Representatives of more than sixty law firms from across Central and Eastern Europe and from as far away as the United States, United Kingdom, and China came together in Prague on June 6, 2018, for the first ever Dealer’s Choice international law firm conference and CEE Deal of the Year Awards Banquet.
The Dealer’s Choice event, which began on the morning of the 6th in the Congress Center of the Czech National Bank, consisted in a series of panel discussions on topics of importance to the legal profession. The day concluded with the Awards Banquet in the Empire Room of Prague’s Slovansky Dum. The two June 6 events, in combination, represented an unprecedented celebration of CEE lawyering and an opportunity for the best lawyers working in Central and Eastern Europe to exchange ideas and contact details in a vibrant and entertaining setting.
The first panel of the day, entitled “Terrific Not Terminator: Adapting and Adopting New Technology,” and moderated by Tereza Simanovska, Head of Legal & Compliance at APS Holding, considered the affects of recent developments in technology on the practice of law in CEE and explored the ways advances in artificial intelligence, robotics, and document review/discovery technology are reshaping the profession.
“Sometimes I ask myself if we need offices anymore,” said Damir Topic, Partner at Divjak, Topic & Bahtijarevic in Zagreb. “Lawyers can work remotely and take conference calls from almost anywhere now and clients are also more and more reluctant to travel.” This change is a positive one, Topic suggested, and instead of representing a potential threat to the profession should instead be seen as “rather a commodity, a way to save time and be more efficient.”
Rastko Petakovic, Managing Partner at Karanovic & Nikolic, reported that his firm had decided several years ago to “go phoneless” – eliminating the phones on each lawyer’s desk in favor of Skype for Business with landline capability. “I believe that we have to embrace new technologies,” Petakovic said. “I also believe that artificial intelligence will always be managed and supported by humans, so we need to train people to be open and innovative, and spare time from the usual bureaucratic things. We often forget that most of what we do can be narrowed down to three things: content, process, and relationships. The last one is the driver of our work with our clients, and this cannot be replaced with AI,” he said.
“But is saving time good for us?”, Avellum Managing Partner Mykola Stetsenko asked, returning to Topic’s earlier comment. “Can we profit from it in a time of fixed fees?”
“Absolutely,” came the reply from Clifford Chance Prague Managing Partner Alex Cook, who added that “clients actually expect us to be on top of technology. If the client wants to save time, we have to be prepared. Legal services are not diminishing; they are increasing and becoming more complex, so saving time is definitely good in my view.”
Turning the discussion in a slightly different direction, Tereza Simanovska asked what new skill-sets partners and HR departments are looking for when hiring new lawyers.
“Personally, I would like to hire more software developers at our firm,” answered Petakovic. “Not just because we need to understand and embrace technology, but also because we need more algorithmic thinking.”
Stetsenko disagreed. “I don’t understand why law firms need to hire a lot of IT professionals,” he said. “We are law firms, not IT giants. Indeed, we can have a few IT professionals to handle automation and management of AI. However, I do not believe that AI can replace human nature, which is a basic element for our work. Negotiations and business consulting are things requiring human experience and personal judgment – something that computers cannot replace.”
The second panel of the day was titled “The Friendship Zone: Establishing and Strengthening the International Firm-Domestic Firm Referral Relationship” and involved a thorough consideration of the ways international and domestic law firms can initiate and strengthen referral relationships. The panel was moderated by Shawn Atkinson, Partner at Orrick Herrington & Sutcliffe in London.
Atkinson started the conversation by asking the panelists how they approach local firms, and what strategies they use in choosing them. “For us, it’s really a mixture,” said Slaughter and May Partner Jonathan Marks. “Sometimes the client says which firm they want to work with. On other occasions the client wants us to choose. We also have ‘country partners’ who are responsible for being in touch with the best firms in the region for particular jobs, and we have an international team that keeps track of national law firms and helps us choose. We will want to get quotes from more than one firm where that is feasible and will generally be expected to get all the local law advice we need, within a budget agreed upon with the client.” Marks added that the fee charged to the client would generally be based on local rather than London rates, as Slaughter and May wouldn’t look to do more than pass through the amount it pays.
Christian Blatchford, Partner at Kocian Solc Balastik in the Czech Republic, provided a local perspective. “Firms disappear and new ones appear and performance can vary over the years. We try to keep abreast of changes and maintain a close and a two-sided relationship with firms: ideally both giving and receiving work.”
On the use and usefulness of road-shows, a strategy that law firms often use to build new relationships with prospective clients – both referral partners and in-house counsel – Kavcic, Bracun & Partners Managing Partner said: “We do not do a lot of those. I think there are various other ways to bring people on board, like by getting recognition from clients and peers, for example.”
