Weathering the storm

Hurricane Gustav was heading towards Cayman as research for this article was underway, but the lawyers there just battened down the hatches, carried on, and provided informed and thoughtful interviews as soon as the skies had cleared. This pragmatic reaction is comparable to most offshore law firms’ responses to the major challenges that have emerged over the last 18 months: the credit crunch. They will cope with this and the cyclical economic downturn but there’s nothing they can do to change the business climate.

However, action can be taken in response to the realignment of the global economy towards Latin America, Russia, the Middle East and Asia, and here, perhaps, the mature offshore legal market can be seen taking shape. The renewal of unevenly distributed political pressure on ‘tax havens’ from the US, EU, UK, and the Organisation for Economic Co-operation and Development (OECD) has also provoked anger and indignation amongst offshore lawyers, with limited consensus on resolution.

Defining the ‘offshore’ world has always been difficult, and developments in 2008 didn’t make it any easier. To a certain extent, the ‘offshore finance centre’ (OFC) slipped out of the legal lexicon in May 2008 when the International Monetary Fund (IMF) decided to merge the OFC assessment programme with the financial sector assessment programme (FSAP). The morale-boosting move marked the maturity and increased importance of the leading offshore jurisdictions, by focusing IMF resources on ‘the small number of OFCs that account for the overwhelming volume of offshore activity’, as well as removing discrimination against OFCs.

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