As competition among offshore law firms continues to intensify, British Virgin Islands-based O’Neal Webster has opened a New York City office—a rare step for an offshore firm.
The large, long-dominant players in the BVI—Harneys, Appleby, and Conyers Dill & Pearman—have global networks and may dispatch lawyers to meet and greet clients in the Big Apple, but none of them has an official branch anywhere in the U.S.
For the moment, O’Neal Webster’s New York outpost consists of a single partner, Kerry Anderson, who heads the firm’s investment funds and regulatory practices. While based in New York, Anderson will advise a global array of companies and funds on BVI law (but not on New York law) related to such matters as mergers and acquisitions, investments, trusts and estates, and restructurings. Anderson said he expects to add staff soon as the firm’s business grows.
While opening a New York office may be an unusual step for a BVI firm, Anderson said it is entirely logical for the head of a funds practice to be based in the city, given the sheer number of funds that find sponsors, launch and make use of legal services in New York.
“With roughly 75 percent of all hedge funds set up in New York, if you want to be able to increase your market share in the hedge fund space, it makes sense to be here,” Anderson said, adding that O’Neal Webster is a member of the global Lex Mundi law firm network, many of whose member firms have a presence in Manhattan and throughout the U.S.
Still, Anderson acknowledges that opening a New York office is an unusual move in the BVI, where many firms are part of networks with offices in Hong Kong, Singapore, London and the Cayman Islands.
“We wanted to try something different and see where it leads. Now we can have more face-to-face meetings, hold seminars, leverage our network, and provide more comprehensive services,” he said.
Part of Anderson’s role in his new outpost will be educational in nature. Raising the BVI’s profile and luring people to do deals with a BVI component means promoting understanding about what the jurisdiction does and does not offer. Certain misconceptions are fairly common among those who have not yet done deals in the BVI. For example, Anderson noted that some people believe that parking money in the BVI and making use of fund structures there is a way to avoid paying any taxes on transactions.
“We have to explain that it doesn’t actually work that way. If you are a U.S. taxpayer, you pay taxes in the U.S. no matter where you put your funds,” he said.
At the same time, he noted that there are many benefits to doing deals in the BVI and some of these are not as widely understood as they could be. Thanks to the BVI’s new (2017) Limited Partnership Act, for example, it is easy to form an entity that has a separate legal personality while maintaining the pass-through character of a partnership. On a broader level, the BVI government has a marked business-friendly orientation.
“For years, the government of the BVI has partnered with the private funds industry, making regular amendments to regulations to keep up with client demand and to anticipate what BVI products they may be looking for,” Anderson said.