There is no significant evidence of Cayman-established law firms moving large numbers of staff overseas to the detriment of their local operations, Financial Services Minister Wayne Panton said Wednesday during a Legislative Assembly debate on the controversial Legal Practitioners Bill.
However, Mr. Panton said the government did have evidence of foreign operations starting up that were “practicing Cayman Islands law” and using Cayman-registered financing vehicles without maintaining any local presence.
It is the latter activity that the passage of the Legal Practitioners Bill seeks to prevent, Mr. Panton said.
“We have firms that have no connection to Cayman … no office in Cayman and they have people who are practicing Cayman Islands law,” Mr. Panton told the assembly. “We have a [current] law which is deficient in its ability to deal with that.”
Mr. Panton said it was simply a function of the modern financial services industry in a globalized world that required local law firms to maintain and grow their presence in overseas “centers of commerce” like Hong Kong, Singapore and London.
“If we’re not there, meeting their expectations in those centers of commerce … we are going to lose business,” the minister said. “We do not get to dictate the rules of global finance.”
Mr. Panton said “the truth” is that Cayman’s global competitive advantage in financial services has narrowed in recent years as other regional competitors have started to catch up and adopt some of Cayman’s practices.
The Legal Practitioners Bill seeks to establish methods to promote the training and advancement of qualified Caymanian professionals, the minister said.
“The perception is that too few Caymanians have made it to the top as equity partners [at law firms],” he said.
However, some recent numbers from the financial services industry indicate the winds of change are blowing, the minister said. The large law firms have reported 65 percent staff retention of Caymanians after three years on the job, which Mr. Panton said is better than in many other jurisdictions.
The Caymanian Bar Association has 130 student members and there are now 21 Caymanian articled clerks [trainee lawyers], with a further 114 who have completed that training, he said.
Of the roughly 700 lawyers now licensed in the jurisdiction, about 240 are Caymanian, Mr. Panton said.
“This bill finally goes a long way to addressing concerns around these issues and puts in place mechanisms through which Caymanians may become a part of this very significant legal fraternity,” Mr. Panton said.
“We don’t need mechanisms which give Caymanians anything,” Mr. Panton continued. “There are many young Caymanians out there and others in the profession … who got there on their own merit. We simply need a framework that provides that platform for them to do that … they don’t need to be handed anything.”
The government would not support any “mandates” that made “a certain number of people” law firm partners regardless of merit, the minister said.
The bill creates an eight-member council, called the Cayman Islands Legal Practitioners Association, to promote the qualification, training and promotion of Caymanian lawyers. All attorneys must be members of that council, Mr. Panton said.
If Cayman fails to pass the current bill, which successive administrations have tried to do over the past 15 years, it is “guaranteed to fail” a territorial assessment by the Caribbean Financial Action Task Force due later this year, the minister said.
“It is the absence of a bill like this … that is what is against the interests of Cayman lawyers,” he said.
Independent members of Cayman’s parliamentary opposition have long opposed the most recent draft of the lawyers’ bill, and George Town MLA Winston Connolly gave some of their reasons Thursday morning.
“The problem with the bill, as it is drafted, [is that] these equal opportunities have not been given by the same people that we want now to remain fully in charge of the [legal] fraternity,” Mr. Connolly said. “Once gone, [the opportunities] will likely never come back.”
Mr. Connolly, who worked for Walkers Global and Maples and Calder – Cayman’s two largest law firms – before becoming a director in a financial services company, said many reasons had been given for supporting the Legal Practitioners Bill but that fundamental problems of Caymanians in the legal industry were not addressed.
“Nobody has acknowledged the situation that exists with Caymanian lawyers in this country,” he said. “The ones that are schooled here are not making it to equity partnership and there’s a culture of fear where people don’t speak up. To modernize a law and not put in the provisions that would protect our people is no real modernization.”
Mr. Connolly said he was not making an argument for forced promotions of individuals who are unqualified.
“I do not believe in affirmative action; I do not believe in putting Caymanians into a position because they are Caymanians, but equally they should not be kept out of a position because they are Caymanian,” he said.
Mr. Connolly said he realized he was “committing professional suicide” by making such public comments in Cayman, but that if he didn’t speak out, others wouldn’t or couldn’t.
“Their mouths are sealed for all eternity unless they are willing to pay back the money they received for that silence,” he said. “What has been said to me repeatedly is there is a culture of fear in and around the large law firms …. People, if they speak out, feel they are going to be blackballed.”
The debate on the Legal Practitioners Bill is likely to continue for the remainder of the week at least.