In The Corner Office, we ask Managing Partners at law firms across Central and Eastern Europe about their backgrounds, strategies, and responsibilities. With the first quarter of 2023 wrapped up, we turned to the future and asked: In which practice area do you expect the most growth – in terms of work volume – in the next 12 months?
Oliver Werner, Managing Partner, CMS Slovakia: We expect that compliance will certainly grow as a practice area in terms of importance for the CEE legal market. The CEE region has implemented various anti-corruption and anti-money laundering laws and regulations, which require companies to have robust compliance programs and internal controls in place to ensure that they operate within legal and ethical standards.
Moreover, the increased focus on white-collar crime and corruption by law enforcement agencies and regulators in the region further highlights the importance of internal investigations for companies. Effective internal investigations can help companies identify and address potential violations of the law or company policies, as well as detect and mitigate risks that could lead to reputational damage or financial losses.
Companies in the CEE region that fail to conduct effective internal investigations may face legal and financial consequences, including fines, sanctions, and reputational damage. Therefore, it is essential for companies operating in the CEE region to have a strong internal investigations program in place that includes trained professionals, clear policies and procedures, and effective reporting and escalation mechanisms.
Mentor Hajdaraj, Managing Partner, RPHS: In recent years, the Kosovo market has gone through major development in the context of industry practices and new legal frameworks. In this regard, our firm aims to further increase its practice in M&A and Competition.
With the adoption of the new Law on Competition in 2022, there has been a new threshold and set of conditions foreseen by law, with a focus on the area of concentration. As a result of this, the Kosovo Competition Authority has taken a more active role in monitoring the compliance of the companies with the new law. There is no doubt that in everyday M&A transactions, including those transactions where foreign companies are involved, reasonable guidance is needed since any wrong step might lead to an initiation of the competition-protection procedure by the KCA.
Oleksiy Feliv, Managing Partner, Integrites: I see tremendous potential in the Real Estate and Construction practice. It will certainly become one of the busiest in our firm when the war ends with Ukraine’s victory, and the country will undergo the most massive reconstruction in Europe since World War II. At this stage, we see much interest both from domestic and foreign clients – they seek investment opportunities related to rebuilding critical, social and transport infrastructure, as well as housing stock. The industry will boom with private and institutional investors coming from around the world to support the Ukrainian economy and help it to handle the aftermath of the war.
We expect to see specific sectoral plans and programs introduced by the state, which will allow for setting the strategic and legal framework for the forthcoming reconstruction. Lifted restrictions and eased permit procedures, new developments in the land, agricultural and energy law, a significant number of disputes related to the compensation of damages, and investor incentives – all these factors will surely generate a considerable amount of work not only for Real Estate lawyers but also for the firm’s cross practices.
Olexiy Soshenko, Managing Partner, Redcliffe Partners: The answer mainly hinges on, and will be substantially very dependent on, when the Russian war will be over in Ukraine. As soon as it finishes, lots of work and effort will be dedicated to rebuilding Ukraine. It could, though, be rather difficult to single out one particular practice area or industry. Lawyers in banking and finance, corporate, construction, real estate, infrastructure, energy, as well as IT and fintech could all be very involved in this anticipated burst of activity.
Being realistic, however, it appears that the war may not finish within the very near term. In that scenario, I would expect that documenting damages caused by the Russian aggression, as well as preparing and initiating claims against Russia and its assets will be very active. That will involve work in local and potentially foreign courts, involvement in criminal proceedings, claims to the European Court of Human Rights, arbitrations based on Bilateral Investment Treaties, asset tracing, enforcing damage awards, etc. Such work will also continue after the end of the war.
Branislav Maric, Managing Partner, Kinstellar Serbia: I expect the energy practice is going to grow the most, primarily due to the continuing interest by foreign investors in the Serbian energy market, especially in renewables. Given that the relevant energy framework is about to be revised, which should open the way for the first auctions, this should further intensify the project work in the market and, consequently, among advisors.
Also, many projects that have not been planning to apply for auctions are waiting to formally secure connections, which process was delayed since the state-owned TSO was not willing to grant such requests before the current legal framework is revised in relation to the balancing responsibility/costs. Once the revised framework is formally adopted, it is expected that the connection issues will be resolved to a large extent across the market, which should be an impetus for the projects to move forward faster. Increased activity in the energy segment would also have a positive knock-on effect for work in the financing sector, as the project financing will have to be put in place so that projects can move into the construction phase.
Pal Jalsovszky, Managing Partner, Jalsovszky Law Firm: An easy answer would be liquidation and insolvency. The current economic situation will prompt lots of businesses to the brink of bankruptcy, which would create work for lawyers. It is, though, cause for reflection that we had the same expectation during COVID times which, finally, did not materialize.
