Making a judgment on cases for expansion to maintain progress

Making a judgment on cases for expansion to maintain progress


Worldwide tax transparency measures are causing a slow down in Gibraltar’s traditional legal work, prompting firms to consider other areas to demonstrate professional excellence, writes Ray Spencer


The Gibraltar legal profession has historically been fed work from its close association with the trust and company management industry or the fiduciary business that helped give birth to the finance centre. It remains a significant part of Gibraltar legal work generally.

The legal profession is involved in the establishment of the trust and company structure below the trust at the onset and then, following disputes between the beneficiaries as between themselves or with their trustees, the legal profession is involved in litigation that ensues.

“This type of work has kept the legal profession busy for many years”, points out Melo Triay, great grandson of the founder of Triay & Triay (T&T). “But with the advent of FATCA (US and Europe wide) and the OECD Common Reporting Standard (CRS), [obligatory international initiatives designed to develop a single global standard for the automatic exchange of information between tax authorities] and the transparency that these standards bring could well result in less use of the fiduciary industry in Gibraltar, and with that goes the litigation that followed”, he notes.

CRS began in January and the first reporting will be from the end of this year. “It’s too early to tell whether these measures will adversely affect the trust and company industry, although the money appears to suggest that it will,” Triay, immediate past chairman of the Bar Council, declares.


Overcoming threats

The legal profession in Gibraltar is used to changes that could hit business – introduction of the 4th and 7th EU Directive on Company Accounts and the repeal of the exempt company tax regime – and Triay says, “in both cases Gibraltar has not been affected; thus these new changes although threatening, will be overcome”.

There’s no doubt the number of lawyers locally has continued to blossom. There are 300 or more people providing legal services in Gibraltar; 216 are lawyers – solicitors and barristers – listed in a fused profession by the Gibraltar Courts Service and the Bar Council has some 170 subscribing members.

Keith Azopardi, Bar Council chairman for the past year and one of four QCs at Triay, Stagnetto, Neish, Azopardi, explains: “In the 1980’s there were a tenth of the lawyers practicing here today; 60% of the economy then was defence driven, but today it accounts for 2-3% of Gross Domestic Product.

“Today there is not only private practice; we now also have dozens of corporate in-house lawyers in gaming and financial services for example – maybe 20-30 people.”


Government spending more

The government has become a big employer of lawyers. “In 2011 it was 18, but now the number of our lawyers in four years has just about doubled to reach 35”, Gilbert Licudi QC, Gibraltar’s Minister for Justice, notes. The cost grew from £1m in 2011 to £2.8m now from higher fee scales, as well as more lawyers.

Reasons cited include more employed in the Crown Prosecution & Litigation Office – advisory work in relation to government, apart from criminal prosecution work. “The number of lawyers in international legislation has grown significantly, because of our EU [legislation] obligations and arising from treaties and bi-lateral arrangements for mutual legal assistance, for example.

“We normally engage local firms and sometimes specialist counsel. Last year there were some important pieces of legislation – the new Companies Act and European [insurance] legislation such as Solvency II; a lot has been EU driven”, he said.

Government spending on external fees last year at almost £600,000 was double that in both 2011 and 2012. Of the eight external law firms engaged last year, Hassans – Gibraltar’s largest firm with 84 lawyers and 8 QCs – captured 45% of this work, and 82% of the £289,000 billed by five firms in 2014!

Overall, Hassans reports its business grew 3.7% in 2015 and expects the same in 2016, significantly less than, for example, the 10% growth claim of ISOLAS law firm. Marcus Killick, ISOLAS chief executive, reasons: “Litigation was one of the areas with very strong growth previously, but now it has lessened. These cycles of work are not unusual.

“Company and trust business is seeing a decline, partially because new international requirements mean more exposure of clients’ affairs … and this has increased costs; also as tax regimes have changed, tax mitigation opportunities have declined.”


Targeting UK and Europe

Gibraltar firm, Ramparts Law, has seen quite spectacular business growth: in 2012 Peter Howitt made the unusual step of leaving BwinParty, the giant Gibraltar-based gaming concern where he was in-house counsel, and started on his own; today there are 18 staff, 13 being lawyers.

