Jon Robins examines Jersey’s and Guernsey’s legal markets and finds firms setting aside traditional divides to set up offices on both and offer a true Channel Islands service


Island hopping appears to be very much in vogue this summer, at least for lawyers on Jersey and Guernsey. The happy coexistence of the somewhat sedate legal markets on the Channel Islands has suddenly sprung to life. Ozannes recently announced that it will become the first Guernsey law firm to launch an office in Jersey. Meanwhile, Jersey rivals Mourant du Feu & Jeune and Bedell Cristin both announced their intentions to do the reverse trip and move into Guernsey. At the same time, Bailhache Labesse has been looking further afield and will link with Bermuda’s Appleby Spurling Hunter in a transatlantic merger of offshore firms. This will give the Jersey a firm foot in four of the world’s leading offshore centres: Bermuda, the British Virgin Islands, the Cayman Islands, and Jersey.


While mainlanders tend lazily to clump the Channel Islands together, they are two very separate legal markets for two different British Crown dependencies. ‘Most people regard them as just “the Channel Islands”,’ observes Russell Clark, a partner in Carey Olsen’s corporate and fiduciary group, the firm with the largest presence on both islands. ‘The subtleties of the differences between the two are lost on most people. They expect that if you’re a “Channel Island lawyer”, then you can provide “Channel Island advice”.’


So what are the main differences between the two jurisdictions? For a start, they have their own legal systems. ‘Our heritage has common roots insofar as we were both parts of the Duchy of Normandy, but soon after we were independent, from 1204, and the islands went their own way,’ explains Mr Clark, a Jersey native. ‘I would liken the difference to Lancashire and Yorkshire – but with real animosity.’ He quickly adds, from a commercial point of view, that there has always been ‘friendly rivalry’ between the two islands. ‘When it comes to business, if it’s in the interests of the others to work together, we will,’ he says.


Carey Olsen managed to overcome inter-island tensions successfully three years ago to merge two practices, Carey Langlois and Olsens, to create the largest law firm in the Channel Islands, serving both Jersey and Guernsey, with more than 330 staff. Other law firms are building up a presence on both islands; unlike Carey Olsen, they have followed the model of a full-service main office on one island, plus a limited specialist practice on the other. Are they missing a trick then for not having a sizeable presence in both centres?


‘There are a number of financial institutions that are present now in both places and our major clients in Guernsey wanted us to offer legal services in Jersey, and vice versa,’ explains Mr Clark.


At the beginning of the year, Jersey’s Mourant du Feu & Jeune opened the doors of its new Guernsey legal practice. Initially, it plans to specialise in niche areas: international finance, private equity, property and hedge funds. It will be led by Darren Bacon, who joins Mourant from Carey Olsen.


A few weeks later, Bedell Cristin (part of the Bedell Group) announced its plans to open a Guernsey office. Managing partner Richard Gerwat reflects that ‘there are many similarities between the Jersey and Guernsey markets, but there are also important differences’. The biggest differentiator is the type of work, he reckons.


‘Guernsey has a very developed finance industry in captive insurance and Jersey has the much more developed industry in capital markets, special-purpose trust structures and securitisation. That kind of business is done in Guernsey, but not in the same volume.’


Mr Gerwat says there is much common ground on the choice of investment fund structures, but the range of products differs. He points to the 1998 Edwards report, which reviewed financial regulation in the three Crown dependencies (Jersey, Guernsey and the Isle of Man) as having created ‘a fairly level playing field in the regulatory environment in which we all operate’.


John Bisson, senior partner of Bailhache Labesse, points out that the Jersey legal market remains polarised between those firms that practise ‘almost exclusively indigenous Jersey law’ and those that, like his, ‘to a material extent deal in an offshore law’. He adds: ‘We are a full-service law firm that focuses on offshore work and the globalisation of the offshore market.’ Clearly, his firm is seeking to position itself not just as a ‘Channel Islands firm’, but as part of a worldwide offshore practice, following its merger with Appleby Spurling Hunter.


What is the business case for expanding across the Atlantic? ‘The strength of being in multiple jurisdictions is that you can offer clear, dispassionate advice about why it might be better to have one business structure in jurisdiction A and another in jurisdiction B,’ he replies. ‘If you can only provide a service in jurisdiction A, then you’re likely to suggest A is better.’ The combined group will be known as Appleby Hunter Bailhache and will have a worldwide staff of nearly 600 employees, including 44 partners.


‘The offshore world is getting smaller and the major players are becoming ever more international in their scope,’ reflects Bedells’ Richard Gerwat. He sees his firm’s latest move to open offices in Guernsey as part of his firm’s ‘long-term growth strategy’ responding to client demand. The Bedell Group opened offices in Dublin in 2003, Geneva in 2004 and London late last year.


So how do the Channel Islands rate among the other offshore jurisdictions? ‘We win a lot of business on the basis of the comfort factor,’ he answers. ‘The fact that we are politically stable, near to mainland UK, and that we understand the European context and are in the European time zone helps.’


Channel Islands lawyers are adamant that the international pressure to clamp down on money laundering has had little impact on business. ‘We have various regulators on our backs now, but I do not think it has made a big effect,’ reckons Matthew DesForges, financial operations director at the Guernsey firm Collas Day, which has 45 fee-earners. ‘Certainly in Guernsey, [anti-money laundering concerns] have been there long enough for it to become embedded and best practice.’ He insists that the regulatory regime does not deter those legitimate clients. ‘It has a positive effect in that it shows that the jurisdiction takes the issue seriously,’ he says. ‘Occasionally, it can get heavy-handed, but overall the balance is OK. It works in our favour.’


Ozannes, one of Guernsey’s largest and oldest law firms, is making the short but nonetheless historic jump by becoming the first Guernsey law firm to open in Jersey later in the year.


‘Our big clients are organised in both jurisdictions and they expect us to be, too,’ comments managing partner Robert Shepherd. ‘Instead of getting a Rolls-Royce service from us, they have been prepared to get a Rover service from another firm, simply because that Rover is in both jurisdictions.’


Which big clients typically have a presence in both Jersey and Guernsey? He names Kleinwort Benson, Barclays, Lloyds, and HSBC, as well as small institutions like the trust company Walbrook. Collas Day has ‘no immediate plans’ to make such a jump. ‘But it is definitely something we would consider and haven’t yet ruled out,’ adds Mr DesForges.


Why has it taken so long for a Guernsey firm to have a presence in Jersey then? Mr Shepherd points out that ‘one of the oddities’ of offshore firms is that they are ‘where onshore firms were 15 to 20 years ago’. The culture of the firm is very important and partners do not want to dilute it, he adds.


For solicitors in England and Wales who fancy relocating to the Channel Islands, they should bear in mind that there are a couple of hurdles. Mr Bisson, who is President of the Jersey Law Society, points out that to become either a Jersey solicitor or a Jersey advocate means taking more examinations.


‘Historically, they are considered to be pretty tough and it is by no means a rubber-stamping process,’ he says. ‘The underlying law is materially different.’ Plus, Guernsey is a fused profession and solicitors will also have to re-qualify as advocates. There are also strict controls on the housing stock, and incoming lawyers have to apply for housing licences, which tend to be for a maximum of five years.


Mr Gerwat says the hardest thing for a firm in expansionist mode is finding the right people. ‘If you have someone who is 45 years old and has been qualified for 15 to 20 years, then having to re-qualify is a pain in the neck,’ he says.


‘But generally, [new recruits] are in their early 30s and they are all fired up and wanting to maximise their career progression, and so it’s fine.’


Jon Robins is a freelance journalist