Dimensions of Bermuda’s Legal System
Bermuda’s legal environment serves as the practical application of English common law, a system that has shaped the legal systems of many Commonwealth countries. The courts and the legal infrastructure in Bermuda are grounded in centuries of British legal tradition, while also being uniquely Bermuda. Under the supervision of the Chief Justice and with the assistance of the Supreme Court and the Court of Appeal, the Bermuda legal system resolves not just the commercial disputes that are inherent to its economy, but also actions concerning real property, land registration, insolvency , family matters and criminal law.
Lawyers in Bermuda tend to be generalists, though some lawyers’ practices are highly specialised. The local Bar has a relatively small membership, which naturally creates an environment where a large proportion of lawyers are widely known to one another, allowing for a level of comfort with the local bar. The majority of the lawyers in private practice on island are from England, Canada or the United States and many have professional connections with leading law firms around the world. All lawyers in Bermuda are members of the Bar of England and Wales and are therefore bound by Bar rules and practices.
Prominent Practice Areas Among Bermuda Law Firms
Bermudian law firms have a range of primary practice areas. These areas of legal expertise are essential to the functioning of both local and offshore businesses and continue to form the core of legal and advisory services provided by the island’s leading law firms.
Corporate Law: Corporate law is an essential practice area for Bermuda’s economy. The vast majority of international insurance and reinsurance enterprises run their operations out of Bermuda. As such, over 90% of Bermuda’s GDP is garnered from international business – with insurance operations making up the lion’s share of the revenue. As global insurance leaders increasingly shift their operations to Bermuda, so too does the burden of corporate law and restructuring, both of which are requisite to forming a legal base in Bermuda.
Insurance Law: Like corporate law, insurance law is essential to the economy of Bermuda. The majority of law firms in Bermuda have a specialized practice in the insurance sector, as the island’s corporate reputation is founded on insurance and reinsurance opportunities. Directly and indirectly, insurance and reinsurance sectors drive the attentions of local Bermudian law firms.
Trusts: For preference, offshore trusts are viewed as highly lucrative tax-advantageous investment strategies. Trusts are subject to a low rate of taxation, while dividends and capital gains generated in the separate investment trust are generally not subject to Bermudian income taxes. Businesses intending to make use of offshore trusts will find Bermudian law firms to be experienced in establishing offshore trusts and reaping the benefits of such legal establishments.
Maritime Law: Given its relative geographic remoteness, maritime law is also an important practice area for Bermudian law firms. Going hand in hand with maritime law, admiralty law is also covered by the majority of Bermudian law firms. Ship and yacht registration is a common practice offered by local law firms, as is dispute resolution under maritime law.
Top Bermuda Law Firms
Bermuda is home to numerous law firms with specialties that cover the breadth and depth of legal services. At the top of the list are a handful of leading firms that boast more than 100 years of experience on the island. These include:
Conyers. The Bermuda branch of this global firm was established in 1928. It is best known for its corporate and finance work and has received the Law Firm Awards’ "Highly Commended" status in the European Insurance Awards for the last two years for its work for insurers. Conyers is also recognised as outstanding in restructuring, admiralty, aviation and tax law.
Appleby. The Bermuda office of this firm opened its doors in 1896. It has a strong finance team and is notable for its resilience in the previous financial crisis. Appleby served as Bermuda counsel in the Bermuda Commercial Bank IPO in 2009. Over the last two decades, the firm has worked on more listings on the Stock Exchange than any other firm.
Walkers. This firm opened its Bermuda office in 1995. While it has one of the smaller headcounts on island, Walkers has a large litigation team with significant experience in trusts. Walkers carries out a lot of its management and litigation work as part of its wider practice across its global offices.
A new generation of leading players on the island
While these firms dominate, in terms of size and reputation, they face competition from smaller firms who have been reshaping the landscape. In recent years, several new firms have entered the top tier. In addition to this, a number of smaller firms have grown bigger by absorbing medium-sized firms and teams.
MJM. This firm, which opened in 1982, rivals the largest firms in the amount of work it does. Its pieces of work include acting as Bermuda counsel for around 1,000 new listings, including some of China’s high-profile IPOs.
Kirkland and Ellis. This US firm entered the Bermuda market via a dual partnership with Conyers. The two firms maintain a common ownership through a parent company, name and brand. Their arrangement creates a powerful offering for capital markets and private equity clients on both sides of the Atlantic.
Mason Webster. This firm opened in 2009. It has already made it to the big league by absorbing the litigation team from the former Kendall Freisen under the leadership of veteran litigator, Michael Kendall. The firm has expertise in insurance, reinsurance, transfer of reinsurers’ portfolios and litigation. It has made several headline-grabbing insurance moves in recent years.
In the next section, we take a look at what drives the lawyers of these leading firms. We’ll look at their areas of focus, career paths and inspirations.
Selecting a Law Firm in Bermuda
Choosing the right Bermuda Law Firm involves careful consideration of several factors. As Bermuda is a small jurisdiction, the choice of a law firm can have a significant impact on the outcome of legal proceedings. Potential clients should therefore always check to see whether the law firm they are considering has experience and expertise in their particular legal issue. Returning clients to a law firm are also a key indicator of a Bermuda law firm’s quality. While previous clients may have declared their own confidentiality to be waived, it may be advisable to ask for the names of those prior clients in order to determine how long the law firm has been in business as well as who its other and returning clients are.
