Tech companies have taken full advantage of the internet’s global reach, often working in multiple jurisdictions.
But while such companies tend to be physically headquartered in the West and have legal teams there, local legal help is sometimes needed, and in this way Ukrainian law firms can pick up profitable work, and, hopefully, long-term clients.
In fact, many tech companies operating in Ukraine work mainly outside of the country and are headquartered abroad — like Astound Commerce, a provider of internet trade solutions for global retail giants like Crocs, Moosejaw, and BBC Shop. The company, founded in 1999, has several international offices, including its headquarters in San Francisco, and four software development centers in Ukraine.
Darja Gornitska, the general manager of Astound Commerce Ukraine says that for her company, the legal course is set by the head office.
“We have our head office in San Francisco, and that is where our Global Legal team works, who are responsible for global law-related issues, as well as compliance and the European Union’s General Data Protection Regulation, or GDPR,” Gornitska says. “They set the standard approaches and directions of the company’s operations.”
Homegrown
But a number of big tech companies, rather than expanding into Ukraine by opening sales and R&D centers in the country, instead started up here and expanded outward. One example is Intellias, founded in Lviv in 2002 and now working from there and from additional offices in Kyiv, Kharkiv and Odesa, plus operating a delivery center in Berlin.
Intellias engages external legal advisors to tackle “specific or complex issues” and that happens about “once a year,” says Dmytro Hural, an in-house lawyer with Intellias.
“There are also small legal tasks, which are outsourced for the purposes of optimization. These are tasks like the legalization of the employment of foreigners in Ukraine,” Hural says.
Astound Commerce also has a legal team in Ukraine, which deals with the issues of Ukrainian offices only, such as legislative changes in Ukraine, contractual and labor relations, as well as contracts with suppliers and other partners. The company mainly relies on international law firms, as they can provide solutions that cover several jurisdictions at once.
The selection of legal advisors within Astound Commerce is centralized, but sometimes local advice is necessary as well, and often the company asks for recommendations of local law firms and looks at top companies and top lawyers, Gornitska says.
To get on the selection shortlist of companies like Astound Commerce, local law firms are well advised to participate in legal rankings. Some experience in the field of IT law is also a must, Gornitska says.
Oleg Zelisko, an in-house lawyer at Intellias, agrees: “Previous experience in the IT industry is important. We really don’t want to be a learning exercise for people (lawyers), as this will cause additional expenditures of time, and bring risks.”
International experience
For a law firm to gain the trust of IT players it will have to have a well-developed suite of services tailored to the demands of the industry. This indicates to potential clients that the firm’s lawyers have taken the time to research the industry and develop insights into the industry’s needs.
For a law firm to win business with a big IT client, these insights have to be supported with practical experience in the industry. The firms have to show off a track record of completed projects on which clients can give testimony and feedback.
A local law firm has an added advantage if it is a constituent part of an international company, says Gornitska, but she underscores that it is not an absolute must. Often it is enough for a local firm to give evidence of experience working internationally, perhaps with clients from neighboring countries.
Intellias announced a tender when the firm was selecting lawyers for its GDPR project. The criteria for winning the tender included previous experience, the price, and the scope of work on offer for the price. The firm’s management awarded the contract to PwC. The first stage of the GDPR compliance lasted for half a year, and now Intellias is considering whether to continue independently or jointly with PwC.
The swiftness of a law firm’s reaction to a potential client’s request is a major factor when IT companies look for local legal help, while pricing is always an issue, but not the most important one, says Gornitska.
Last year Intellias attracted investments from Horizon Capital, a direct investment management company based in Kyiv. The IT company engaged lawyers for that project but declined to reveal their identity to Kyiv Post.
Overspecialization
While market for legal services for the IT sphere is growing, Hural sees pluses and minuses to this. On the one hand, it is good for lawyers to specialize and raise their levels of professionalism. But on the other hand, “too narrow positioning can play an evil joke” on such lawyers, as they are not aware of other issues that can affect the firm, he says.
“Maybe it is right from a marketing point of view, but the niche is getting (too) concentrated,” says Hural, adding that some lawyers that brand themselves as IT lawyers are not really up to the job.
Specialization brings most value when it is achieved with the help of good-quality and reputable training, he says.
Zelisko agrees.
“There are several courses, which help you learn (IT law well), such as the Digital Law Course offered by the Business Consulting Academy in Kyiv, or the Ukrainian Catholic University’s IT Law program,” he says.
“These are respected for the experience of the lawyers teaching there.”
