The major constituents of Gibraltar’s economy – offshore work, financial services, and e-commerce – are continuing to grow, increasingly there is demand for sophisticated legal skills and services, and greater competition
Gibraltar is said to have the world’s largest legal representation, putting California into second place; there are 230 lawyers working in commercial enterprises or one of 32 legal firms and partnerships, for a population of just 30,000.
The only common law jurisdiction in continental Europe, Gibraltar has a multilingual background and its multi ethnicity has enabled some firms to move more easily into multi-jurisdictional operation.
The legal system dates from 1740 and largely reflects that of England and Wales with its Common Law and rules of equity adopted wholesale in 1962, except for property law, which differs significantly. Some local laws aim to give the finance centre a competitive advantage, but much of new legislation is driven by universal EU requirements; indeed Gibraltar last autumn became the first in Europe to have transposed into law all EU legislation.
Chief Minister, Fabian Picardo said that in the past two years the Government’s legal work had been “spread out amongst a much larger part of the legal fraternity – always choosing the best lawyer or firm for the job – quite unlike the position before we were elected when a favoured few got all the work”.
Although the number of lawyers registered with Gibraltar’s Supreme Court continues to grow steadily by 10 or so each year there are signs that the rate of increase in the jurisdiction’s legal work is slowing, making for greater competition and pressure on fees.
Law a commodity
“Some firms are having to redefine and develop in the way they will approach evolution. The days of companies with huge budgets for legal expenses are gone. People abroad are looking at law as a commodity and there is a huge downward pressure on legal fees,” observed Peter Montegriffo, one of Hassans’ 28 partners and corporate and commercial team leader.
Melo Triay, senior partner at the 113 years old Triay & Triay, said: “We are taking on lawyers on a needs basis. Five years ago we couldn’t get enough lawyers, but today the workload is not necessarily increasing that much locally as a result of the impact of the recession.”
At end 2009 there were 200 in the legal profession, it having doubled over the previous decade as a result of substantial economic expansion largely on the back of the international finance centre and e-gaming.
The collective turnover of lawyers was then estimated at some £95m, including several associated enterprises in the territory and in nearby Spain. Four years on, and there are 15% more lawyers, the pace of growth having slowed.
The number of lawyers returning home creates a dynamic: some suggest there is the potential for saturation, because so many Gibraltarians have qualified as lawyers in recent years. Fewer Gibraltar students opted for Law Degree courses last autumn – 18 compared to 23 in 2012.
Other legal work
“Youngsters choosing to study law today may well not end up working in local law firms, but instead join gaming and financial services businesses, where there is growing demand – to help with regulatory or compliance matters, for example; we have to manage expectations”, insisted Triay, grandson of the original managing partner, P S C Triay QC.
Yet Hassans, employing 250 people (245 in 2010) in offices in Gibraltar and on Spain’s Costa del Sol, said its revenue last year grew by more than 5%, helped particularly by gaming and funds work.
“Gibraltar is a small, densely populated jurisdiction so any business sector which is a large part of the economy will involve a high number of people per capita”, reasoned a spokesman for the 43 years old Hassans practice.
In 2013, six of 88 lawyers left Hassans – one to a small, growing local law firm, and the remainder “took up positions in industry, for example in-house legal departments, compliance, fund managers/promoters etc”; five of six trainees have remained.
Accountancy in Gibraltar has grown from international firms establishing or buying into local operations and recruited from outside of Gibraltar to expand their areas of expertise, whereas the same generally is not true for legal firms it has been suggested.
However, at Triay Stagnetto and Neish, associate Nick Culatto joined in late 2007 and was primarily involved with litigation, construction and maritime matters.
But in 2010 he moved to work on both contentious and non-contentious construction matters, including public procurement in a specialist London law firm. Culatto returned to TSN – it has three QCs in its 19-strong legal team – in October 2012.
And a year ago Peter Howitt formed Ramparts Law as a sole operator and has since developed to become a four-lawyer practice by building on his wide in-house legal experience. In January, William Rawley joined Ramparts to lead a new Corporate & Finance team, having been Head of Execution and Syndication of the EMEA Corporate Solutions team at Citigroup Global Markets in London.
“Having worked within companies – gaming, e-payments and financial services – in varying sectors and gained detailed knowledge is a big advantage; you know how people in those sectors think and see more clearly what they are seeking to achieve”, Howitt asserts.
