A flurry of merger and acquisitions activity – spurred by a growing economy and investment – is driving the demand for topnotch legal services.
A flurry of merger and acquisitions activity – spurred by a growing economy and investment – is driving the demand for top-notch legal services. The local market has in recent years attracted more foreign law firms.
Some of the newest arrivals, coming this year, include global giant Clifford Chance and Linklaters.
They are following in the footsteps of United Kingdom-based multinational CMS Cameron McKenna, which opened its doors formally in 2007, more than a decade after Baker & McKenzie and the legal departments of other major legal players.
The arrival of leading international law firms is, in turn, forcing domestic law firms to adapt.
Market insiders say competitive strategies vary. The trends today are for domestic law firms to offer increased specialization, and representation of client interests abroad through mergers with larger firms, opening of branch offices abroad or strategic alliances.
Vyacheslav Korchev, the managing partner of Integrites, said his law firm has in a few years set up partnerships with law firms across the former Soviet Union, and in Africa and Asia. The aim is to better serve clients whose interests are increasingly stretching across country borders.
Korchev said Ukraine’s closer ties with international businesses – and increased business activity are setting new standards for law firms.
Given a surge in acquisitions of banks in Ukraine by European financial groups, demand is hottest for legal services in banking and finance, he added.
As client demands grow, Ukrainian law companies are implementing Western business practices and employing lawyers with high foreign language skills and familiarity with international law, said Serhiy Shklyar, the managing partner of Arzinger & Partners law firm.
Still, while there are many domestic and international law firms in Ukraine, few are practicing in internationallyoriented work like mergers and acquisitions, and finance, said Illya Muchnyk, senior associate with the Kyiv office of DLA Piper.
Kyivbased law firm Magisters, one of the largest domestic law groups, is perhaps the only Ukrainian law firm to have launched a full branch office outside Ukraine with its Moscow office that opened up in 2006.
The international sphere of the market is divided between several international law firms and a few domestic ones. Despite high competition, the market appears to be hot for both international firms who are already in Ukraine and for those considering entering into the market, Muchnyk added.
In Ukraine, however, there is still room for new law firms and an abundance of legal work to fight for. In recent years, foreign law firms have just started to rush into the market.
But their absence in previous years has allowed Ukrainian law firms to gain valuable experience on international legal work, said Oleksiy Didkovskiy, managing partner of Asters law firm.
“The lack of real competition from big international law firms inside the country” allowed domestic firms to gain invaluable experience through “close cooperation with foreign offices of those international firms,” he said.
“A handful of independent local law firms have developed practical skills and amassed a tremendous amount of experience working on complex and sophisticated international transactions, from multijurisdictional Eurobond issues, to multimillion dollar syndicated loan structures, to multibillion dollar mergers and acquisitions deals,” Didkovskiy added.
Meanwhile, competition on the legal market in Kyiv is near saturated, compared to other big cities in the country, said Oleksandr Solod, a lawyer at DLL Top Consulting group. There is a lack of high quality legal services outside Kyiv, he added.
Legal companies in Ukraine face a number of challenges, particularly the low regulation levels on legal services.
While Ukraine’s court system is notoriously corrupt, industry insiders say, it is possible to cope with this problem. Nepotism may be a much greater problem.
“If, say, in the United States, a judge would have to resign from his position just because his daughter was seen in a bar with one of the relatives of the accused, here in Ukraine a person can openly come to the court or call the judge to solve his or her problems in a way suitable for that person,” said Shklyar.
The prestige of being a relatively highly paid, independent judge in America and Europe is a big contrast to the situation in Ukraine, where a judge accepts money to decide a case in favor of one side over the other, he said.
“The prestige of this occupation and the possibility to administer fair justice are the main principles of this profession” in Europe and America, he said. “That is why a judge is a much respected profession internationally. That however, is sadly, not the case in Ukraine.”
Shkylar said that “we especially need judges to be elected by people, but not appointed by the bureaucrats. That is the only way of providing people with access to justice,” said Mikhail Ilyashev, the managing partner at Ilyashev & Partners law firm.
Legal experts lament the slow pace of legal reform. “The most crying example is a conflict between numerous provisions of the commercial and civil codes, two fundamental acts for the entire legal system,” Didkovskiy said.
Laws need to be adopted that would facilitate financing, with a view to eliminate obstacles and legal uncertainties that limit bank lending in Ukraine, primarily in creating and enforcing standard international security documentation, said Myron Rabij, the partner at Salans Kyiv office, adding that this would create more available funding for projects in Ukraine.
Overall, industry experts agree, the forecast for Ukraine’s legal market is favorable. Although, over the next several years, the Ukrainian legal market will face considerable changes and challenges. The legislative reforms, required by the World Trade Organization, would bring about new rules and new players on the market and the competition on the legal services market, together with the level of professionalism of lawyers would increase, said Korchev, of the Integrites law firm..
Alina Pastukhova can be reached at [email protected] or 4964563, ext. 1095.