Ramparts was profitable from day one, reports Howitt, who set up Gibraltar’s only limited company (rather than partnership) law practice. Ramparts has also become the only Gibraltar firm to open in its own name a UK law office, where he and two others work from Manchester, a strong centre for eCommerce, digital companies and crowd funding. The aim is to establish a mini-European chain that could include offices elsewhere in England, Amsterdam and Stockholm.

Hassans, ISOLAS and T&T all have long-established offices in nearby Spain, largely servicing the ex-pat community.

Aaron Carpenter, a Ramparts director in Gibraltar and specialist in eGaming and eCommerce, was poached last year from Go-compare, the comparison website where he had set up a in-house legal team in Cardiff. “We are very different to other local firms: the company is very international, and we have expanded from abroad with a team having worked both in private practice and – unusually for law firms – also from various in-house roles, which gives us people with direct experience of the corporate field.

“Very few of our clients confine their business to Gibraltar and all are cross-border, so we aim to have offices wherever we can serve them better,” he reveals.

Emma Azopardi specialises in private client and family office business and joined Ramparts a year ago from Hassans where she worked for a decade (the last two years as a partner) and where her father is a senior partner. High Net Worth Individuals (HNWIs) relocating, maybe establishing a business in Gibraltar, or as part of an international business with a Gibraltar presence, are proving lucrative.


Fees pressure

“There is a general downward pressure on fees, but we don’t seem to be feeling that; we’d rather be more competitive on fees and work in partnership with our clients. Often we provide an outsourcing facility for companies that also might be considering establishing an in-house legal team”, she explains.

Triay also believes Gibraltar is becoming the jurisdiction of choice for HNWIs. “Some choose Gibraltar for tax reasons, others because of the intrusive impact that measures like FATCA and CRS have in their home state; so good things also come out of the new measures!”

He’s adamant. “Gibraltar needs to develop itself as centre of excellence in another field; we have done this in the gaming world, we are also achieving international recognition in the insurance field, and we now need to concentrate on a new field. Whether this is arbitration or another form of dispute resolution is something that only time will tell.”

Killick maintains: “A significant amount of our business is international and emanates from elsewhere by recommendation. The best way to develop legal business is by leveraging individual contacts in other jurisdictions and speaking at conferences, for example.”

But as he points out: “We have to be responsive to the needs of clients in the Gibraltar financial services centre and development of the commercial areas. We are seeing potential for growth in the Insurance Linked Securities (ILS) space, as well as a busy pipeline of work in respect of listings on the Gibraltar Stock Exchange.”


Planning for change

ISOLAS, Gibraltar’s oldest law firm dating from 1892 and now with 25 lawyers , also is driving the agenda in development of a crowdfunding solution for Gibraltar. Killick says: “Fintech in general, represents a significant opportunity.

“What would be bad for Gibraltar, would be having firms in these and other new areas wanting to come here, but not having appropriate or knowledgeable professional services available. As law firms, we therefore have to anticipate and plan for these,” he warns.

Hassans last year recruited from top tier UK law firms, including lawyers and consultants from Linklaters and accountants, PWC, and Javier Chincotta, Managing Partner, explains: “We endeavour to recruit home grown talent where possible, and we have plenty of it, but equally, when we do need to extend our recruitment overseas, for a specialist in a particular area of work or industry, we are fortunate in that Hassans and Gibraltar itself aren’t difficult ‘sells’ to potential recruits.”

As an example, Mark Okes-Voysey, an ex-PwC partner based in Europe, was recruited to provide international business consultancy services to both the firm and its clients and from April he took over as chief executive of Hassans’ fiduciary arm, Line Group.

Gibraltar’s Financial Services Commission has spent a year trying to recruit locally without success for its new Director of Legal, Enforcement and Policy, but has just appointed an experienced regulatory lawyer, Peter Taylor, who moves in July from Director of Access to Legislation at New Zealand’s Parliamentary Counsel Office and Chief Legal Advisor to the New Zealand Customs Service.