“It is becoming very competitive here with UK legal firms,” Howitt noted, “and some of Gibraltar’s legal firms are becoming involved in cross-border work for clients, including from the UK – it’s a sign the Gibraltar market is maturing.”
Yet no large UK legal firms have moved to open Gibraltar offices, so local firms have yet to be challenged.
Charles A Gomez & Co, specialising in general dispute resolution and commercial law, was established 25 years ago and is retained locally by two of Gibraltar’s largest firms – Morrisons supermarket and Saccone & Speed, wines & spirit merchants.
“We have always been different to other firms. We took a decision in 2001 to concentrate on litigation work and general legal work on companies and trusts. However, we will not offer trustee and company management services – unlike other Gibraltar firms – because we think that represents a potential conflict and we prefer absolute independence in our advice. That has created a niche market for us,” 54 years old Gomez declared.
Hassans actively seeks to work with leading UK, US and European law firms and claims “a high level of international referrals and regularly advises internationally and on cross-border transactions”. The firm handled the first European cross-border merger in Gibraltar between two major internet gambling companies, PartyGaming plc and bwin Interactive Entertainment AG in 2011, and last year three simultaneous European cross-border mergers of Gibraltar companies were formed into a single legal entity incorporated in another EU Member State.
Gibraltar’s fused legal system giving both barristers and solicitors rights of audience in court has not caused many to appear before judges: it is estimated that no more than 50 are involved in advocacy and appear in Court.
Yet, Gibraltar courts are now dealing with some very sophisticated issues and, as a result, the jurisdiction has seen a big temporary import of Silks – senior barristers known as Queen’s Counsel (QC) – with specialised knowledge for cases.
“There is a changing basis of work for lawyers – more litigations and trust and international activity – so Gibraltar could present itself as a centre of excellence on the technical points of the law,” Triay suggested.
However, local frustration built over years at having only few QCs for the size of the profession arises not only from perceived added kudos of the status, but also the potential for Silks to earn higher fees.
Gibraltar has 15 QCs – some are semi-retired – and at this stage, in-house legal counsel is not included.
In March 2012, six QCs were admitted to the Gibraltar Bar – the first for ten years – and included a Isalas civil and commercial litigator, Mark Isola, and Gillian Guzman, a Hassans partner in the litigation department, who became the first woman QC and at 39, the youngest ever.
The profession is also troubled by the fact that QCs seem only to come from Court advocates, when 70% of the total are commercial lawyers
“It is unfortunate that the guidelines for the appointment of QCs so inadequately cater for the vast majority of lawyers practising in this jurisdiction yet our number is taken into consideration when appointments are made,” Peter Isola, vice chairman of the Bar Council, told the Ceremonial Opening of the Legal Year in September.
Isola, senior partner and great, great nephew of the firm’s 1892 founder, Horace Parodi, argued that those with a non-litigation background should not effectively be excluded by setting the barrier to entry too high. The next batch of QC appointments is expected early this year.
At the same time, a Legal Practitioners’ Act – making the Bar Council a statutory body responsible for ethics, and creating a separate Lawyers Regulatory Authority (LRA) – needs parliamentary approval and is unlikely to be functioning until 2015.
Membership of the Bar Council will become compulsory for all lawyers and the LRA will issue practicing certificates, ensure accounting rules are followed, and check for Professional Indemnity insurance. It also will be concerned with complaints, taking responsibility from the Chief Justice Anthony Dudley, who has executive power on discipline matters.
Isola highlighted the need for “regulation of a higher standard” and for greater efficiency to better protect the public.
The LRA will plug into the UK’s Solicitors Regulatory Authority programme of continuous learning and the High Court Inner Temple has offered support as has former Gibraltar Chief Minister, Sir Peter Caruana QC and Attorney General, Ricky Rhoda, QC.
In the meantime, Rhoda said that Gibraltar’s success rate in obtaining convictions in cases prosecuted compares favourably with experience in England and Wales – 46% and 32% respectively – “despite the smallness of our jury pool and particular problems posed by a small jurisdiction”.
Giving the profession a boost, Gibraltar’s new Law Courts – four Supreme Courts, two Magistrates’ Courts and a Coroner’s Court – were officially opened last year in refurbished and extended premises complete with new technology, including a video link, improved access to online services and a new IT system.
Isola highlighted the need for “regulation of a higher standard” and need for greater efficiency to better protect the public.