December 2018 Handle with care | Page 8

News Booming Colombian tech sector driving demand for M&A and tax advice Law firms training lawyers to give them the technical and legal skills to cope with the demand being generated by the $6.8bn industry Colombia’s booming technology sector is generating a substantial increase in M&A, regulatory, tax employment and competition work for the nation’s law firms. Statistics from the International Data Corporation showed that the country’s IT industry grew five-fold during the period 2003-15 and is now valued at $6.8 billion, according to some estimates. Initiatives such as the government’s Vive Digital programme – which aims to increase access to broadband internet services – have led to law firms providing lawyers with additional training to meet the demands of the digital economy. “Internet penetration in Colombia has substantially increased, largely thanks to Vive Digital”, according to Enrique Gómez Pinzón, a partner at Holland & Knight in Bogotá. Indeed the Colombian government is committed to using technology to unite the country’s disparate communities, says Sergio Michelsen, partner at Brigard Urrutia. “The Colombian government recently reaffirmed its commitment to promoting technology as an instrument for bridging the digital gap between urban and rural populations, Sergio Michelsen, Brigard Urrutia 6 Diego Cardona, Philippi Prietocarrizosa Ferrero DU & Uría (PPU) and the wealthiest and poorest citizens,” he says. In addition the Colombian Free Trade Zone regime (which, includes ‘Special Economic Zones for Exports’ in the cities of Cúcuta, Buenaventura, Valledupar, Ipiales and Tumaco) has played a large part in attracting foreign investment to the country’s IT sector, says Michelsen. He adds that Colombia’s technology sector is also attractive because there are few barriers to entering the market, as well as incentives for companies that establish operations in the country and “tax benefits for those adopting digital technologies”. Michelsen adds that such an environment is exemplified by the Colombian Free Trade Zone regime, which is “the most successful mechanism in attracting foreign direct investment for IT services projects”. He also says that Colombia’s highly qualified workforce is another factor that is encouraging foreign investors. “Colombia has been ranked as having the highest skilled workforce in South America for IT services,” Michelsen says, which has resulted in significant investment from tech giants including Microsoft, Facebook, Amazon, Apple and Google. There is significant interest from investors in Mexico, Peru, Chile, China, Japan, as well as a number of European countries, according to Gómez Pinzón. He • THE LATIN AMERICAN LAWYER • December 2018 adds that this trend is generating a wide range of opportunities for law firms in different practice areas. “There are companies looking to invest directly in the country, which generates M&A, regulatory, corporate, taxation, labour, intellectual property and competition work,” says Gómez Pinzón. “Companies are also increasing their exports to Colombia, which generates international trade work.” Unsuitable regulatory framework Meanwhile, Diego Cardona, partner at law firm Philippi Prietocarrizosa Ferrero DU & Uría (PPU), says that, in addition to traditional businesses undergoing digital transformation, new business models, products and services are being developed that operate exclusively on a technological basis and the implications, from a legal standpoint, can be complex. “These new business models and digital interactions present legal challenges that traditional regulations may not be fully equipped to address,” Cardona explains. “Regulations in Colombia are progressing and adapting to the digital economy, but clients still face many legal challenges in adapting to the digital landscape.” In addition, law firms are undergoing a process of digital transformation, and are consequently devoting resources to training lawyers in the technical and legal skills required to respond to the challenges presented by the digital economy, says Cardona. Michelsen adds: “Law firms are not just strengthening their capabilities, but also forming task forces by industry – such as fintech, intermediation platforms, social networks and OTT services – to meet specific client needs – they are integrating different practice areas so that knowledge can be combined and leveraged in a more efficient manner.” www.thelatinamericanlawyer.com