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The socialist agenda of Hugo Chavez has not won many converts from the legal community. Many lawyers report a decrease in opportunities, as nationalisation, over-regulation, and flat-lined investment has quashed private endeavour....

The socialist agenda of Hugo Chavez has not won many converts from the legal community. Many lawyers report a decrease in opportunities, as nationalisation, over-regulation, and flat-lined investment has quashed private endeavour. "People are just trying to survive," says one attorney, complaining about the heavy-handed policies of the socialist leadership. "The government needs to work with the private sector."

"Expropriation is always a threat to many of our clients," says one lawyer. "It's a general concern for our country." Exemplifying the issue is the number of ICSID claims increasingly being filed against Venezuela by companies seeking to be reimbursed. One attorney reports that there are now 15 ongoing arbitrations against Venezuela.

Under the constant threat of nationalisation, private businesses have fled the country, if they have not already been nationalised. But practitioners could not predict which industry would be next, as there seemed to be no way to properly forecast the government's plans. "It's totally unpredictable," says one attorney. "It depends what the king says, the king being the President."

Without being able to adequately plan business, private economic activity has slowed to a trickle. The "best source of work is investment, but it is non-existent," says one partner. "People are frightened to invest."

That lack of investment has compounded the country's economic problems. "Substantial reduction in foreign investment actually has created disinvestment," says one practitioner. "Businesses are not in expansion mode, [they are] basically in survival mode." The effect on the legal market has led to a dramatic reduction of M&A work over the years, with only indirect investment feeding new work.

Beyond nationalisations, the government has also tinkered with other aspects of the economy, and in the opinion of one attorney, the continual parade of regulations has choked markets. "Capital markets have been wiped out," says one partner. "There is no such thing in Venezuela. The brokerage houses have disappeared."

The Venezuelan parliament passed stiff new banking regulations at the end of 2010 that require a percentage of profits to be given to community groups every six months, according to a Reuters news report. Additionally, the law allows Chavez to take over institutions he deems 'problematic'. The new regulations did not sit well with practitioners. "The banking sector has been affected by new legislation," one says. "It represents additional evidence of the micromanagement and over-regulation. The oversight is beyond comprehension."