Not many people know it but the Cayman Islands are the world's fifth largest financial centre, with only New York, London, Tokyo and Hong Kong out in front. Some 600 banks, including 47 of the world's top 50, have operations on the islands, which are also home to the second largest captive insurance market after Bermuda.

Cayman has long been the offshore centre of choice for the hedge fund industry as well. At the end of December 2007, there were 9,413 regulated hedge funds with a net asset value of $1.38trn (£708bn). This represents 17% annual growth in the number of funds since 2001.

Further east in the Caribbean, the British Virgin Islands (BVI) are more of an emerging offshore jurisdiction. But they are still
very successful in their own right and, with more than 600,000 companies registered, promoted as the world's leading offshore corporate domicile.

The success of these two offshore centres – and the legal work it has generated – has prompted law firms there to expand rapidly in recent years, through a mixture of strategic moves and lateral hires.

Cayman law firm Quin & Hampson, for example, merged with offshore giant Mourant du Feu & Jeune in July 2007. In a sign of its ambition, the combined firm then went on to hire finance partner Richard de Basto from magic circle firm Allen & Overy this year. Walkers meanwhile bolstered its BVI practice in March by hiring three corporate lawyers, pointing to an upsurge in M&A activity following the introduction of the Business Companies Act 2004.

The strongest demand in terms of legal recruitment has historically been for lawyers with experience in finance, corporate or investment funds. It has, however, been a slow start to 2008.

"I have been recruiting to the Cayman Islands and the BVI since 2003 and in all that time – apart from 2003 – the recruitment of lawyers has been pretty buoyant," says Jamie Newbold of Taylor Root. "This has been the lowest point, particularly in finance. Finance has gone off the cliff."

But he adds that while there is not much expansion recruitment, firms still need to replace people who leave. "Most of the bigger firms at any one time last year were looking for three to four people," he says. "Now it might just be one."

Rob Green, Cayman-based vice president (legal) at CML Offshore Recruitment, agrees that it has been quieter in 2008, but he puts this down in part to the "astonishing" amount of hiring by the larger firms last year. "They were bedding people in earlier this year and did not need anyone," he suggests. "Things are now starting to pick up."

The credit crunch may have had a dampening effect on recruitment in some practice areas, but it has produced openings for lawyers with a commercial litigation or insolvency background as firms adapt to this new environment. In the Cayman and the BVI the hours are generally the same as in the City, especially in corporate and finance. However, as with other offshore jurisdictions, lawyers tend to work on a number of deals at any one time. This means they are more consistently busy and often better able to balance their work.

In any event, most lawyers find their remuneration package more than adequate compensation. Senior associates, for example, can earn £200,000-250,000 at the largest firms in the Cayman. "When you consider you are not paying any tax at all, it really does make a difference," says Newbold. "When you have proved yourself, you will be earning a lot of money." Income tax is payable in the BVI but the rate is a lowly 8%.

The firms will usually pay for flights when people move, offer generous relocation expenses and provide accommodation and a car for the first few weeks. They will also assist with immigration formalities, which can take two to three months to complete.

Paying such exceptional salaries allows firms to look for "the best London has to offer", according to Ben Williams, a legal headhunter and founder of BJJW Offshore. The most attractive candidates will have excellent academics and wide-ranging experience at a top-tier City firm.

"The key driver is that we are looking for people who are good all-rounders and not too precious," says Edward Strickland, human resources (HR) director at Maples and Calder. "Our lawyers handle the highest quality instructions, so we like candidates who want direct, hands-on dealings with clients."

The firms will use the interview process to establish a candidate's commitment to relocation. "Firms are not looking for people who are considering 'a couple of years or so' overseas," Williams says.

In particular firms are keen to work out whether a candidate and their family will enjoy the island lifestyle. Some people enjoy the sense of community, while others would find living somewhere with a population of 50,000 too much of a goldfish bowl.

"You have to look at the whole family," says Gareth Russell, global director of HR at Appleby. "As a lawyer you will have a pretty good idea about what you will be doing, what your life will be like in terms of work. But your family has nothing to benchmark against."

As a result firms like Appleby will generally fly candidates and their partner out to see what life is really like. They also invest resources in ensuring the whole family unit is supported when they do make the switch.

"We recognise just what a big commitment moving is," says Russell. "It is in everyone's interest to make it work."

On the whole, the recruitment process is pretty successful, with most lawyers staying for at least four years. There are good reasons for this – Taylor Root's Newbold says he has never come across a lawyer who has not been better off financially and from a lifestyle point of view as a result of moving to the Cayman or the BVI.

"In the Cayman Islands you can live 15-20 minutes away from the office," he points out. "The beach will be just two minutes away. I am amazed why more people don't do it."

Case study: Jonathon Meloy,associate, Maples and Calder, Cayman Islands

Jonathon Meloy trained at Slaughter and May and spent three years post-qualification in one of the City firm's general financing groups. "I had five really good years there, but my wife and I felt it was time for a change of scenery," he says.

Meloy identified the Cayman Islands as somewhere that would offer the same quality of work but also a healthy, outdoor lifestyle, and Maples and Calder as a Cayman firm that was most likely to offer a 'City' client base and professional ethos. He was interviewed by the firm's partners in Cayman via a video-conferencing system at its London office and offered a job shortly after.

The couple did not visit the islands before relocating, which he admits was "a bit of a step into the unknown". "I did know one person out here who had been a trainee at Slaughter and May and had spoken to various other people who lived and worked there," he says. "Ultimately we thought: 'Let's take the plunge. What have we got to lose?'"

Moving was a relatively straightforward process, with Maples and Calder coordinating the paperwork for immigration (including the medical), booking the couple's flights in business class and arranging accommodation for their first few weeks.

"I have been here since January and it has been really enjoyable," Meloy says. Clients of the structured finance and capital markets group he works for include household name companies and major investment banks, although instructions will often come through the leading US and UK law firms.

Meloy has found that a lot of the skills he learned in London are directly applicable to his work in Cayman. One notable difference is that whereas in London he might have had five or six deals on the go at any one time, he now has quite a lot more.

"There's less of a project manager role and more of an adviser role," he says. "You get to do more law and there's less in the way of large administrative exercises."

The work and the hours can be demanding, but his commute only takes 10 minutes. His wife now has a job with Maples and Calder as well, which has helped the process of settling in.

The quality of life has also proved to be every bit as good as Meloy expected. "The chance to go diving every weekend is just fantastic."

He adds that the financial package is another attractive aspect of moving, particularly when you take into account that the salary is tax-free. To people considering moving to Cayman, Meloy recommends they do their research. "You are coming to quite a small island," he explains. "Most people still find the work enjoyable and stimulating. It is whether the island lifestyle is for you. My wife and I both love it."

NewHorizonsJuly2008