Labour reforms in Costa Rica leading to increase in employment litigation

It is anticipated ‘one or two’ global firms will take the step of opening offices in Central America, with data protection and technology driving demand for legal services

Recent labour law reforms in Costa Rica has led to an increase in employment litigation, according to Tomás Nassar, senior partner at Central American law firm Nassar Abogados. The reforms, which came into effect earlier this year, have had a significant impact in that it has meant changes to approximately half of the country’s labour code, including aspects related to collective bargaining as well as laws governing the employer-employee relationship. Consequently, it is vital that clients have a clear understanding of how these changes could impact on how they do business in Costa Rica, Nassar says.

With regard to the wider Central American region – which has a population of more than forty million people across Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, as well as Belize and Panama – there are a wide range of business opportunities on offer, which in turn, are generating significant work for law firms, Nassar says. Countries with skilled labour forces, a strong rule of law and stable economies attract significant investment and this leads to high demand for legal services. Nassar also notes that “non-traditional” areas such as data protection, telecommunications and technology are becoming increasingly important in Central American markets and this is also creating new opportunities for law firms. “There is a significant increase in demand for legal services in areas such as environmental law, compliance and regulatory matters,” he adds. Besides Costa Rica, Panama is another country where there has been an increase in international trade and this means demand for corporate lawyers is on the rise.

Creative thinking
According to Nassar, in order to be able to take advantage of such opportunities, law firms in the region must partner with clients and develop an in-depth understanding of the clients’ business and treat it “as if it were their own” in order to be able to provide comprehensive, fast, ethical advice, while offering a legal product that has a “true tangible added value for the client”. He adds that law firms should also “align their personnel with their values and objectives” and encourage creative and innovative thinking in the search for solutions for clients. However, the political and economic environment can be a challenge when advising clients, according to Nassar, and consequently, a “comprehensive and integrated approach that involves addressing the legal issues of clients from a business perspective is fundamental”.

‘Passionate about work’
Nassar Abogados has sought to make its practice groups homogeneous across its five offices in Central America, with the aim of developing a pan-regional service in order to ensure that the firms’ clients have the “same level of satisfaction when working with any of our offices”, explains Nassar. He adds that he believes the firm’s success is due to the “commitment of a team that is passionate about their work and that translates into ensuring the client receives services of a high quality, which are timely and uniform in each jurisdiction where the firm provides services.” Nassar continues: “For many law firms it is a challenge to set up a structure that fits all these aspects.”

Global firms arriving?
Legal markets around the world have undergone a profound transformation and Central America is no exception. “We believe that more local firms will be interested in expanding their operations in Central America and, as has been the case recently in other jurisdictions in Latin America, new boutique firms will be established, some as a result of the departure of senior associates from more established law firms,” Nassar says. Likewise, Nassar expects at least one or two more global firms to open offices in Central America in the short to medium-term.

New office openings?
Nassar says there is a possibility that his law firm could expand and open more offices in response to client demands. He adds: “As we strive to be the law firm of preference for our clients, we constantly evolve and expand in order to be a strategic ally of our clients – as it happens, some of our most important clients have invited us to establish operations in two additional jurisdictions and we are evaluating it.”