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. The latest addition to regional firms is Alta, which launched in 2021 with Costa Rican firm Batalla. It joined forces with three other outfits from El Salvador, Guatemala and Honduras – Valdés, Suárez & Velasco Abogados, QIL+4 Abogados and Melara & Asociados.
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.
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. In addition, the now rebranded Arias has rapidly rebuilt its presence in this country while staying strong in the rest of Central America. Many senior Costa Rican lawyers expect a further shake-up in 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 2020 to strengthen its stand against the regional players. Intellectual property 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.
Costa Rica became the 38th member of the Organisation for Economic Co-operation and Development (OECD) in 2021 – the first Central America country and the fourth in Latin America after Chile, Colombia and Mexico. While lawyers have already adapted to many large reforms since the government announced its intention to join the OECD several years ago, including major competition, labour and tax reforms, membership of the group is likely to mean more reform work and alignment to OECD standards. Further market liberalisation and closer ties with the rich members of the OECD – which represent some 80% of global GDP – may bring investments and acquisitions of local assets, while tax and competition advice should also continue to be in demand. OECD membership may also help to accelerate the country’s growth, which has been lacklustre for several years: the IMF predicts a 2.6% GDP expansion in 2021.
Costa Rica’s real estate and tourism industries have historically encouraged firms to expand outside San José, where all 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 is not uncommon for firms to have a base in other coastal tourist hotspots as well. Once things return to a semblance of normality after the pandemic, the local tourism sector is likely to flourish again.