Another development in the jurisdiction’s quest to be seen as a centre of excellence is provision of statutory regulation of the legal sector, something that many regard as long overdue. The Bar Council has worked on the framework for over six years and in 2012 its 170 individual members agreed to a potential fee rise from £50-£70 to £1,000-£1,500 a year to meet the regulatory cost.

Lawyers from abroad – mostly QCs from the UK – as well as some 25-30 of those who arrive to appear in cases each year would also need first to register with the Bar Council. As Azopardi asserts: “I am in favour of people coming in and pitting their wits against local advocates, but there are areas where it is being done too frequently – and in my opinion, unnecessarily.”


Regulation in prospect

Minister Licudi, who is considering the Bar Council’s proposals, says he is “close to broad agreement with the profession.” Azopardi hopes for legislation before the year-end and sees it being made compulsory for all lawyers to become Bar members, swelling membership to around 300.

However, Licudi cautions that that particular aspect is still subject to negotiation, but emphasises: “All lawyers [including those working in-house or for government] need to be regulated and, therefore, will need to be registered with the statutory body and have a practicing certificate. The Bar Council represents the lawyers, but the independent statutory body is the regulator, much as, for example, there is a Bankers’ Association and a separate Financial Services Regulator. We are not talking about self regulation.”

Nor has it been decided whether the planned Legal Services Act will include a consumer compensation fund, with Azopardi arguing instead that “it is more equitable and less costly for lawyers to review the level of their Professional Indemnity cover to reflect the scale of activity and the risk level based on the type of cases handled”.

Killick, who until 2014 was Gibraltar’s financial services regulator and previously held a similar role in the Cayman Islands, comments: “Whilst I am not sure that client compensation schemes work in small jurisdictions, an effective independent arbitration system or ombudsman scheme may be appropriate for individuals to be able to get any wrongdoings by law firms put right in a speedy and cost effective way – it’s what people effectively expect to have in 2016.”

The Bar has also been supportive of compulsory training for lawyers specifically in Gibraltar law, which is based on Common Law and similar to English Law, but frequently is subtly different. A new Certificate in Gibraltar Law is required by all newly qualified lawyers before they can be called to the Gibraltar Bar and the part-time, one-year course at Gibraltar University is being taken up by the first 21 students on law firm contracts of at least a year, as well as a two week Professional Skills Course that will follow in the summer.


Training for the future

Currently there are 37 Gibraltar-sponsored students of law at various stages of UK University training, and those who return to Gibraltar will either join one of 31 local practices or work in-house for companies or government.

However, continuous professional development (CPD) for existing lawyers occurs only on an ad hoc basis: Azopardi would like to see it become compulsory, a view supported by government. Minister Licudi reveals: “I used to do CPD, because I was not only called to the Bar in Gibraltar and the UK and unusually I had a practicing certificate there as well, so I was required to keep up with knowledge through CPD – its fundamental.”

Gibraltar’s modernised and extended law courts costing £11m opened in 2012, but ‘administrative issues’, such as backlogs in provision of dates for hearings, caused months of delays, and then law firms frequently waited months for court appearances. The government subsequently imposed hearing date time limits of five days for 90% of applications and for cases to be heard as soon as possible. Licudi says the system sometimes works too well; “we now even face situations where dates are given that are too soon for lawyers.”

There used to be “a significant delay – years later in some cases – in reporting of cases and judgments and, because we rely on Common Law and judicial precedent, it is so important for the profession to know what judges are deciding.” Judgments now are made available on the Court website shortly after cases end.

Recently a judge criticised prosecution systems as “a shambles” when court papers were mislaid or not available. Licudi is hoping to prevent repeat situations with the launch before summer of a £1.4m criminal justice integrated IT system that provides for data input from all elements of the criminal justice system, police, lawyers, judges, prison authorities and customs staff. “It will reduce the need for paper shuffling: taking physical bundles of documents to court may well be a thing of the past”, Licudi muses.