Despite an April 2023 state of emergency declaration over coastal erosion, anxiety over the Supreme Court’s third invalidation of the current document that governs land use and permits on the island (in March 2023), high inflation and the residual fallout from the devastation of Hurricane Fiona (which struck in September 2022), the IMF’s April 2024 projection placing GDP growth at –0.2%, in addition to a massive blackout in June 2024, a series of recent developments suggest potential for a more optimistic direction for Puerto Rico’s economic future.
In March 2022, the nation formally exited bankruptcy, following what was reported to be the largest public debt restructuring in US history. Stepping out of the shadow of over $70bn in debt, the country was finally free to repay bondholders, settle approximately $1bn-worth of claims by residents and local businesses, issue over $10bn in bonds and reimburse the public pension system up to $1.3bn.
In March 2023, Governor Pedro Pierluisi, addressing repeated power outages and rising energy costs, announced the approval by the US Federal Emergency Management Agency of microgrid projects to supply the entirety of the power to the island municipalities of Vieques and Culebra, both popular tourist destinations, in addition to an infusion of $100m in federal funds to create a voucher programme to cover up to 30% of the costs of installing battery-backed solar systems in the homes of residents. In February 2024, the US Environmental Protection Agency announced Puerto Rico would receive $63m in funding to bolster its drinking water infrastructure.
Such steps, combined with the unveiling of a new fiscal plan for a complete overhaul of Puerto Rico’s education, tax and infrastructure sectors by the federal control board that oversees the nation’s finances (in April 2023), a boom in manufacturing and an impending change in leadership with the November 2024 elections (Governer Pierluisi was defeated by Representative Jenniffer González-Colón in a June 2024 primary) indicates the potential for an upward economic trend, as reflected by the legal market.
In the corporate, commercial and banking space, respondent firms described increased activity in construction, as well as a more active fund formation market. In the energy, natural resources and environmental sphere, firms interviewed predicted an increase in major projects built with federal funding, specifically repairs on existing infrastructure. In the dispute resolution arena, firms described a post-pandemic rise in litigation relating to labour and employment compliance issues. Intellectual property teams predict the usage of AI increasing, due to the influence of larger markets, requiring the need for increased client data protection. In the tax space, respondent firms indicate the potential for an increase in solar and various renewable energy projects due to increased tax incentives.
In the legal market, full-service firms McConnell Valdés LLC, O'Neill & Borges and Pietrantoni Méndez & Alvarez LLP continue to dominate in most practice areas, although other prominent domestic firms include Ferraiuoli LLC (a vital force in the market in the IP space), Cancio Covas & Santiago LLP, Estrella LLC, Reichard & Escalera, Casellas Alcover & Burgos, P.S.C., Marini Pietrantoni Muñiz, LLC and Toro Colón Mullet, P.S.C. (a leader in matters relating to energy, natural resources and the environment). International firms DLA Piper Puerto Rico and ECIJA SBGB also have a strong foothold in the market.