Touch of presence
"Those who have the best infrastructure and the best market coverage will benefit" OLEG BATYUK, MANAGING PARTNER OF THE KYIV OFFICE OF DENTOS INTERNATIONAL LAW FIRM, ANALYZES WHAT GIVES A LAW FIRM INTERNATIONAL STATUS
— What are the current ratings of international legal service businesses on the Ukrainian legal market?
— The situation is quite interesting: the country is big, the economy is serious, but, due to the small levels of foreign investments and taking into account the high risks, the presence of foreign law firms on the market is minimal. There are just four offices of international law firms and several representative offices of regional law firms. It is not enough for a country with a population of 45 million people.
— In which market segment do you place legal sub-divisions of the Big Four?
— We know that the Big Four companies enter the legal market very actively. What is more, this is happening in many countries. In Ukraine, we do not feel serious competition from them yet, especially in the transaction and financial practices. At the same time, they are in consulting, especially on issues related to taxes and labor, and their presence is becoming increasingly prominent.
An aggressive approach to the legal market on the part of the Big Four has been a global trend in recent years. We will see more competition: in the foreign markets first and then in our markets. And it is an obvious challenge for traditional law firms. There are no law firms in the world able to allocate comparable budgets for business development.
— What can be set off against this expansion of the market in this case?
— Law firms can better manifest themselves in their transaction work. Plus, the inevitable issues of conflict of interest. It is reasonable. In terms of solely legal issues, law firms now have powerful human resources and much more experience. The presence of the Big Four in the areas, where the law firms dominated in recent years, has so far not been considered as being serious in the world, but things could change quite quickly.
— The benefits you are talking about could be leveled in a matter of several years.
— We are creating a large global large law firm at Dentons, including in order to compete on an equal basis with the Big Four. It will be extremely difficult for a national or even regional law firm to do this, unless in certain niche practices, which, for whatever reason, remain outside the scope of attention of global players.
— What impact did the global transformations of the firm have on the work of the Kyiv office?
— Establishing such a law firm as Dentons is an unprecedented event. Literally. We came to Dentons from Salans, which was a medium-sized European law firm. Dentons is quite another story. The most important thing is that we got access to new markets and new clients.
It is very difficult to spot another ‘black swan’ in our global and unpredictable world. Those who have the best infrastructure and the best market coverage will benefit. In addition to the broad geography of presence, the global law firm will have offices in the world's largest centers. First of all, in London and New York, but also in Paris, Frankfurt, Warsaw, Beijing, Singapore and Hong Kong. We cannot develop a practice in a consistent manner without this, including in Ukraine.
In fact, the client base is changing quite dynamically. A reminder: in the past, a sufficiently large pool of German companies was consistently represented in Ukraine. Today, hardly any German business (engineer, transport, bank and, consequently, legal) remains. You know, Germany was always considered as potentially the most important European investor for Ukraine. Or let’s consider Russia. The position of Russian companies as clients has, for obvious reasons, changed dramatically. At the same time, there is increasing interest on the part of China, Japan, USA and Canada. The presence of offices in these jurisdictions is our advantage.
— Are Ukrainian and foreign companies represented in equal shares in the Kyiv’s office client composition?
— No. International clients still prevail. It often happens that we export work for the client, who is part of an international corporation and runs a business in several countries, from Ukraine.
As for purely Ukrainian business, it has come a long way during this time. I would like to have many more blue chip companies in Ukraine.
— In which segments do international law firms compete in the Ukrainian market, and against who?
— In the mergers and acquisitions practice, especially involving a foreign element, more and more work is being given to international law firms: transnational corporations reduce the number of their service providers, including legal ones, it is easier for them to work with a small number of legal advisors who have a ramified system of offices. The presence of offices in at least in 50 jurisdictions is indicated as qualifying requirements with ever increasing frequency.
In this practice, we can notice competition on the part of local law firms. It is a typical case when a very Ukrainian law firm represents the seller of an asset. Likewise in international financing: an international law firm (sometimes in the partnership with a local one) represents an international lender and a local legal counselor acts on a debtor’s part.
We are conducting several cases in the disputes settlement practice, but I should say that international law firms are not yet sufficiently represented in judicial practice in Ukraine. This is a traditional niche of local law firms which, in general, are small boutiques that do not have serious international ambitions. This is one of the peculiarities of the Ukrainian legal market. At the same time, international law firms are represented sufficiently well, in unison with a Ukrainian element, in the practice of international arbitration.
— How do you assess the position of Ukrainian lawyers in the global legal market?
— They are the same as the position of Ukraine as a whole, as a country with enormous potential unlocked to a level of less than 10%. The lawyer can come into the spotlight on the international stage only when accompanying large transboundary projects. Our lawyers do not have many such opportunities. It is necessary for Ukrainian business to enter international markets more frequently together with its lawyers. For now, lawyers from Anglo-Saxon countries dominate the legal market, first of all, from New York and London. They are involved in the majority of global projects.
— What challenges does your firm face and in which direction do you intend to develop?
— In terms of global things, we intend to improve our brand. With regard to the regional markets, we have a roadmap for growth in the USA, Latin America, and Europe. We are a big regional player in Europe, but not as big as we would like to be. We have already done a lot in Germany, the Netherlands, Italy, Luxembourg, Georgia. Several countries, particularly Scandinavia, are next.
One of the characteristic features of Dentons is the emphasis we put on innovations, without which it is impossible to survive in today's world and which our clients require of us. We want to be and will be the first in this direction. This is a question of two or three years.
With regard to Ukraine, much depends on how the country will develop. In the optimistic scenario, we would like to at least double our growth over the next three-five years.