A balance must be struck between protecting Cayman’s financial services industry and ensuring Caymanian attorneys can receive “a piece of the pie” from gaining employment and promotion in locally operating law firms, opposition party members said this week.
The government, keen to comply with international requirements for the regulation of financial services and related industries pending a territorial anti-money laundering review due next year, is pushing the latest version of the Legal Practitioners Bill (2016 revision) to the Legislative Assembly early next month.
Various iterations of the legislation have been attempted since 2010, with an eye toward modernizing the local practice of law and complying with internationally accepted anti-money laundering and terrorist financing rules. Successive governments have failed to pass updated legislation. The current legal practitioners regime is based on a law that originally took effect in 1969.
The new legislation creates a regulatory body for local lawyers, called the Cayman Islands Legal Practitioners Association. This is envisioned as an industry “self-regulator” with eight attorneys appointed to its members. Five of those members must be Caymanian.
The association will be responsible, if the bill is passed, for promotion and training of Caymanian attorneys. It also must ensure all attorneys practicing in the Cayman Islands are suitably qualified.
The bill also creates a separate business staffing plan regime for locally operating law firms, including rules that seek to ensure Caymanian lawyers are “properly considered” for promotions, including in overseas operations at the various law firms.
It is in the attempt to regulate offshore activities of the Cayman Islands law firms that the Progressives-led administration must be particularly careful, Opposition Leader McKeeva Bush said Tuesday.
Mr. Bush gives one example of a New York law firm doing business with Caymanian attorneys on a particular wealth management transaction due to advantageous tax considerations for the New York firm’s client. Under clause 24 of the proposed bill, an attorney based in New York operating on behalf of a Cayman Islands firm in the transaction could not practice Cayman Islands law without being licensed and registered in Cayman.
“Under the [proposed] system, the New York firm would, in essence, be practicing Cayman Islands law,” Mr. Bush said. “Such firms would reasonably contend that instead of trying to meet the new [legal] requirements, it would be more financially feasible to move such business to another jurisdiction that does not impose such restrictions.
“We must take a step back … and look at the bigger picture when considering these changes in the context of Cayman functioning as a key player in the global financial services industry.”
Mr. Bush said this is not to say that Caymanian lawyers should not be given more opportunity under the current legal regulatory schemes. He objects to rules now in the Legal Practitioners Bill that allow a foreign lawyer to be hired in Cayman after three years’ relevant experience. Ideally, Mr. Bush said, that should be pushed to five years.
“History has shown that those coming here with three years do not have requisite experience to properly train a Caymanian, as a five-year veteran would presumably have,” Mr. Bush said. “In many cases, [the foreign attorney is] trained by the existing Caymanian staff and advances beyond Caymanians to senior associate and partnership roles.”
It is the advancement of Caymanian attorneys, once they are hired, that concerns George Town MLA Winston Connolly.
Speaking during a public meeting in East End Monday night, Mr. Connolly said many Caymanian lawyers have entered the profession with high hopes and later learned exactly how far they would be allowed to go before hitting “the ceiling.”
“We need to modernize how lawyers practice, their obligations, code of conduct … no one is arguing that” Mr. Connolly said. “People are missing the part where Caymanians – one set of Caymanians – the Caymanians that are born here, are not represented in the highest jobs in the profession.
“We’re talking about the major law firms, where the senior partners are getting $10 million-plus a year,” he said. “This [bill] basically cements … that status quo.”
Mr. Connolly, as he has previously, again drew the distinction Monday about Caymanians who were “made here” (those who have been granted status after lengthy residence) and those who were “born Caymanian.” The latter, he said, is the group he is most concerned with.
Financial Services Minister Wayne Panton said both major professional organizations for Cayman attorneys – the Caymanian Bar Association and the Cayman Islands Law Society – worked with government in drafting the bill.
Mr. Bush questioned who exactly was involved in the legislative review process with the legal profession.
“While there have been a number of surveys conducted by the Caymanian Bar Association, there seems to be a clear lack of probity in representing such statements to government, when in fact the membership has not had an opportunity to comment,” Mr. Bush said.
Premier Alden McLaughlin said last week that passage of the revised law is critical to Cayman’s continued success in the offshore financial services industry.
“The failure to pass this legislation has been damaging to us, not only as a jurisdiction, but also to the interests of Caymanian lawyers,” Mr. McLaughlin said.