Adam Mycyk of Cameron McKenna and Nick Fletcher of Clifford Chance reflect on challenges and prospects of work in Ukraine.
Top international law firms have in recent years flocked to Ukraine in record numbers, each eyeing market share in a steadily enlarging economy increasingly dotted with multinational firms.
Even as economic recession bites Ukraine hard, ending a 10-year growth spurt, foreign law firms are taking a long-term view, holding firm to Ukraine expansion plans. In recent months, two leading Austrian law firms – Wolf Theiss and e|n|w|c – have set up practices in Ukraine. Lawyers say more foreign law firms are on the way.
“It’s interesting that all of a sudden – in the last three years – this is happening,” said Adam Mycyk, an American-born lawyer who has worked in Ukraine for 15 years. Today, Mycyk manages the Kyiv practice of CMS Cameron McKenna, launched less than two years ago.
A decade ago, Kyiv had only a handful of internationally-recognized law firms, including Baker McKenzie, Squire Sanders & Dempsey and Salans. International law firms serviced clients in Ukraine via domestic law firms. Today, there are arguably at least 15 internationally-recognized law firms with practices in Ukraine. It’s a sign that Ukraine’s legal services pie will be lucrative for the foreseeable future.
Nick Fletcher, managing partner at Clifford Chance’s new Kyiv office, said his firm has for years been handling lots of Ukraine work coming from Moscow, Frankfurt and London. The work was handled by Ukrainian lawyers employed at practices outside Ukraine.
“It just seems natural that we would set up here, since it was the next big developing market in Central and Eastern Europe,” Fletcher said.
“It’s a big market that we can’t ignore,” added CMS Cameron McKenna’s Mycyk. “[The opening of an office] is primarily client-driven. And the number and the types of transactions that have been occurring are becoming way more complex.”
Precise income figures for law firms in Ukraine are hard to come by, but even rough estimates show that the game is worth playing. Mycyk estimated Kyiv law firms’ total turnover at around $250 million, with some of the top firms making in excess of $20-25 million in a good year.
With the recession, this year is not expected to be as lucrative, and layoffs are happening. But there is still enough work to keep plenty of lawyers busy. Debt-restructuring cases, bankruptcies, insolvencies, mergers and acquisitions connected with distressed assets, are piling up.
“Any time the economy falls apart there is always going to be work for lawyers, just different work” in contrast to the investment-oriented work of recent years, Mycyk said.
But with budgets contracting all over, lawyers expect to bill and earn less from crisis-related work. One top Ukrainian law firm said it could cut its billing rates by half. Top foreign firms say they charge 300 euros per hour, and up. Some say they could decrease rates. Others plan to hold firm.
“There probably will be firms that will cut [their fees] just to get the work. I am not really sure that this is the best strategy for longer term,” said CMS Cameron McKenna’s Mycyk.
With competition rising, international law firms say their wide reach is part of their competitive advantage. With practices across the globe, they claim advantage in handling cross-border transactions, for example.
“We can guarantee [to our clients] standard-quality service they would expect wherever they would use Clifford Chance,” Nick Fletcher said.
Clifford Chance and CMS Cameron McKenna say they have not made cuts so far, but others are known to have put hiring on hold, cut salaries and downsized.
“We are lucky, in a sense. If we had opened earlier, we would probably have recruited more lawyers than needed. But because we were halfway through with recruitment plans when we opened, we just put recruitment on hold, keeping to 18 lawyers,” said Clifford Chance’s Fletcher.
