November 27, 2021

Briefs on the [Cayman Islands] beach

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D25_12_521_1200By Felicity Nelson From Lawyers Weekly

Practice in a tropical paradise is not all about sunsets and cocktails. Felicity Nelson reports.

Close to zero tax, more than 300 days of sunshine a year and an endless supply of blue-chip commercial clients – where do I sign up? Convincing a lawyer to give up the big city hustle for the easy-going lifestyle of an island solicitor is not a hard sell. But embracing life in a faraway offshore financial centre takes a certain mindset – and not everyone will find it appealing.

Offshore financial havens such as the Cayman Islands or the British Virgin Islands are small, low-tax jurisdictions that attract investment by providing services to onshore companies.

Despite the reputation of these countries as tax havens, they have made an effort to improve transparency and tax information exchange (as noted by the OECD in its Tax Transparency 2011: Report on Progress).

These islands are magnets for wealth. The Cayman Islands has a standard of living comparable to Switzerland and is the sixth largest banking sector in the world. According to the CIA’s World Factbook, 93,000 companies were registered in the Cayman Islands as of 2008, including almost 300 banks, 800 insurers, and 10,000 mutual funds.

There are no direct taxes in the Cayman Islands, including income tax, corporation tax, inheritance tax, capital gains or gift tax and property tax. The country does, however, have stamp duties and duties on imported goods, which raises the cost of living.

The British Virgin Islands, on the other hand, does have income tax, but at very low rates.

Beating the crowds

The financial sector on these islands offers many opportunities for foreign commercial lawyers, but these roles can be quite competitive.

While the major international firms do not have a presence on the islands, the law firms that operate there are very well-respected, according to Burgess Paluch Legal Recruitment director Doron Paluch. Firms such as Walkers Global, Carey Olsen, Ogier, Higgs & Johnson, Appleby Global, Harneys and Maples and Calder are all big names on the Cayman Islands.

The demand for lawyers on the Cayman Islands is not what it was a decade ago, but the economic conditions have improved markedly ince 2011, with 2.1 per cent expected growth this year.

“In the last few years we have seen a continued steady demand for qualified overseas lawyers,” says Inga Masjule, the global executive HR director at Walkers Global.

The financial services industry makes up 60 per cent of the GDP in the Cayman Islands and lawyers are needed in areas such as corporate advisory and fund formation. There are many areas of law that have little demand, according to Mr Paluch, including family law, criminal law and employment law.

Law firms will typically “knock a year or two off” a foreign lawyer’s level of experience, “which by definition means you would have to be at least two or three years post-admission to be of any interest”, Mr Paluch says.

Additionally, it is difficult for a foreign lawyer to get a work permit if there are local applicants available to fill a position. The Cayman Islands has a law school producing a steady supply of law graduates, which reduces the need to import junior lawyers. However, Ms Masjule says Walkers is seeing more opportunities open up for younger lawyers with more than three years’ PQE.

Some Australian lawyers move to island locations for a few years, even up to the nine permitted on a work permit, and then return home, while others apply for permanent residency. Lawyers with experience on offshore financial centres are generally easy to place back in law firms when they return to Australia, according to Mr Paluch.

Idyllic lifestyle

On islands like the Caymans, one is never more than a short walk away from the beach. While long hours are still hard to avoid as a commercial lawyer, the blue skies and warm weather go some way towards making up for it.

“There is a misconception that Cayman Islands lawyers dawdle away their days in a hammock, sipping cocktails and taking the odd client call on their cell phone,” says Michael Padarin, a partner at Walkers Global on the Cayman Islands.

In reality, he says lawyers are working just as hard as their onshore counterparts on deals and matters of the same complexity.

“You would expect to be in the office around 10 hours each day,” adds Mr Padarin.

But this is offset by the short distance between home and work, which shears off the hours you would spend in traffic in a big city. The compact geography also means lawyers can duck out to catch up with a friend for lunch.

“You do get more family time, and the firms are well geared up to allow you to work remotely,” says Mr Padarin.

Add to this the “beautiful, clean beaches”, leisure activities like fishing, sailing and kiteboarding and the “welcoming and friendly” expat community, and island life is starting to look enticing indeed.

“The ‘winter’ months are absolutely idyllic,” says Mr Padarin. “It gets so hot in the summer months, even the iguanas don’t want to go outside. But you do acclimatise, learn to exercise early in the morning or at night, and everywhere is air-conditioned.”

Far, far away

One of the major drawbacks of living ‘on an island’ is the tiny population and limited amenities, such as shops and restaurants. The Cayman Islands, for example, has a population size of 57,000.

“There is a lot of attraction but you probably have to have the right mindset in going, because it can be a little bit like living in a glass bowl,” says Mr Paluch.

“The communities in these islands are often small,” he continued. “The British Virgin Islands probably only has a handful of great restaurants to go to, so if you are spending any substantial period of time in these locations it can probably become a little bit tiring.”

Another downside to making the move is that islands are by their nature isolated. While modern telecommunications can go some way towards bridging the gap, it is not unheard of for communications infrastructure to fail on the British Virgin Islands and for lawyers to be completely cut off from the world for days at a time.

The diversity of these island populations cannot be overstated, however. In the Caymans, for instance, there are more than 100 different nationalities and 43 per cent of the population are expats. Walkers has 14 nationalities in the Cayman office alone, with nine per cent of staff from Australia.

Law firms on the Cayman Islands often prefer UK lawyers to Australians because they can visit home more frequently.

“An Australian lawyer might get home sick and have to quit his job and return home permanently,” says Mr Paluch.

It is not unusual to get “island fever”, according to Mr Padarin.

“Same faces, same places – this is easily fixed by a quick weekend away,” he says.

The Cayman Islands and British Virgin Islands are only a short flight from Miami and New York – not bad locations for an onshore getaway.

Mr Padarin moved to the Cayman Islands in 2012 from Hong Kong, after completing his bachelor at UTS and his masters at the University of Sydney. People with this kind of international experience are not unusual in the Caymans, according to Ms Masjule.

“We definitely like people who have already tried living somewhere else,” says Ms Masjule. “Quite a lot of Australian lawyers come to us via another jurisdiction. We are looking for people that would do well anywhere.”

Ms Masjule is a globetrotter herself, having lived in London and Moscow before moving to the Caymans. She speaks Russian and English fluently, as well as her native tongue, Latvian.

“There’s not much I’m missing at all [about city life],” she says. “I’m not missing the commutes. I’m not missing the rush-hour traffic and some of the pollution. I wake up every morning and I just think sometimes it is too good to be true.”

Like Australian lawyers on the Caymans, Ms Masjule finds the “trek” home to Latvia difficult. “[I do miss] being away from family,” she says.

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IMAGE: Clear waters Cayman Islands IMAGE SOURCE

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