Guatemala

Market overview

Guatemala’s legal market has stood out in Central America for many years for its relatively slow adoption of the regional strategy for law firms. Its comparatively large...

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Guatemala’s legal market has stood out in Central America for many years for its relatively slow adoption of the regional strategy for law firms. Its comparatively large and stable economy and closeness to Latin America’s second biggest economy, Mexico, meant several sizable local firms could remain busy and independent for longer. That has recently changed. One of the largest firms in the country, QIL+4 Abogados, joined forces with other outfits to form a regional firm in 2021, launching Alta Legal together with Costa Rica’s Batalla; Valdés, Suárez & Velasco Abogados from El Salvador; and Melara & Asociados in Honduras. In doing so they agreed strategically with Mayora & Mayora SC – one of the country’s most respected local players and once staunchly local, but whose partnership believes an alliance-led strategy is no longer sufficient for major transactional firms in Guatemala. It opened an office in Honduran capital Tegucigalpa in 2016 and an additional San Pedro Sula office in 2019, while it also entered El Salvador in 2017. The firm now has its eye on Costa Rica. That leaves Carrillo y Asociados, Clarity Law and Legalsa as the only firms in this chapter that have not opted for a formal network of offices in the region, relying instead on alliances or referral strategies with other firms. Other established regional firms with offices in Guatemala are familiar names, such as Aguilar Castillo Love, Arias, BLP and Consortium Legal. For a market of this size, law firms have not seen fit to open offices outside the capital, Guatemala City.

Guatemala has not escaped international firms’ attention either. Global labour and employment firm Littler Mendelson PC has a presence in the country through a Swiss Verein with Costa Rica-based BDS Asesores. More recently, Dentons Muñoz also opened a small outpost in the capital. However, it is EY Law that has the largest presence of any international outfit in Guatemala. It assimilated regional firm Pacheco Coto in 2018, adding substantially to its ranks and local reputation. However, since then it has lost its two main transactional partners on the ground, the most recent to competitor Deloitte Legal.

As for practice area focus, the country’s legal market is known for its strong transactional capabilities. Corporate and corporate finance are strong suits. A good number of lawyers have substantial experience in multijurisdictional transactional work (in both local and regional outfits).

The pandemic took its economic toll in Guatemala as elsewhere, causing a contraction of 1.8% of GDP in 2020. However, years of fiscal responsibility and economic growth – the Guatemalan economy grew on average 3.3% from 2015 to 2018 – plus a swift and responsible reaction to the pandemic created a greater cushion in the country than elsewhere and seems likely to prompt a rapid return to growth: the IMF predicts a 4.5% expansion in GDP in 2021.

However, corruption scandals have engulfed the country for several years. A low point saw former president Jimmy Morales expel the UN’s International Commission Against Impunity in Guatemala (CICIG) in early 2019. Alejandro Giammattei was elected, on his fourth consecutive attempt, in 2019, and replaced Morales as president in January 2020. Following the dismantling of CICIG, the Special Prosecutor’s Office Against Impunity (FECI) has taken the lead on corruption investigations. In 2021, the country’s attorney general dismissed the institution’s head, Juan Francisco Sandoval. Few details about the removal were announced and it came shortly after a court ruled that former president Otto Pérez Molina would not be prosecuted in relation to a comprehensive corruption investigation initiated by Sandoval, whose removal sparked massive protests and drew international condemnation. Sandoval’s successor – Rafael Curruchiche – has, according to local media, been suspected of protecting businessmen, among others, who had illegally financed the party of former president Morales.

Growing awareness of anti-corruption work has created a new premium for compliance services, alongside growing demand for tax expertise. These newer areas complement law firms’ existing capabilities in litigation and arbitration. Companies will also find lawyers who are proficient in intellectual property and labour law, as well as the other practice areas one would expect from firms operating in an economy of this size.

 

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