Hunter andHunter Responds to Statement in House
Attorneys-at-Law, Hunter and Hunter, hasissued the statement below.
"Hunter & Hunter makes the followingstatement in response to comments made yesterday in the LegislativeAssembly by Mr Gilbert McLean regarding measures taken by thefirm in response to the government's proposed introduction ofhuge taxes on law firms.
"Hunter & Hunter is the oldestlaw firm in the Cayman Islands, and has always been the most Caymanianof the major firms. It currently has 21 attorneys, with four morestarting in the New Year and offers made, subject only to workpermits, to two more. The firm's planning is based on having 27attorneys by Easter 2002. We are currently training three prospectiveCaymanian attorneys and sponsoring a further five through theirlegal studies.
"The proposals impact firms of thesize of Hunter & Hunter far more severely than most otherfirms. The recent 'concessions' make no difference at the 26+level and actually increase the fee by $10,000 at the 21-25 level.
"On a per lawyer basis, Hunter &Hunter will be paying two to three times as much as Maples andCalder (depending on whether overseas offices are included inthe total) under the proposed taxes, as shown in the graph below:
"Hunter & Hunter employs 34 Caymanians,and spends almost $ 1/4 million on sponsorship and training ofCaymanians every year.
"Hunter & Hunter has, unlike someof its competitors, always had a philosophy of serving the localcommunity, by undertaking legal aid work, pro bono work and generallegal matters for local individuals, and not just large-scaleinternational commercial work. As a result, we are less profitablebut we regard this as our way of being of service to the community.Regrettably, as a result of the introduction of a very significanttax on law firms, this policy will now have to be reconsidered.
"Despite a significant slowdown infee income over the last several months, and concerns over thecollapse of Enron (one of the firm's major clients) the partnersof the firm had resolved at a meeting on 5 December to pay discretionarybonuses according to the firm's performance-related bonus scheme,and to increase salaries for support staff for 2002, in some casesby over 10%.
"The reversal of that decision wastaken with great reluctance, solely because of the massive newtaxes that the Government has decided to levy in a manner thatis (presumably unintentionally) severely discriminatory, penalizingthis firm to a strikingly greater extent than any other.
"The firm (in other words the fiveindividual partners) will have to find some US$ 1/2 million, forwhich it had not budgeted. Unlike firms that practise exclusivelyin lucrative international work, we cannot simply pass on thecost to our clients, we are constrained by what our market willbear.
"In the circumstances that we now face,the firm is forced to implement cost-cutting measures. These willonly offset in part the impact of the new taxes. We are not alonein being forced to adopt cost-cutting measures other businessesless severely impacted than Hunter & Hunter have also reducedor cancelled bonuses and/or pay increases.
"Having been forced into cancellingbonuses and pay rises, we took the view that it would be inappropriateto hold a lavish party at Grand Old House. We are still holdinga Christmas party for our staff, but at the home of one of thepartners.
"Our staff fully understand the reasonsfor the decisions we have had to make, and we are grateful fortheir support. Our Caymanian support staff on their own initiativepresented a petition to the Governor protesting against the Government'streatment of this firm, pointing out its long record of treatingits staff well.
"We find the remarks made yesterdayby the Honourable Member regrettable, particularly since he wasnot in possession of the facts.
"Hunter & Hunter fully acceptsthat the Government needs to resolve a serious financial crisis.We only ask that any additional revenue be raised in a fair andnon-discriminatory manner, and in a way that does not distortthe market for legal services, stifle competition or penalizeexpansion of the smaller and medium-sized firms. Particularly,we have pointed out to the government that the present proposalsdeter firms from hiring young Caymanians, especially if to doso will catapult the firm into a higher tax bracket.
"We commend and support the proposalof the Caymanian Bar Association, that Government simply dividethe $2.5 million that it seeks to raise from the accountancy andlegal professions by the total number of expatriate lawyers andaccountants and add the resulting figure to the work permit fee.This would raise the same amount of money fairly, and moreoverwithout the need to introduce a whole new regime and the administrationto go with it. It would also be more reliable income for the Governmentbecause it would not be prone to tax-motivated restructuring offirms of the kind encouraged by the ill-considered proposals currentlyon the table."