The offshore law firm Harneys has been flooded with work from Latin American clients, including financial institutions and family offices that want to create investment vehicles in the Cayman Islands as their governments seek to raise tax revenue at home.
But recruiting lawyers to handle the workload has become more difficult, especially from its usual go-to source—the U.K.—since the advent of COVID-19 and law firm pay wars.
James Smith, a partner and member of the specialist investment funds team in the Harneys Cayman office, dedicates all of his time to Latin America. Yet he estimates he’s personally attending to less than half of the firm’s legal work pouring in from the region.
“We’re looking to get additional personnel in because it just hasn’t slowed down,” Smith told Law.com International. “Everyone was a little bit nervous with COVID and what was going to happen, but then we kind of got busier. We thought maybe it was a temporary spike—then it continued.”
Capital is flowing out of Chile after the country elected a former student protest leader as president in late 2021—a leader who has promised to unwind conservative frameworks. At the same time, a growing number of Brazilians are seeking to shelter their savings abroad ahead of a possible swing left in the presidency this year. Argentine wealth held overseas also offers a steady stream of business.
Smith joined Harneys in 2019 from another firm in Cayman, Stuarts Walker Hersant Humphries, where he spent nearly five years after leaving a position in the U.K. as a corporate M&A associate in the Birmingham office of Eversheds.
The Harneys investment funds team recruited another Cayman-based lawyer, Paul Ebanks, from Conyers in mid-2021 to assist with the crush of business streaming in from Latin America, and in particular Brazil.
Harneys is well-established in Latin America, with sales offices in São Paulo and Montevideo staffed with Argentine, Brazilian and Uruguayan lawyers—as well as an outpost in Miami.
The law firm owes its strength in Latin America in part to Harneys’ former managing partner for the Cayman office. Marco Martins, a U.K. and New York-qualified Brazilian lawyer, led the Cayman office for eight years until departing in mid-2020.
Brazil has the second-largest economy in the western hemisphere after the U.S. and ships a substantial amount of wealth overseas. Data collected by the U.S. State Department shows that the Cayman Islands has captured more than $74 billion of the $247 billion of Brazil’s outward foreign direct investment, making the island chain the South American country’s top destination for those assets.
According to the firm’s website, Harneys has about two dozen lawyers in the Cayman Islands, a tiny Caribbean archipelago south of Cuba with fewer than 70,000 inhabitants. The Cayman Islands are a British Overseas Territory governed by English common law.
Smith says it has become more difficult to recruit U.K.-qualified lawyers since the pandemic began. Salaries have increased substantially in the U.K. amid fierce talent wars, making the tax-free salaries of the Caribbean offshore haven less attractive. And work-from-home became the norm in the U.K.
“A lot of the people that we would look to recruit are people who are based in London who are fed up with the hours and the commuting. They don’t have to do the commute anymore—most of them are working from home,” Smith said.
Recruitment to Cayman is laborious. It takes six or more months, typically, to line up work permits and everything else necessary to relocate a lawyer from the U.K. to the Cayman Islands.
“There’s a bit of a merry-go-round of people leaving firms,” recounts Smith. “Whenever someone does get someone to come to the island, there are stories of those persons being taken by other firms three months later. It’s a little bit crazy out there.”
The right fit for the Harneys Latin America team, he says, would be a technically sound lawyer with a friendly and warm demeanor. Latin American clients want personalized attention, often reaching out via WhatsApp and signing off emails with words like “hugs” and “kisses.”
Smith is now attempting to master Portuguese, with language lessons twice a week. He describes Brazil as a “satisfying” market in which to work. The clients say please and thank you, and don’t give ridiculous deadlines, he said.