Ukraine’s legal market sparkles today with loud local and international names, all promoting themselves as leading highly qualified and highly ranked full-service law firms.
In fact, Ukraine’s market of legal services is a 24-year-old toddler.
It was born in 1989 when 10 inspired students and their professor started a cooperative. The only available form of private legal practice in the Ukrainian Soviet Socialist Republic was devoted to trade – exports and imports.
They were the first entrepreneurially inclined minds who took advantage of a 1988 law allowing cooperatives to engage in legal services, including foreign economic activity.
“Enthusiasm and proactivity of my students helped me, and together we created a cooperative, Yurvneshservis… After adoption of the law on the bar in 1992, Vasil Kisil & Partners seceded from Yurvneshservis,” Vasyl Kisil, senior partner of Vasil Kisil & Partners law firm, told the Kyiv Post. “Twenty five years later, I still work with people who have been my students once and now are my partners.”
An influx of big and small players entered the market between 1991-1993.
At the time, Ukraine was seen as a promising place for economic growth and foreign investment.
In fact, the first year of statehood was marked by a number of significant foreign direct investment and finance projects, Sergiy Chorny, co-managing partner in Baker & McKenzie’s Kyiv office said. “It resulted in a high demand for quality legal services.”
He said his firm “was the first among the international law firms to tap new markets in many parts of the world. He credits the opening of the Baker & McKenzie office in 1992 to John Hewko, “a talented and super-active U.S. lawyer of Ukrainian origin and other partners.”
Vasyl Kisil is the senior partner of Vasil Kisil & Partners law firm. He is one of the founders of “Yurvneshservis,” a pioneer of the Ukrainian legal market and predecessor of Vasil Kisil & Partners.
Baker & McKenzie offered services in corporate finance, banking, corporate law, tax, intellectual property and real estate, subsequently supplemented with competition and dispute resolution.
However, perhaps the most robust times for the Ukrainian legal market came in 2004. Unlike the chaotic and cash-starved 1990s, Ukraine started showing signs of stability, predictability and relative transparency in 2004, the year that the Orange Revolution brought Viktor Yushchenko to power.
From then until 2008, Ukraine experienced economic growth and renewed interest among foreign investors.
Those relatively flush times attracted many international big names like DLA Piper Ukraine, Clifford Chance, CMS Cameron McKenna, Noerr etc. That era also stimulated a large number of domestic law firms – Avellum, Lavrynovych & Partners, Sayenko Kharenko and others.
But still not very many law firms were able to handle the cross-border transactional work demanded by Western clients, Nazar Chernyavsky, partner at Sayenko Kharenko said.
“Accordingly, the firm predominantly concentrated on mergers and acquisitions, capital markets and finance deals – sectors which were developing rapidly,” he added.
But financial crisis – this time a global one – came soon enough in 2008, combined with the political gridlock that characterized the last two years of the tandem government of Yushchenko and Prime Minister Yulia Tymoshenko.
The downturn forced some law firms out of the market.
CMS Cameron McKenna, which opened its office in 2007, says the business faces numerous risks because of the crisis, but also big opportunities, Daniel Bilak, McKenna’s managing partner said.
Themis, a symbol of justice, is at home in the Supreme Court of Ukraine.
And the protracted crisis did not stop Baltic Sea regional law firm Magnusson from entering the market in 2013. The opportunity to work with Baltic companies investing in Ukraine outweighed possible risks, Anton Prysyazhnyuk, managing partner of Magnusson, said.
Some law firms merged to strengthen their stance in providing legal services. Egorov Puginsky Afanasiev & Partners (Ukraine), Squire Patton Boggs and Marchenko Danevych law firms are the final products of successful 2011-2014 mergers.
While there was a noticeable drop in the number of big M&A and energy deals, financing and securities, real estate and some other practices during 2013-2014, law firms experienced solid expansion in commercial and dispute resolution practices.
Despite the current doldrums, the legal market has three big advantages.
First, Ukraine’s market is self-sufficient. While Ukrainian lawyers learned a lot from their non-Ukrainian peers, the big international law firms did not monopolize the market. “Even if they decide to leave the market one day, which I hope does not happen, the legal services market will stay afloat,” Kisil said.
Second, it has tremendous potential with Ukraine’s status as one of the last major emerging markets in Europe. If Ukraine’s international partners extend country risk insurance to investors, coupled with long-overdue reforms, then the risk-reward ratio will make Ukraine a very attractive place to invest, especially in energy and energy efficiency, agribusiness and infrastructure and the high technology sector, Cameron McKenna’s Bilak said.
Third, the Ukrainian market is still transforming.
Albert Sych, partner at Ernst & Young Ukraine, said that: “Before the latest crisis, the Ukrainian legal services market was still a developing one. I do hope lawyers in Ukraine will hold out against all current hardships to emerge and develop into a stronger and, one day, mature market.”
Kisil added: “I have always encouraged and continue to encourage young people to undertake risk, open a law firm and kick into gear. Doing legal business in Ukraine is highly competitive and challenging. It is full of comfortable niches for a person of enterprise.”