Schoenherr Sofia Managing Partner Alexandra Doytchinova nodded in agreement, noting that receiving guests from the same firm every six weeks can get boring, although she conceded that avoiding multiple contacts can be difficult for lawyers from a firm which, like hers, has over 15 offices in CEE alone. “We work very independently from our own headquarters, and we have our own contacts at referral firms – and we really try not to knock twice on the same door,” she said. “It is a bit difficult, but we try not to become annoying, so we just keep a close relationship among our firms.”
Christian Blatchford, from one-office Kocian Solc Balastik, suggested that annual road-show cycles strike the right balance, so his firm usually strives to limit such efforts to one city per year.
“Road-shows can be useful, and we all do them ourselves so there is an element of reciprocity,” concluded Slaughter and May’s Jonathan Marks, “but what we truly appreciate is working together, including good responsiveness and top quality work when we get in touch.”
Politics: The Nitty Gritty
After an extended networking lunch, the Dealer’s Choice conference’s third panel – Moving Right Along: How Recent CEE Political Trends and Developments are Likely to Affect Investment and Law Firm Business – considered the state of Central & Eastern Europe twenty years after the end of Communism. Moderator Martin Magal, the Managing Partner at Allen & Overy in Slovakia, led a conversation about how lawyers can provide valuable counsel in times of economic and political upheaval, how recent changes have affected partners’ practices and relationships with clients, and the significance of recent developments on actual and potential investments in their region.
Magal started the conversation with a brief historical overview, referring particularly to the events of the Prague Spring of 1968. “50 years ago in front of this building we still had Russian tanks,” he noted.“The very fact that today people from all around the world can discuss these topics freely is an important step.” But Magal didn’t deny the problems of the present. “Still,” he said, “Western democracies have fragile structures, and not so far away from here, political and economical crises are taking place.” He cited his own country as an example. “Let’s also not forget that in Slovakia a few months ago an investigative journalist was murdered, and the country is still shaken by the following uprisings and protests.” He then asked the panelistswhat the proper role of legal experts is in this context, and how lawyers can they use their expertise to influence the politics of their countries.
Freshfields Partner Sebastian Lawson suggested that Magal’s question was difficult to answer. Lawson noted that there are many different narratives within the EU, and the division between the North and the South, the East and the West is getting deeper and deeper. “Nationalist, illiberal parties are emerging everywhere,” he said. “For example, if Hungary and Poland will continue with their current policies, they may lose funding from the EU. With less funding, we will probably see more private financings on infrastructure projects,” he said, adding that this would definitely affect the work of lawyers.
Muhsin Keskin, Partner at the Esin Attorney Partnership and Baker McKenzie in Istanbul, suggested that the prevailing narrative in his country, at least, may not be the same as it is outside. “If I had to define Turkey’s economy at the time in the global context, I would say it is resilient. We have had some turbulence in the past five or six years, but we still have many transactions. Turkey is a resilient country, always able to adapt to any situation.”
In response to a question about Brexit, Denise Hamer noted that while many investors are pulling back from the UK market, Continental Europe remains strong. “Central and South East Europe is benefiting from UK political uncertainty on one hand and domestic political will on the other hand. Slovenia is developing as a cryptocurrency center, Croatia has just implemented an investor-friendly tax regime, and Estonia has introduced a residency and stipend program for individuals working in FinTech.”
Moving the conversation to the role of lawyers in the current economic and political climate, Ron Given said that in his view lawyers’ “traditional role in bringing structure to confusion and making some sense of the complex applies to helping clients translate things political as well.” But Given also noted that the political divisions requiring expert guidance do not stop outside the law firm door.”It’s natural that the same divisions that exist in the greater societies are also found among our colleagues, and we must take care that these divisions do not have a materially negative effect on the running of our business.”
The question of whether lawyers should take a politically active stance in the face of political controversy sparked animated discussion. In response to the suggestion made by a member of the audience that the oath lawyers took to protect the rule of law requires them to oppose potentially unlawful acts, several panelists insisted that the role of lawyers is guide, not lightning rod. “This is a very hard question, and I believe every firm must decide individually,” concluded Martin Magal. “For example, when [Slovakians] were dealing with the murder of journalist Jan Kuciak and his fiancee, half of our office attended the protest. The firm itself did not organize anything – everyone made an individual decision.”
Look East, Young Man!
The conference concluded with a special session on Chinese investment in Central and Eastern Europe. The “Coming Over the Wall: Chinese Investors and Firms in CEE”panel, moderated by Judith Gliniecki, General Counsel at CEE Equity Partners, considered the forms and targets of Chinese investments in CEE, and the motives, methods, and maneuvers of both investors and law firm advisors in identifying and exploiting opportunities in the region. The panel focused on how Chinese investors perceive European opportunities and counterparts and what the cultural differences are for law firms seeking to work with Chinese clients.
