In a major shakeup in Central America, global law firm Dentons announced a proposal to open offices in Central America through a combination with Muñoz Global. The partners of Muñoz Global have split from leading firm Arias & Muñoz, which will now be known simply as Arias. Dentons is not technically the first firm to expand into Central America. International firm Littler also has offices in Guatemala, Honduras, Nicaragua, Costa Rica, El Salvador and Panama. But Littler is focused on global employment and labor law, whereas Dentons has developed numerous practice areas, including financial and corporate work. Additionally, Littler is spread primarily throughout the Americas (with a few offices in Europe), while Dentons has offices in over 50 countries and five continents. Dentons is also the world’s largest law firm, based on number of lawyers.

Arias & Muñoz came to be when FA Arias merged with Muñoz & Muñoz in 1998. Arias & Muñoz was Central America’s first regional law firm, when the partners developed a practice in six Central American countries (Nicaragua, Panama, Costa Rica, Guatemala, El Salvador and Honduras). The regionalization of the firm sparked a trend in the market, and it is now common to see regional firms in Central America.  

José Antonio Muñoz, co-founder of Muñoz Global, will manage the Costa Rican office of the firm. The firm will also have offices in Panama and Nicaragua. Gisela Alvarez de Porras who acted as managing partner of Arias & Muñoz’s Panama office will now act as managing partner of Muñoz Global’s Panama office. (Porras left Arias & Muñoz in April 2016 to serve on an Advisory Committee of Independent Experts for the Government of Panama to review financial practices.) Pedro Muñoz, co-founder of Muñoz Global, will supervise the launch of the Nicaragua office, but the partnership is yet to be announced.

Dentons established its first offices in Latin America in November 2015, when it combined with Colombia’s Cardenas & Cardenas and Mexico’s López Velarde. “I think our challenges in entering into Central America were the same sort of challenge we face anywhere around the globe: identify top firms that share our vision and our values,” Jorge Alers, Chief Executive Officer for Latin America and the Caribbean, said. Examples of such values include being “proactive not reactive” (being enthusiastic to adapt to a changing market) and “polycentrism” (the idea that talent is everywhere and shouldn’t be limited to or centered on one particular place). Alers expressed that Muñoz Global shares Dentons' vision and values.

“Given the interconnectedness of the economies of Costa Rica, Panama and Nicaragua, we see real opportunities to serve clients further through more intra-region work as well,” Elliott Portnoy, Global Chief Executive Officer of Dentons, said in a statement. Although synergies between Central American countries are frequent — the small size of the countries combined with their similarities lead to a lot of cross border work — each country has its unique economy and legal climate. For example, regional firms are frequent leading players in Costa Rica and Nicaragua, but due to the uniqueness of the Panama economy and local firm reluctance to regionalize, regional firms in Panama have not taken off at the same level as they have in other Central American countries.

Still, Dentons remains optimistic in regards to its ability to generate a significant market share. When asked if success in Panama would be an issue, José Antonio Muñoz indicated that he did not think that Panama had greater barriers to success than the other Central American countries.

Although the firm will start off with a physical presence in Costa Rica, Nicaragua and Panama, the partners do not feel limited to those countries. “We envision building Dentons Muñoz across the entire Central American platform. We will soon have a presence throughout six Central American nations as well as Belize and possibly other important jurisdictions in the Caribbean,” Muñoz said.

Given the partners’ involvement in the regionalisation of Arias & Muñoz, the Muñoz Global lawyers are no stranger to starting a trend in the market. “I think the region has been reticent to explore the possibility of combining forces with an international law firm, and this is why I think the combination of Dentons gives us the opportunity once again to be a pioneer,” Muñoz said, in response to a query about whether we can expect to see other firms follow suit. Still the partners acknowledged that the future is unwritten. “Whether regional firms will combine into other global firms is difficult to predict,” Alers added. 

Arias will maintain its six offices, and with the exception of 8-10 lawyers from Costa Rica, will not lose any lawyers as a result of the move. The Costa Rican office still holds over 20 lawyers, and Carolina Flores and Vicente Lines serve as managing partners.

While the Muñoz Brothers, were interested in combining with Dentons, Arias did not feel this was the right decision for them. “We receive referrals from a lot of firms in Europe the US and Asia, and if we decide to merge with an international firm we are very sure the rest of the international firms will not send us work, and we highly regard the relationship we have developed with all these firms throughout many years,” founding partner Amando Arias explained. The firm plans on redistributing equity, previously owned by the Muñoz brothers to every partner at their firm. Arias, as a firm, also plans on developing practice areas such as compliance, anti-money laundering, anti-trust, and consumer protection.

The combination of Dentons and Muñoz Global is still tentative and will require voting from partners. The voting processes are expected to be finished by December 5.