Guatemala continues to maintain its reputation for economic resilience, with GDP growing by 3.5% in 2023 and predicted to increase by 3% in 2024, despite months of political turbulence leading up to the inauguration of President Bernardo Arévalo, an anti-corruption campaigner from the progressive Movimiento Semilla party, in January 2024.

Longstanding fears over the state of the rule of law in Guatemala came to a head in 2023, as the office of attorney general Consuelo Porras launched a series of legal challenges designed to prevent Arévalo, who won the August runoff election with 58% of the vote, from taking power, including by attempting to annul the election results. Finally, after months of pro-democracy protests driven by Guatemala’s indigenous communities, the Constitutional Court ruled in December that Arévalo, Vice-President Karin Herrera and other elected candidates must be allowed to assume office.

With only 23 of the 160 seats in Congress, the new president faces significant challenges, but has committed to improving the accountability of the public sector, creating better conditions for foreign investment and increasing spending on infrastructure – all of which are positive signs for Guatemala’s future.

While the political turmoil had some effect on the M&A market, transactions continued at a steady pace, with a lot of activity in the energy, financial and heavy industry sectors, and greater political stability is expected to lead to greater investment opportunities – particularly as relations with the US, Guatemala’s most important economic partner, have improved significantly. In addition to transactional work, law firms have noticed an uptick in demand for advice on corporate governance, as CSR trends become more prevalent.

In the financial sphere, firms are being engaged to advise on increasingly sophisticated transactions – deals that would in the past have been led by international banks and governed by New York law are now frequently spearheaded by regional banks and subject to local law, and Guatemalan companies are also becoming more active in the international capital markets.

Multilateral development agencies are also playing a prominent role in financing transactions in Guatemala, with a strong emphasis on the development of infrastructure projects. Guatemala has historically lagged behind many other Central American countries in terms of the construction and improvement of transport infrastructure, but this is a key priority of the new government. The country’s first PPP, the expansion of the Escuintla-Puerto Quetzal highway, was approved in 2021, and although the project has faced considerable delays, this has led to increased interest from investors.

There have also been signs of growth in the energy sector after a decline in development in recent years – while investors remain wary of hydropower and mining projects (due to ongoing disputes over environmental damage and lack of consultation with the indigenous population), solar, wind, geothermal and hydrogen projects have attracted interest from investors, not only from the US and Latin America but also from Europe.

In the dispute resolution field, arbitration continues to gain popularity, particularly in the energy and construction spaces, as the court system is still affected by delays and dogged by concerns about corruption – although there is hope that a new series of elections of Supreme Court and Court of Appeal judges, to take place in October, will improve transparency and trust in the system.

Turning to the legal market, regional heavyweights Alta QIL+4 Abogados, Arias, Consortium Legal, Mayora & Mayora, S.C., BLP and Aguilar Castillo Love remain the key players, alongside prominent full-service domestic firms Legalsa, A. D. Sosa & Soto and Carrillo & Asociados (which is particularly renowned for its litigation practice).

Palomo Abogados (a well-known name in the insurance and maritime spheres), Alegalis (a member of the regional LEGIC alliance) and Bermejo & Bermejo also stand out on the domestic front, while other Central American firms with a strong presence in Guatemala include Lexincorp, CENTRAL LAW and Lex Atlas, along with international firm Dentons. In addition, IP specialist Ideas Trademarks & Patents, which has offices throughout Central America and the Caribbean, recently entered the Guatemalan market.

The market is also home to a number of notable boutiques, including Clarity Law (which has a strong corporate and banking offering), Estudio Chávez Bosque S.A. (a go-to for dispute resolution), white-collar crime specialist García-Merlos & Asociados, LegalPlus (which focuses on the venture capital, start-ups and technology spaces), and IP practices Viteri & Viteri and Saravia IP.

Since the conclusion of research, A. D. Sosa & Soto has announced its merger into Costa Rica's Tactic Legal to form a new regional firm that also has offices in El Salvador (led by Jesús Fernández and Jorge Gutiérrez - both formerly at Verum) and Honduras (led by Jorge Colindres, Amilcar Ramíez and of counsel Denis Hércules); the new operation will retain the name Tactic Legal.