I would, however, give a different answer in light of tendencies that we see in the Hungarian market. We experience that many factors push wealthy individuals and private company owners to restructure their holdings and keep their assets safe. Economic uncertainties, the generation gap, and a perceived country and business risk are just some of those triggers. This appetite is, on the other end, accompanied by legally and tax-wise attractive vehicles and solutions such as trusts, private foundations, and investment funds. It all results in an extremely high demand for company/ownership restructurings and wealth management, which, I believe will continue in the forthcoming year(s).
Victor Constantinescu, Managing Partner, Kinstellar Romania: Generally speaking, Kinstellar Bucharest is incredibly busy. I can’t put my finger on one practice area, but would instead point to all work generated by shifts in geo-political concerns that are prompting investments and activity in various areas: this takes the form of renewable energy for clean energy independence, friend-shoring and industrial re-capacity and relocation, and investment in other key sectors such as agriculture, infrastructure, and defense, to ensure long-term security and self-sufficiency.
Ewelina Stobiecka, Managing Partner, Taylor Wessing Poland: Based on the trends we are seeing in the market today, several practice areas are likely to see growth in the legal industry this year, but if I had to pick one: cybersecurity.
With the increasing use of technology and the rise of cyber threats, cybersecurity is an area where technology and cybersecurity lawyers may have more work to do. This could include areas such as data privacy, cybersecurity regulation and compliance, intellectual property rights in the digital space, dispute resolution, and crisis management.
With the increasing reliance on technology and the Internet, cybersecurity threats have become more prevalent and sophisticated, and the consequences of a cyberattack can be devastating to both businesses and people. A successful cyberattack paralyzes business operations, resulting in financial and reputational damage, and the possible liability of board members and employees. In these areas, lawyers can expect more work that could be summarized as crisis management support.
Done Yalcin, Managing Partner, CMS Turkey: I anticipate a significant increase in the volume of work related to the Environmental, Social, and Governance practice. This is due to the growing significance of the ESG framework for companies, as stakeholders are increasingly demanding greater transparency and accountability in corporate practices.
The pandemic has emphasized social and governance factors, leading to increased scrutiny of how companies treat employees and manage pandemic-related risks. Also, climate change and sustainability are now critical concerns for investors, governments, and consumers, driving the demand for legal services related to environmental issues.
ESG-focused legal professionals can provide expert guidance on ESG-related regulations and standards, such as the Sustainable Development Goals, the Paris Agreement, the Task Force on Climate-related Financial Disclosures, and the forthcoming COP 28, covering ESG reporting and disclosure requirements, stakeholder engagement, risk management strategies, and other related services.
The rise of impact investing and responsible investment has increased the need for legal assistance in navigating sustainable finance, green bonds, corporate social responsibility, and sustainability initiatives. As the demand for ESG legal services is expected to continue growing in the next 12 months, the ESG practice area presents a promising opportunity.
Panagiotis Drakopoulos, Managing Partner, Drakopoulos: We expect our M&A work volume to grow the most, despite unpredictability in the global post-pandemic business climate, the current turbulence in the banking system, and the ongoing war situation in Ukraine.
The acquisition appetite of foreign investors continues to grow steadily, with no visible signs of regression, targeting, besides real estate, tourism, and energy, which are the usual suspects in terms of FDI focus, also opportunities in services, agriculture, and manufacturing.
Given Greece’s geopolitical significance in the SE Europe region and favorable business climate in the current global turbulent environment, this trend will most probably be dominant throughout next year.
Alina Popescu, Managing Partner, MPR Partners: The way we see the market trends and current context, technology, debt recovery disputes, and insolvency as well as the energy practice areas are the most likely to prosper.
First of all, technology legal work is now a must for all companies, big and small – with data privacy, e-commerce, digital platforms, AI liability, fair dealing, cybersecurity regulations, authorization of providers of equipment and software for 5G networks, and critical infrastructures being just a few of the aspects to think of, the sheer complexity of tech regulation nowadays and the continuous push for innovation on a variety of markets makes specialized technology law advice a must for all wishing to be 100% compliant.
Second, the volatile economy and the very global context are unfortunately fertile ground for disputes and insolvencies. These are more often than not managed with external counsel help, especially where intricate contractual structures and complex financial issues are concerned.
Last, but obviously not least, energy law will continue to be one of our star areas of practice, with the increasing deployment of resources towards green energy projects and the race to ensure energy supply resilience.
Balazs Dominek, Managing Partner, Szabo Kelemen & Partners Andersen Attorneys: European and regional economies need a fundamental restructuring of the production and distribution of energy. From an economic perspective, it is a must to regain industrial competitiveness, which was leveraged on cheap fossil energy before. In addition to economic concerns, sustainability is also a key social and environmental driver.
Sustainable and/or non-fossil energy production has been an ongoing issue for a while, but heavy barriers to the boom are imposed. The distribution infrastructure and systems need to be developed, the problem of storage and shortages of renewables must be sorted out, and so on. However, these barriers are technical issues in the first place, and these will also impose heavy regulatory and advisory work, as well as M&A opportunities. We expect Projects and Energy to be the practice area to grow most in terms of work for the next 12 months.
This article was originally published in Issue 10.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.