By Vito Echevarría
President Barack Obama’s historic visit to Cuba in March, with CEOs Arne Sorenson (Marriott), Ursula Burns (Xerox), Daniel Schulman (PayPal), and Brian Chesky (Airbnb) in tow, is already having the desired effect — corporate America’s interest in the island is growing. But the embargo is still very much in effect, despite Obama’s recent easing measures, and this requires legal input.
“Your commercial, government affairs, and international trade compliance teams must be working together, partnering in meetings with potential customers and in building relationships with the (Cuban) ministries,” Kevin Cuddy, an international trade compliance officer with General Electric Co., told Corporate Counsel magazine in February.
For U.S. companies, it also means turning to legal experts. In recent months, U.S. lawyers who specialize in Cuba-related trade issues say they have their phones ringing off the hook with calls from companies big and small with plans to cash in.
“Despite the clarifying statements that OFAC has recently made about what can be done through the general licenses in the Cuban Assets Control regulations, companies are still trying to figure out what’s possible,” said José Gabilondo, who teaches law at Florida International University (FIU), in an email to Cuba Standard.
In terms of legal work, Cuba is a far cry from large markets such as China. Still, experts already see good business for lawyers and predict even more.
“Sanctions compliance and investment licensing (on the Cuban side) produce a trickle of legal work, but the potential market there for practicing foreign trade and investment law is orders of magnitude larger,” says Gabilondo. “That’s where the latent growth is.”The players
There are attorneys Pedro Freyre and Augusto Maxwell of the Akerman law firm in Miami, who have not only been advising their corporate clients on the ‘dos and don’ts’ of dealing with Cuba, but taking them on fact-finding trips to Havana.
Freyre, chairman of the international practice group and a partner at Akerman, said that companies once reluctant to deal with Cuba are now having a change of heart.
“Before, they worried about doing something that was not allowed,” he said. “Now, they are worried about being left behind.”
Among his clients are Airbnb and Pearl Seas Cruises, which plans to sail from Ft. Lauderdale to Cuba this Fall.
Akerman, after having risen seemingly out of nowhere in the Cuba business within just a couple of years, raised its international profile late last year, becoming the first U.S. law firm ranked by the UK-based Chambers & Partners guide for its Cuba expertise.
But competitors in Florida such as Holland & Knight, Greenberg Traurig, Broad & Cassel, or Foley & Lardner, are not far behind.
Responding to demand, more corporate law firms are setting up Cuba practices, such as Greenberg Traurig in Miami, which now has a “Cuba Working Group”. Akin Gump in Washington went as far as hiring a non-lawyer with strong Cuba credentials — Anya Landau French — to firm up its specialty in that area.
To shore up their expertise and services, U.S. law firms also recruit Cuban legal talent and seek connections to law firms in Cuba.
“There is a growing pool of attorneys licensed in the U.S. who also practiced law in Cuba,” says FIU professor Gabilondo. “That said, companies operating in a foreign market almost always need local counsel. Cuba will be no different. Even the U.S. firms angling for this market need to retain representation from the Bufete de Servicios Especializados, which coordinates legal advising in connection with foreign investment.”
Finally, some U.S. firms are riding the express lane to expertise by teaming up with European firms with many years of Cuba experience. Miami law firm Carey Rodriguez Milian Gonya formed a strategic alliance with Spanish law firm Díaz-Bastien Abogados in April, following New York-based McDermott Will & Emery, which partnered with Madrid-based Olleros Abogados last year.Good relationships in Cuba
But gaining a foothold in Cuba takes time, suggests FIU’s Gabilondo.
“Different firms have different motives for what they’re doing with Cuba,” he said. “Pedro Freyre at Akerman has long been interested in Cuban reconciliation, long before it became fashionable and potentially profitable to be so. The ‘Johnny-Come-Latelies’ have more commercial motives. (But) business is still very relational in Cuba, so that a history of dealing with the same counter-parties still counts for something. U.S. firms will have to work to build these relationships. It will probably be harder for firms that in one way or another supported sanctions against Cuba, as well it should be.”The issues
Advice ranges from obtaining specific licenses from the Treasury Department (OFAC) for commercial activities, to interpreting revised OFAC regulations such as setting up a physical presence, as well as fact-finding trips.
“Inquiries have run the gamut: Tour operators, technology companies seeking to take advantage of Cuba’s highly educated and low-cost labor market, sports promoters, and a restaurant chain,” said Matthew Feeley, shareholder of the Miami law firm Buchanan Ingersoll & Rooney PC.
He notes that lawyers who are working on Cuba-related trade issues are generating more billable hours for their firms. One example is corporate firm Jones Day in New York, which is currently assisting Major League Baseball (MLB) over OFAC-related issues. The firm is positioning itself for the day when MLB may work out a deal with Cuba that could result in more Cuban baseball players being drafted into its teams legally. Tom Schieffer, an ex-senior counsel of Washington law firm Akin Gump is also reportedly assisting MLB on Cuba-related matters.Beyond Miami and Washington
The buzz over U.S. business prospects with Cuba has also created a growing niche for Cuba-centric lawyers based in other U.S. cities. Brown Rudnick partner Adolfo García in Boston, a Cuban American, has recruited young Cuban talent Aynel Álvarez-Guerra, for instance, to expand the firm’s business.
Luis Alcalde, a Cuban American attorney with Kegler Brown Hill + Ritter LPA in Columbus, Oh., says his law firm has brought Cuban diplomats to Ohio in preparation of a trade mission led by a local Congressman. Alcalde has been working to end the embargo for nearly 20 years, and has advised various clients, including U.S. charter companies and Brazilian investors interested in setting up manufacturing facilities in the Mariel Special Development Zone. Because Alcalde is based in Ohio, he is well-positioned to offer Cuba-related advice to companies located in his state and nearby Illinois, Michigan or Indiana, he says.
“Just today, I received a call from a multinational that wants to meet to ‘discuss their Cuba strategy’”, he said. “The interest and demand is certainly growing.”