IFLR 1000
The Guide to the World's Leading Financial Law Firms

The Companies (Guernsey) Law 2008 came into force last July; companies can now go into administration in Guernsey and the Act also legislates for schemes of arrangement and squeeze outs."The Act has allowed us to do things that we were doing already, but in a more straightforward and strategic way, and with statutory backing....

The Companies (Guernsey) Law 2008 came into force last July; companies can now go into administration in Guernsey and the Act also legislates for schemes of arrangement and squeeze outs.

"The Act has allowed us to do things that we were doing already, but in a more straightforward and strategic way, and with statutory backing. It makes things simpler and more certain for clients," says one partner at a leading Guernsey firm.

And while you may think anything that encouraged clients to undertake legal services would be met with open arms at present, praise for the Act has not been universal.

"Some people are moaning about the companies Act," says another Guernsey partner. "There are good things and bad things: more flexibility and, of course, the schemes of arrangement, but there are also complaints that things are more difficult." The partner adds: "Though lawyers as a profession are quite conservative and don't really like change."

Such lawyers might find the market as a whole a bit of a bother, as corporate and finance partners on the island say their diet of work has changed drastically. "Things like pure banking work are not a luxury many of us can have, so we extend our remit to dealing with administrations and looking at refinancing and enforcement," says one partner. "We have been able to take our skill and move to other fields."

But restructuring is not the only work the downturn has begat. Commentators expect to see some mergers and acquisitions as local companies see sense in consolidation and others look to pick up cheap distressed assets. In the second quarter, some firms even reported a small increase in financing.

But overall the effects of the downturn on corporate and finance lawyers in Guernsey are the same as for lawyers the world over. "There is a lot more pitching for work," says one partner. "Clients are more cost conscious. The market is more competitive."

"Investment funds are probably now the biggest contributor to Guernsey's finance industry GDP," says one partner at a leading Guernsey firm. Consequently, firms are increasingly focused on seizing work....

"Investment funds are probably now the biggest contributor to Guernsey's finance industry GDP," says one partner at a leading Guernsey firm. Consequently, firms are increasingly focused on seizing work.

And while the downturn reduced the flow of new structures, particularly in the first quarter of 2009, the new funds regime that came into force on December 15 2008 picked up some of the slack, providing firms with advisory work as existing clients looked to change structures.

The new regime separates all funds into two categories – registered and authorised investment schemes. Both have their advantages. While registered investment schemes are regulated with a lighter touch and provide for a quick turnaround, appealing to experienced clients, the authorised scheme's more comprehensive regulation, according to one partner, "chimes with the market".

The partner adds: "Whereas before clients just wanted to get their hands on the money as soon as possible, now they want to take longer to get a stamp of approval that they get with these funds."

The newfound caution that the downturn has brought with it has also made fund-raising a difficult process. "A lot of people are having trouble fund raising; we had a fund last year which raised nothing," says one partner.

Even secondaries are finding it tough. "For these guys it is a good time; it could be boom time for them, but it's still taking longer for them to raise money. We're talking about nearly one year to raise the money, whereas before it would take three months."