“In the last couple of years we indeed saw a good amount of Chinese investment in Bulgaria,” Milan Pandev, Partner at Djingov, Gouginski, Kyutchukov & Velichkov in Sofia, said. “They are mostly interested in renewable energy, solar projects, infrastructure, and car manufacturing businesses.”
Chinese lawyer Rita Ran Pang, who works within the Kinstellar Prague business development team, explained that the wave of Chinese investment that hit Europe recently is properly considered in terms of cost and opportunity. “The cost of investments is still quite low in CEE, and the region also has favorable employment law,” she explained. “Chinese companies tend to go big, so these are rentable conditions for them.” She gave several examples: “In the past four years, four billion US dollars were invested from Chinese companies into international football clubs. In Serbia, even though the country is not in the EU, there are around 20 Chinese companies doing infrastructure projects, with the intention to spread out to the Czech Republic and Croatia.” The size of these investments, Pang said, makes them controversial, leading many local officials toview them with concern.
Linjun (Lawrence) Guo, Senior Partner at the Zhonglun W&D Law firm in Beijing, added that his firm is helping clients specifically targeting CEE countries as a means to gain a foothold into the West. “If a client wants to enter a Western country which is expensive and hard to penetrate, we consider a CEE country as a stepping stone for the larger project,” he explained.
When Judith Gliniecki asked how CEE countries engage with Chinese investors, Pang employed a metaphor. “They are like girlfriend and boyfriend: sometimes they love each other, but sometimes they hate each other. The hate part evidently is based on conspiracy theories, while the love part is driven by mutual financial and security issues.” Pang added that both parties should learn from each other – a process which is already well underway.
Guo agreed that “learning is very important,” but he suggested the concept is not only an external one for Chinese clients. “30 years ago the legal profession did not exist in mainland China, so companies still need to learn to appreciate the work of lawyers, and understand how legal processes unfold.”
Turning to the cultural differences that may influence the course of negotiations, Pandev suggested that parties invest time and energy in studying each other’s mentality in order to get a project done. “I have to say we learned some valuable lessons in the past about Chinese investors. We learned not to underestimate them: if they look slow, it is because they are analyzing everything carefully. We also have to pay attention to every verbal formulation, because they never want to communicate negative news, they like to finish a meeting on a positive note, so you kind of have to fish it out for yourself what their position really is.”
“They are indeed reluctant to say ‘no,’” Rita Ran Pang agreed. “Face-to-face meetings are also very important, for Chinese people have difficulty in trusting people. If during a personal meeting you can reassure the trust, it will considerably speed up legal processes.”
Feedback and Perspectives
Gathering for final coffees after the event, before going to their hotels to freshen up for the evening’s awards banquet festivities, attendees at the Dealer’s Choice conference spoke enthusiastically about the day’s proceedings.
Alexandra Doytchinova, Managing Partner at Schoenherr Bulgaria, described the full-day event as extremely valuable. “It is always interesting to hear the views of other firms, working in other markets,” she said. “I believe it was really nice that during the panels people talked quite frankly about their experiences, so you could feel that it was really a sharing of thoughts and information, which is much appreciated, because this is how you can get up-to-date and measure if you are on the right way, and if you have the right understanding of things.”
In addition, Doytchinova said, the Dealer’s Choice event brought together friendly competitors and a good collection of regional practitioners. “The event is fantastically organized, and the number of topics is exactly right. There should not be more in number, or people would get distracted. The panels were interesting, and people were really participating.”
Pavel Hristov, Managing Partner at Bulgaria’s Hristov & Partners law firm, highlighted the benefits of the event from another side. “I personally liked this event because it fills a void for CEE lawyers, who so far have not had a platform – a venue where, besides exchanging business cards, they can also exchange valuable ideas and initiatives.”
Hristov also suggested that next year he would be interested in learning more about how Brexit and other major developments in the global economy are changing conditions in CEE’s legal markets. “Will English law continue as parties’ preferred governing law for transactions, or will we change to other foreign laws?,” he wondered.“I think these are important questions.”
Renata Petkova, Partner and Leader of Deloitte Legal’s practice in Bulgaria, suggested that she would be interested in a session considering the increasing role of the Big4 in the legal market, as they increase their ability to compete with international and major local law firms.
Kocian Solc Balastik’s Partner Christian Blatchford said that he appreciated the opportunity to meet other members of the extendedCEELM family, including people about whom he had so far only read about in the CEE Legal Matters magazine. “We see the deals, the partner moves and so on, and it is good to put faces to the names. I would not say that I heard many new things during the panels, but there are certain things which you need to hear repeatedly in order for the message to sink in. For example, we all have to think about legal tech, but we can tend to forget about its importance day to day. The conference has therefore succeeded in raising awareness about important issues.”
Finally, the participants slowly dispersed in small groups or pairs, immersed in talks with old and new friends, and considering the many subjects discussed during the day.
This Article was originally published in Issue 5.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.