As Colombia’s economy has diversified so the legal industry has proliferated. Traditionally dominated by larger domestic and multinational firms – the growth of these entities experienced a slowdown during the pandemic whilst the industry witnessed a rapid growth of small and medium-size firms specialising in areas including technology and environmental law. Indeed, as foreign investment increases so too will the need for commercial arbitration.
A corporate law partner at one of Colombia’s leading law firms said, “There are several factors that explain the growth in the number of boutique law firms. Colombia’s economy has become increasingly diversified which has driven greater capital inflows. This has spurred the growth of smaller and medium-size law firms which are focused on price competition to attract new clients.”
“Colombia’s economy has become increasingly diversified which has driven greater capital inflows. This has spurred the growth of smaller and medium-size law firms.”
Partner, leading law firm, Colombia
Many of these smaller firms can offer a more competitive service in terms of cost-benefit to serve distinct types of clients. Colombia’s larger law firms have been unable to offer a more personal and bespoke service which has irked clients. There are other factors at play too. The emergence of new industries, especially tech, is creating fertile ground for the growth of more specialised law firms. Unsurprisingly, “legaltech” is one area to watch – these firms specialise in products including legal services linked to making technological processes more efficient including contract management, automation of electronic signatures, digital file reviews and process automation.
A lawyer with more than two decades of experience in financial law said, “Specialisation is disrupting the dominance of Colombia’s major legal players. In addition, several key partners have left these firms to setup their own and have taken their clients with them. A number of foreign companies are now participating in the Colombian market and are looking for smaller and more agile partners. We see growth primarily in corporate law, environment, hydrocarbons, energy and telecommunications.”
“Specialisation is disrupting the dominance of Colombia’s major legal players.”
Seasoned financial lawyer, Colombia
What does the future of the industry herald? Much could depend on political developments – a leftward shift in upcoming presidential elections could dampen the foreign investment appetite that is driving the industry’s growth.
For the time being, investors should evaluate which sectors are well served by law firms and which are not. Traditional firms often retain Colombia’s most talented lawyers so businesses could be doing themselves a disservice by choosing smaller, cheaper options.
For Colombia’s legal industry, the dark irony of Covid has meant that insolvency and reorganisations client work has proliferated as businesses have gone under or been acquired by competitors. As competition in the sector hots up, boutique law firms will help reorientate the sector toward price reduction, increased efficiency and the democratisation of access to legal services at more affordable prices.