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"We are a small market, the traditional large firms are still the same," one partner says commenting on the current status of the Bahamas' legal market. Since the island is too small a jurisdiction to have highly specialised law firms, most of the operators in the country are full-service....

"We are a small market, the traditional large firms are still the same," one partner says commenting on the current status of the Bahamas' legal market. Since the island is too small a jurisdiction to have highly specialised law firms, most of the operators in the country are full-service. Attorneys report a drop in the volume of work since the economic crisis, especially property work, while an upswing in commercial litigation is noted. The country relies so heavily on foreign investment that the slowdown in the European and North American economies has also posed a challenge to Bahamian attorneys, although for firms with a diverse client base, work generated by clients from Asia including Hong Kong and Singapore are carrying them through the somewhat stagnant market.

A "thinning profit margin in the legal profession" is another issue raised by attorneys. Since the economic crisis, more and more lawyers coming out of law schools tend to set up their own one-or-two-person law firms and consequently the number of small firms has increased. "That has intensified competition in local business," one attorney notes.

More cost-conscious clients also contribute to the growing pressure on attorneys in a tough market. "We have to do a better job at cost containment and find more efficient and economic ways of delivering our services," one partner says. "Law firms don't compete on prices, but much on services and expertise," the partner adds.

In an effort to modernise its insolvency regime, the country updated its insolvency laws with the commencement of the Companies (Winding up Amendment) Act 2011. The insolvency law reform has received a positive response from the market, with one partner noting: "Now our insolvency law can compete with most of the similar laws in other countries."

CONTEXT AND TRENDS The Bahamas' economy began to turn around a little bit at the end of 2011 and the beginning of 2012, as one lawyer says: "Our recovery is going to be slow and steady, very linked to the US economy." Tourism and financial services are the two main pillars of the Bahamian economy....

The Bahamas' economy began to turn around a little bit at the end of 2011 and the beginning of 2012, as one lawyer says: "Our recovery is going to be slow and steady, very linked to the US economy."

Tourism and financial services are the two main pillars of the Bahamian economy. Although tourism has been hit since the economic downturn, cruise and total arrivals along with hotel occupancy rates have been increasing in the later part of 2011 and early 2012 and are substantially healthier than 2010, according to statistics released by the Bahamas Ministry of Tourism. "We are on the rebound now," one partner concludes.

The market is also seeing a modest upward trend in foreign direct investment, especially in the property sector. "There was a lot of foreign direct investment in that sector prior to the crisis. Then it kind of stopped. Bank financing went under and slowed down. In the last year we saw more interest being shown with people talking about potential investment and new projects in this sector," one lawyer says.

The national election held in May 2012 has also given the market a sense of certainty. Prime Minister Perry Christie – who is now in his second term, having previously served from 2002 to 2007 – and his party Progressive Liberal Party (PLP) came into power. "The new government is ideologically similar to the previous, both committed to free enterprises," one partner notes.

However, a few changes are still expected. While the previous administration had a strong focus on key infrastructure projects, it is unclear whether the new administration will seek to continue that. The new government has already stated that they will review some road improvement projects, which they claim to be substantially over-budget.

The previous government was also committed to stimulating the economy through privatisation programmes, having semi-privatised the Bahamas Telecommunications Company (BTC) and Arawak Port Development Company (ADP). In early May, a few days before his administration lost the election, the former Prime Minister Hubert Ingraham announced that the $37 million IPO of a 9% stake in BTC would be held soon. However, after the new government took office it is now unclear whether the IPO would take place. As one attorney speculates: "The new government won't reverse the IPO of BTC, because it has already been too far advanced." There is a sense in the market that the new government is "interested in privatisation as a tool" but "against privatisation that involves foreign ownerships," because the new government believes if national assets were to be privatised, "the Bahamian people should be given the first opportunity to participate in its own economy", the attorney explains.

Rising crime and unemployment also remain serious problems in Bahamas. The new administration has already identified tackling those issues as their priority.

MAJOR LEGISLATION CHANGES

Companies (Winding up Amendment) Act 2011
In effect as of April 2012