where businesses place a premium on practice area specialisation and expect very high quality service. Lawyers that have environmental law know-how, labour acumen or in-depth knowledge of complex tax planning have become a critical component of any firm’s roster. Meanwhile, firms must also be well-versed in cross-border M&A and banking work to hold their own in a market that has long outgrown its borders.
A recently passed tax reform aiming to help the government reduce its high fiscal deficit has significantly increased tax work in the past year, and it will likely continue doing so in the coming year. But economic growth remains lacklustre: only Nicaragua’s growth is lower among the Central American countries, and lawyers note it in their practice, especially in terms of reduced projects and finance work.
Costa Rica’s real estate and tourism industries have historically encouraged firms to expand outside of San José, where all of the firms in this chapter are based. The coastal province of Guanacaste, a popular holiday and retirement destination, is the most common place to open a second office. However, it’s not uncommon for firms to have a base in other coastal tourist hotspots as well.