A reputation for trustworthiness is critical when choosing a Bermuda law firm. Historically, Bermudians have had a very conservative approach to business matters. Their tendency is to build a business matrix without taking any risks. This tendency is often true of transactions which would involve the use of law firms. Bermuda has a strong reputation for confidentiality and it is important that an attorney or law firm treats professional and confidential information with the due diligence required to maintain that reputation for confidentiality . If a Bermuda law firm has been accused by former clients of being untrustworthy, then it may not be the right choice for either private and public cases or any corporate practice.
Before deciding on a Bermuda law firm there are several issues which should be considered.
• Check the law firm’s website to learn about its experience and expertise in the area(s) of law that are relevant to your inquiry.
• Check what they actually say about themselves on their website.
• Call the law firm to find out whether or not it is a good fit for you or your business. If you are unable to speak to someone personally, e-mail them and see how quickly they respond to you and how well they address your concerns.
• Make an appointment to visit the firm in person and see if your first impression of the firm matches what they say about themselves on their website. For example, do the team members seem organized and professional or are they more relaxed and casual? Remember, whether you are an individual or a corporation, you want to work with a firm that is more serious rather than being more concerned with their social lives. If the firm you are considering does not seem to be professional, scrupulous and highly competent then it may not be the right choice.
How Bermuda’s Regulation Impacts Law Firms
Bermuda’s regulatory environment has a significant effect on law firms and their clients. Law firms on the island are in a position to provide their clients with advice on how to navigate the complex legal landscape. This includes up-to-date counsel on licensing requirements and compliance issues, as well as how to ensure that all business operations comply with Bermuda’s rules and regulations.
Bermuda regularly amends and modernises its laws in order to keep pace with developments in the global business landscape. These changes range from simple improvements to the laws to full-scale reforms of existing regulations and new legislation altogether. In 2018, a number of new laws were introduced in an effort by the BMA to further oversee the regulation of the insurance sector, which is largely responsible for the economy on the island. The major one in 2018 was the Insurance Amendment Act 2018, which implements a number of amendments to the Insurance Act 1978. The amendments introduced additional insurance supervision requirements relating to the economic substance of (re)insurer groups, including the requirement for insurance groups to submit an economic report, which focuses on governance structure, local substance, core activities, risk impact and solvency defence.
In anticipation of possible changes in global political attitudes to the free flow of insurance risk for Bermuda, the BMA continues to provide timely and consistent guidance on the requirements for Bermuda economic substance for insurers (including the CFO, CTO and other governing functions to be carried out from Bermuda, at least at the "adequate level" and the governance of underwriting and claims policies to be carried out by an approved Bermuda insurer). The BMA has also introduced a number of relevant guidance notes affecting the insurance industry, including the Insurance Guidance Note No. 1 of 2018 – Policies, Process, and Procedures for Licensing and Update Notifications, and Guidance Note No. 3 of 2018 – Insurance Business Transfer under the Segregated Accounts Companies Act 2000. These notes inform (re)insurers and (re)insurance group entities of Bermuda’s (re)insurance business licensing requirements and ongoing requirements. As with most larger law firms, the majority of legislation affecting our clients in Bermuda comes as part of the normal and necessary financial services reforms. However, there have been active changes proposed in recent years that could directly affect the management of many law firms in Bermuda. A current proposal to introduce the Limited Liability Partnership Amendment Act 2018 (the LLPA Act 2018) would amend the Limited Liability Partnerships Act 2008 (the LLPA Act) to allow for any limited liability partnership ("LLP") to adopt the status of a private limited company so long as certain conditions are met. A quick look at the definitions in the LLPA Act makes it clear that any LLP wishing to adopt its status as a private limited company will be in for a lengthy process requiring a due diligence review and approval process by the Bermuda Monetary Authority ("BMA"). Any new partner may only be admitted if they are approved by the BMA. The LLPA Act 2018 also permits a private limited company to adopt the status of an LLP so long as certain conditions are met. The focus of the BMA and law firms will no doubt be on the changes to the LLPA Act that apply to LLPs. There are no draft rules or guidance released as yet, but any law firm with an LLP structure will no doubt be keeping a close eye on this proposed change and how it might impact its business.
Trends in Bermuda Legal Services
Bermuda law firms are facing challenges due to changes in global economic policies of the US and UK, making it imperative that they quickly invest in technological tools and services that help them adapt to new regulations imposed upon both local and global financial markets. Changes in UK and US tax policies will affect many industries that operate in Bermuda. Bermuda law firms should stay ahead of the curve by examining the international markets for new legal tools that can help keep ahead of the competition. Bermuda is home to a number of leading law firms but collaborations between law firms and technology companies, like most industries, will separate leaders from laggards . Bermuda law firms can benefit from client relationship management systems, cloud-based document management, and e-discovery. Law firms will need to evaluate their current processes and operations in order to be able to invest in needed technologies. Bermuda law firms should invest in a strong online presence to provide the best level of service to existing and potential clients. A strong social media presence, email marketing programs, and content marketing will help Bermuda law firms raise their profile in the coming years.