Global law firms have won the backing of a key figure in the Bermudan government as the country’s legal market awaits a ruling by the U.K. Privy Council’s in a long-running controversy over the terms on which global law firms can do business in Bermuda.
In a Dec. 14 address to Bermuda’s House of Assembly, Minister of Finance Curtis Dickinson spoke out strongly in favor of the global law firms. Dickinson also set forth an official process by which non-Bermudan firms that may have been stymied or frustrated by local ownership requirements can get around those rules, potentially rendering the Privy Council’s decision moot.
The Privy Council is set to review and issue a decision by the end of January on the question of whether global law firm Walkers, and by extension, other nonlocal law firms, should be able to obtain a certificate of recognition allowing them to operate with limited liability.
Bermuda’s Bar Council, which has found Walkers Bermuda to have violated provisions of the Companies Act of 1981 requiring majority ownership and control of businesses operating on the island, successfully appealed a chief justice’s ruling that had been favorable to Walkers. In the Bar Council’s view, Walkers Bermuda’s claim to be in compliance with the “60-40″ rule mandating at least 60 percent Bermudan control is belied by the control that Walkers Global exercises over the local operation overseen by Walkers Bermuda managing partner Kevin Taylor.
In his address to Bermuda’s House of Assembly on Dec. 14, Dickinson took the side of Walkers, arguing that welcoming global law firms to Bermuda and encouraging them to build a presence in the territory is a key part of making Bermuda’s economy more competitive and attracting higher levels of investment.
“It is the government’s view that the presence of international law firms in Bermuda will generally benefit the economy and employment prospects of Bermudians as well as enhance the national brand exposed through global channels,” Dickinson argued.
While the Bar Council takes the position that non-locally controlled law firms are operating illegally on the island and are not entitled to recognition, Dickinson argued in favor of liberalizing the Bermudan legal market and making it more like other offshore jurisdictions such as Cayman and the British Virgin Islands, where global law firms vigorously compete and build their practices. In Dickinson’s view, the solution is for the government to grant 114B licenses, offering exemptions from the local ownership rules, to any global law firm that fulfills a few requirements.
These requirements include having staff and management on the island; ensuring that Bermudan-qualified lawyers work on Bermudan law matters and that there is no outsourcing of such work to lawyers and paralegals in other jurisdictions; providing scholarships to Bermudan law students; recruiting, training and hiring Bermudans into all areas of the law firm’s operations and granting opportunities for Bermudans to work in other jurisdictions; presenting a five-year business plan setting forth how the law firm aims to grow revenue through offshore work and what policy the law firm has in place “to identify and prepare candidates for partner and high-level management positions that is based on ability but also mirrors the multicultural composition of the Bermuda community”; and, finally, submitting an annual report to the minister of finance showing that the law firm has met these obligations.
If the Bermudan government is prepared to issue 114B licenses to law firms that fulfill these requirements, then the pending decision about Walkers may be rendered somewhat academic, said Mark Chudleigh, a Bermuda-based partner of the international law firm Kennedys Law, who added that he is not concerned about which way the Privy Council ruling goes.
“I don’t think the decision will make any difference to what we do either way,” Chudleigh said.
In Chudleigh’s view, the Bar Council’s challenge to Walkers Bermuda has posed, at most, an inconvenience rather than an existential threat.
“From a risk management perspective, it is preferable to operate with the protection of limited liability, but the issue doesn’t stop you from operating. And now the government has opened the door to applying for a license to get around the control problem. One way or the other, people are going to continue their operations here,” Chudleigh said.
Indeed, global law firms seem largely undeterred by the ongoing legal controversy, with one firm, Carey Olsen, claiming in a recent release to have grown from a single employee in Bermuda in 2017 to a current roster of 17, with more additions planned in the weeks to come.
Still, Taylor of Walkers hopes for a favorable ruling from the Privy Council and says he has the facts on his side.
“At this point my focus is on the appeal, and I’m hopeful that the Privy Council will view things positively. In my view, from the very outset I’ve done everything right. I’ve been open and I’ve consulted with the Bar Council and the other stakeholders. So I’m hoping that we will be successful at the end of the month,” Taylor said.
The Bermudan Bar Council did not immediately respond to a request for comment.