The Tribune

By Brian Simms

It is often stated by foreign attorneys, and recently by some Bahamian attorneys, that the Bahamas suffers from not opening its doors to foreign law firms in an increasingly interconnected and global world. In response, it is articulated by many Bahamian attorneys that such a statement is self-serving and misguided. In this short letter, I will present some of the arguments both in favour and against the proposition in order to stimulate discussion on the topic. Unlike others, I will not put forward a concluded view either way, as to do so would be an attempt to influence a conversation which has not yet taken place. I, for one, would wish to have the benefit of a full conversation before deciding myself what is in the best interests of the Bar and financial services industry.

The case for an open door policy

The Bahamas is one of few remaining international financial centres that restricts the presence of foreign attorneys, resulting in a loss to its competitive edge. The types of foreign law firms, both onshore and offshore, who would practice in the Bahamas are those seeking a global presence and wish to provide their clients with local service. Clients prefer to use one firm in a multi-jurisdictional manner.

These firms are in a position to structure their client’s business in the Bahamas, and further assist in the creation of new products and the marketing and positioning of the Bahamas. Allowing these firms to establish a presence will facilitate the growth of the market, thereby granting Bahamian practitioners a share in the success.

In Singapore, foreign firms wishing to practice local law must do so by ownership in a local firm, while foreign firms wishing to practice foreign law have no ownership restrictions. Singapore is an example of where an increase in the amount of legal work has resulted in the government lifting the ban on foreign Queen’s Counsel appearing, due to a shortage of senior counsel, to keep up with the work. They have also recently increased the percentage of local firms that foreign firms are able to own.

As a result, local practitioners will benefit from being part of firms practicing in other jurisdictions through career opportunities and training in other markets. Cayman and BVI, two other major Caribbean offshore centres, have opened their doors to foreign law firms. The Bahamas needs to do the same to maintain their competitiveness, particularly as they are members of the World Trade Organisation (WTO) and CARICOM.

Even if there are doubts, surely the answer must lie in a staged approach, as in the Singaporean case, by starting with foreign attorneys working in Bahamian firms, or granting limited ownership in such firms by foreigners and then reassessing the position a few years later.

The case for maintaining the status quo

There are more than 1.000 lawyers called to the Bahamas Bar, many of whom have considerable experience in the areas of practice that exist in the Bahamas financial services arena. At present, Cayman is engaged in its own battle over the implementation of a Legal Practitioners Bill. Local attorneys complain there are far too many work permits granted, Caymanian lawyers cannot get articles or the training of the foreign lawyers, and that they are never promoted to partner. They further argue that due to the control exerted by foreign firms over the Bar Association and their influence on the government, their concerns are never addressed.

Foreign law firms will not necessarily grow the pie, but rather, take advantage of their large size and marketing budget to take work from the local attorneys. The inclusion of foreign firms will not create any additional work in the Bahamas, in that within those firms, separate offices compete for work against themselves. It makes little sense for Bermuda-based lawyers to refer work to the Bahamas.

It is not law firms that have expanded the financial services market, but rather legislation and the availability of qualified human resources in that field. By way of example, the Bahamas has been reduced primarily to a private client jurisdiction focusing on banking and trusts, but has been able to compete in this sector without competition for the last 40 years. It was able to successfully grow a sufficient number of competent local professionals during that time and remains one of the industry leaders in terms of legislation. As such, the bank and trust sector has withstood the challenges from other jurisdictions.

Equally, the investment fund industry, which began to grow in the 1990s with no dominant offshore player, eventually faded from the Bahamas as Cayman took a dominant hold on the sector. One of the primary reasons Cayman was able to capture the industry was due to the lenient attitude of their government towards granting work permits for fund administration employees. While Bahamian administrators sought to train locals in a field where they had no previous experience, Cayman brought to the industry thousands of experienced employees against whom it was difficult to compete.

The Singaporean success is also based not on opening the legal market, but the opening of the entire financial services market. They go hand in hand. In the Bahamas, the majority of financial institutions are either subsidiaries or branches of foreign financial institutions, and the local institution has a specific mandate for the type of business it can take on. It is the experience of some leading Bahamian financial services lawyers that the vast majority of such financial institutions are constrained, and unable to take on non-private banking business. So it cannot be right to suggest, firstly, that Bahamian lawyers are crippling the industry, and secondly, that allowing the presence of foreign lawyers will expand the market.

Finally, one needs to consider the vested interest of those advocating the admission of foreign lawyers into this jurisdiction.

Conclusion

Opinions are strongly divided on this issue, and no doubt one’s view depends on where one is standing. Whatever the outcome, a reasoned and considered debate held within the appropriate fora is certainly worth having.