Legal and financial monitoring
During the period covered the 50 leading law firms of Ukraine earned 5.4 billion hryvnias, which shows an income growth trend in contrast to a greater or lesser stabilization of the national currency exchange rate. However, the "crisis" configuration of practices remains the same: major financial receipts come to a limited number of practices, mostly related to conflict resolution and business protection
Despite an improvement in growth of financial proceeds, the legal market has not yet reached the point of 2012–2013. The dominant trend is, just like before, the lack of demand and shortage of people with cash, which will inevitably increase competition, and nowhere more so than in practices that somehow deal with dispute resolution: in judicial practice, arbitration, bankruptcy, debt restructuring, and comprehensive business protection. The result of distrust by the business sector in the Ukrainian judicial system is the huge number of considered by foreign courts. As a general rule, Ukrainian lawyers take part in these processes as experts in Ukrainian law.
Another market trend is deepening specialization: even universal law firms have core earnings generated by a limited number of systemic practices. It must be admitted that the corporate law practice (including maintenance of few M&A transactions) has shown optimistic results, finally heralding a revival.
Within the framework of the 50 Leading Law Firms of Ukraine 2017 annual research, participants were asked to note the key fields of specialization, which account for the largest share of their law firm's revenue. Based on obtained data it is possible to figure out both the most profitable practices and those in greatest demand (separating the share occupied by each single practice from the firm’s total returns). A separate study looked at the contribution made by customers from economic sectors to the income generated by law firms practicing in Ukraine. And since the "Top 50" participants are law firms representing all business-oriented sectors of the legal market with due account for both their scale and geography of operations, the data obtained is rather representative.
According to the findings, the practice in greatest demand was, predictably, disputes resolution: judicial practice accounted for 19.7 % of revenues earned by law firms, while international arbitration provided 4.4 %. During the study period, the practice of business protection contributed 4.1 % to the total income generated by law firms. Compared to a year earlier the practice has experienced some decrease in the scope of work with distressed assets: for example, the bankruptcy practice contributed 3.6% to the total earnings of law firms, while the debt restructuring practice accounted for 3.4%. The popularity of the criminal law practice can be confirmed by objective data, and its profitability accounts for 5% of the market.
The corporate law and M&A practice (second in demand and profitability) accounts for a 12.9 % share in the financial receipts of law firms. This indicator is still far from the achievements of past years; but there are no reasons for overwhelming pessimism either. There has always been demand for corporate-wide consulting and high-level industry expertise. As for "pure" M&A, 58 % of "Top-50" participants reported this area to be practiced in their law firms, which is one third more than a year earlier, though its share of the budget fell to 4.8 %.
The three income-generating practices traditionally include taxation law (11.2 %), and the share of this practice during the period covered has increased. One of the reasons for this situation might be the activation of transfer pricing services, which in fact form a separate sub-practice with its leading law firms.
The banking and finance law practice this year is ranked fourth again, and its profitability continues to fall. Its indicator of 6.5 % is more than modest. On the other hand, there were no transactional operations in the banking sector in bulk last year either. At the same time, it is the banks that are the principal employers of law firms, generating 17.8 % of financial proceeds for the legal market. It is obvious that their requests come primarily from legal aid in resolving problem debts.
Minimum growth in financial indicators can be noted in the practice of land relations and real estate. The practice has clearly become more active, but the effect for the legal market seems to be reflected in the financial statements of subsequent periods.
The practices of competition law and intellectual property are traditionally regarded as niche practices. The situation has remained virtually unchanged compared to a year earlier.
There is a trend towards sectoral specialization of law firms. The most profitable law practices included power engineering, pharmaceuticals and agricultural market. However, despite the declared adaptation of services to the specific industrial needs of clients, few market participants practice the sectoral structuring of their law firms. Accordingly, the revenues received from agricultural or pharmaceutical companies are accounted for in the framework of "classical" practices. The majority of clients issues that are addressed are beyond the industrial plane. They somehow or other relate to dispute resolution, bankruptcy, restructuring, corporate law (including a few M&A transactions), and taxation. At the same time, those law firms which reported on the profitability of industry practices, do belong to the leaders of the sectors in question, with boutique specialization in pharmaceuticals or the agricultural sphere in some cases.
As already mentioned, the banking sector turned out to be the principal employer of law firms (17.8 %), with second place going to the agriculture and food industry sector (10.3%), and third place to the energy sector (10.1%). FMCG/trade and real estate/construction industries are the last of the top five (7.9% and 7.8%, respectively).