Lao People’s Democratic Republic remains one of the most underdeveloped countries in Southeast Asia. But according to the Asian Development Bank (ADB), the Lao economy is poised for growth, with its gross domestic product (GDP) rising by 6.8 percent this year and 7.0 percent in 2017, thanks to strong performances in several sectors including construction, services and electricity exports.
The Lao legal market is also in the developmental stage, being relatively small compared to neighbouring countries such as Thailand, Vietnam and Myanmar. The number of legal professionals in Laos is also small. As ZICO Law Laos managing partner Aristotle David pointed out, “There are only about 188 lawyers in the whole of the country that are members of the Lao Bar Association, and most are not practicing law.” In addition, “the majority of Lao law graduates gostraight into the government without giving any thought of practicing as a lawyer in the private sector,” said Kate Baillie, country manager of Arion Legal Laos.
OPPORTUNITIES
Vientiane-based ZICO Law Laos and Australia-headquartered Arion Legal are among the key law firms that operate in Laos. Baillie notes, however, that the legal industry is opening up. “As the Lao economy continues to expand, largely off the back of resource development and a burgeoning middle class, we have noticed an increase in the number of foreign and local law firms being established to meet local market needs.”
Despite the limitations of the Lao market, most of the legal work focuses on natural resource development and infrastructure projects, according to Baillie. She also observes that as the country gears up for more visitors in connection with the ASEAN Plus 3 (APT) forum, transactions related to industries such as tourism, airline and hotel and mall development as well as the special economic zones, are on the rise.
In addition, to meet the increasing demands of various businesses in Laos, “there is significant growth in the services industry, including financial services, accounting and insurance, IT, recruitment and human resources development,” shared Baillie.
MARKET GAPS
David says that while “international law firms [are] beginning to set a foothold in the country” as they anticipate growth in Laos and the rest of Southeast Asia, “the availability of local legal talent is very difficult in terms of securing an English-speaking lawyer, particularly [one] with legal experience.”
Moreover, Baillie points out that because of problems with the Lao education system, firms have to make considerable investments in training local lawyers to meet international standards. However, after they get the training they need, “it can be difficult to hold onto such lawyers due to the highly competitive labour market for skilled Lao lawyers,” she said.
As such, foreign attorneys and global law firms that have foreign language capabilities and legal experience in international matters such as foreign direct investment and project financing are filling this gap in the market. Many of the newer firms tap “fly-in fly-out foreign lawyers”, observes Baillie, while the more established firms “maintain permanent, on-the-ground teams of foreign and local lawyers,” giving them a competitive edge.
However, foreign attorneys based in Laos are also in short supply, as “it can be difficult to find lawyers who are willing and able to relocate and stay in Laos for an extended period,” added Baillie. Another complication is how the “huge vagaries” of the Lao legal system and its inconsistent interpretation and implementation “can prove very frustrating for lawyers who are used to operating in more transparent and straightforward jurisdictions, which can lead to low retention rates of foreign lawyers,” she continued.
In addition, some foreign firms are hampered by their inadequate grasp of how “Lao cultural and political forces shape the legal and business sectors,” said Baillie. She recounts how some firms have tried to enter the Lao legal market “by applying the same marketing strategy and firm structure that they use in their offices in Thailand, Vietnam or Cambodia.” But after six to 12 months, they fall apart because they fail to understand “the importance of forging and maintaining positive interpersonal relationships within the relatively small business community and government offices” and train their employees accordingly.
HOPES AND CHANGES
According to David, the Lao government is taking steps to remedy the aforementioned market gap, beginning with the recently approved amendments to the Law on Lawyers – the main legislation that governs legal practice in the country. He adds that the amendments include a provision aimed at regulating the registration of foreign lawyers as well as another requiring that Lao lawyers be able to speak a foreign language such as English. The latter is designed to help Lao lawyers develop their ability “to handle legal matters by foreign investors and to be competitive with other countries.”
“There is a need to improve legal education by having courses which address international legal trends and issues and training legal interns on critical legal analysis and writing,” suggested David.
Baillie also cited how Lao legislators are currently revising the Investment Promotion Law “to improve market access for foreign investors” by lifting some barriers such as high capital requirements as well as the possible “introduction of transparent bidding and tender processes for large-scale concession projects.” Nothing is certain, however, until the National Assembly approves these changes as expected in December.
