“In order to succeed on the Ukrainian legal market, a law firm should run a well-balanced legal practice” says Oleg Batiuk, Managing Partner at Dentons Kyiv office
— What trends in the development of the legal profession are being observed in the world?
— First of all, I’d like to mention globalization. We are constantly developing. Other law firms are developing too, but obviously not fast enough. Dentons is in the spotlight today. We have recently announced our intended merger with leading Australian and Singaporean law firms, which will ena-ble us to claim leadership in the Asia-Pacific Region. The Trans-Pacific Partnership, a Chinese infrastructure project “The 21st Century Maritime Silk Road”, efforts to create ASEAN economic community by the end of the year and the Pacific Alliance of the Latin American Quartet are all testimony to the importance of this region in terms of trade development, financing and production.
In addition, over the past few months Dentons merged with McKenna Long, and the team of over 50 lawyers moved into the Budapest office, and a new office in Italy was opened. And the year is not over yet. By the end of the year we are planning to complete a few more similar projects.
And I love the way Milano Finanza wrote about us: “Dentons, il piщ grande e importante studio legale al mondo”. This very succinct phrase accentuates our status as the largest and most significant company of today and our commitment to be the best.
The other trend is the change of the legal product from individually customized into mass and market-oriented. Along with this, profound penetration into the computer technology market is another factor that should not be overlooked. But these trends have not reached Ukraine yet or many other coun-tries.
— Who is ahead?
— Of course, it is the USA. Because there you can do a lot without turning to a law firm. Last will and testament, a simple lawsuit, due diligence, con-tract of purchase and sale of shares – all of this is accessible for a relatively small fee. With the help of computer technologies it is possible to prepare a paper, which used to cost much more on Wall Street. In the USA there are entire corporations engaged in preparing legal documents and selling stand-ardized legal products. They don’t belong to any law firms, but believe it or not, their business is going very well, so well that lawyers ask themselves a question whether the time has not come to return this segment of the market under their control.
Our firm is involved in this process too. In California, we have created a company called NextLaw Labs, which along with IBM is engaged in introduc-ing computer innovative solutions based on artificial intelligence into legal practice. Recently, for example, NextLaw Labs announced consummation of the first transaction with ROSS Intelligence Inc., which started developing a Legal Advisor App powered by IBM Watson, designed to speed up the time-saving process of finding legal information.
Nowadays, fewer people want to pay lots of money for basic legal services. Routine work on the local market is not profitable any more, at least not as it used to be. And when a computer starts doing this job, we will see the changes the market is bound to undergo. This is still a distant prospect but things are changing very rapidly.
Of course, even artificial intelligence cannot solve all legal problems. Individual items will certainly undergo algorithmization, but the most complex projects, such as inter-jurisdictional projects, are going to remain under the domain of people for a very long time. Solutions with the maximum added value, requiring high-level professionals, will be in great demand. Naturally, introduction of artificial intelligence will change our profession, but it is far from being able to kill it. Just like cars didn’t manage to replace horses, at least not entirely. I hope that lawyers will have enough space and the most in-teresting questions to solve.
— How has the Dentons’ global expansion affected the work of the Kyiv office?
— The benefits from mergers at the global level are already visible to the naked eye. Taking into account the peculiarities of the Ukrainian market, in or-der not to repeat the fate of some top brands, which had to withdraw from the market, one needs to be just who we are — a global polycentric firm.
Usually in this context we are talking about the export and import of our customer services. Now clients come to us from our new offices, and such pro-jects account for more than half of the total volume. The Ukrainian legal market is small and very fragmented. It is impossible for an international law firm to succeed operating only on the domestic market. We have projects from the USA, Canada, China —the advantages of our mergers are most nota-ble in exactly these jurisdictions. Often they involve projects where we perform part of the work relating to Eastern Europe.
These are the projects we could not boast of prior to the merger. Let’s take, for example, restructuring external sovereign debt — our firm participated in this project acting for the group of holders of Ukrainian bonds headed by Franklin Templeton Investments, one of the largest private creditors of Ukraine.
As for exports, now we are able to recommend to Ukrainian customers our offices in the jurisdictions, where we weren’t previously represented or had little experience. They include the USA, China, UK and even Africa. We used to have a small office in London that limited our ability to work with the projects of major international banks, and now we hold leading positions in London on a number of focus areas.
— Am I right to suppose that the export volume passing through your office is less than incoming projects, meaning that Ukrainian business is not ready yet to generate a significant amount of work for lawyers?
— Unfortunately, this is true. Large-scale Ukrainian structures are not able to either. There is enough work for external legal advisers but its volume has decreased significantly. For example, nobody talks now about entering the international capital markets or IPO. Such segments of the Ukrainian market as mergers and acquisitions, real estate, private investment funds are in a frozen state. At the same time, there is substantial demand for restructuring, including banking. We are also engaged in similar projects and, I believe, even more than other law firms.
In the meantime, Ukrainian business is actively considering foreign markets, and some companies are even moving into those regions, where we are al-ready represented. Besides, we have a lot of requests, which sometimes may be not fully legal, but relate to the overall assessment of the investment situ-ation, for instance, in China, Canada, Germany, Poland, Africa and the Middle East.
— What are the legal issues that Western customers usually turn to you for? Do they see any prospects for investing in Ukraine or just want to have a closer look?
— For the time being, they are just looking around. The market is very interesting, but at the same time challenging. It is characterized by both stagna-tion and a lack of investment. On the other hand, there are niches of high activity: IT, agribusiness, and pharmaceuticals. The power industry is a very interesting business both in traditional oil and gas recovery and alternative energy, despite the changes in the tariff.
But in general, large foreign investors prefer a wait-and-see attitude. They are waiting for debt restructuring, settlement of the situation in the East of the country and, of course, reforms.
— Such as?
— Tax, regulatory, judicial. For those who want to systematically develop their business in Ukraine, tax reform is of great importance. Investors look for less bureaucracy. And, of course, corruption (how could I forget it?), including changes in the Prosecutor’s Office and the courts.
— In view of such economic and political situation, are there any changes in terms of conducting legal business? And what would you point out as the main trend of the year in Ukraine?
— There is an element of politicization of legal business, which was never noticed before. Nor was such a mass migration of lawyers to government agencies ever observed. Politicization is particularly visible in public displeasure, under which fall colleagues representing the interests of certain indi-viduals and groups (for example, Russian business). I’m not ready to discuss the ethical aspects of this situation, but the trend is rather obvious.
The market has become more diverse. The time when a law firm could focus on the certain groups and, as a result, felt confident about its future, has gone for good. Now, it is necessary to diversify the practice. It is too risky to focus on one client or even practice. To survive in this market, a law firm should run a well-balanced legal practice.