Regional markets

partner at Arzinger LF, attorney, PhD in Law, MCIArb

senior lawyer at Arzinger LF, attorney

Western admiration

The legal market of Western Ukraine is developing, as is the economy of the region in general, which is slowly but steadily moving out of crisis. It is quite predictable that  lawyers are trying hard to keep up with business trends and are actively developing areas and practices which were extrinsic to regional firms.

These directions include transactional work, M&A, corporate structuring, due diligence, tax planning, antimonopoly law, compliance, arbitration, complex foreign economic agreements, investment projects, support in production relocation, support of funding from international organizations, certification and authorizations, export and import operations and support in international expansion.

IT, business processes outsourcing, agriculture, alternative energy sources, car, food industry, retail, logistics, HoReCa, real estate and construction are among the actively developing industries in the region.

It is interesting that the number of judicial disputes in 2018 decreased significantly, especially economic and tax ones, but this is a rather temporary trend. Business protection and White Collar Crimes should be noted among promising areas. The expected inspections by the State Labor Service of Ukraine and the State Ecological Inspection of Ukraine also made a lot of noise. Preparations for such visits may enter the top legal services of this year. But the services related to response to changes in corporate legislation are most likely in first place on this list.

The legal market could not but have responded to the increase in foreign investment and growth of foreign economic activities. English-speaking lawyers became the norm, rather than a competitive advantage, as it was ten years ago. The number of legal start-ups is constantly growing at a very quick rate compared to development of businesses and the demand for legal services. The new firms are not large market players yet, but they already have a significant effect on pricing policy via the use of dumping, though to the detriment of quality and reputation of the legal business.

The market structure is mixed in general. The majority are  represented by lawyers practicing privately and oriented towards individuals and small enterprises, while the others are small regional law firms. The same structure is expected to be maintained in the next few years and the local market will not consolidate. On the contrary, the number of new small regional law firms will increase, including via them splitting off from existing teams.

This market is very competitive, and most large law firms who opened regional offices in Lviv, closed them in the short run, since they could not understand the specifics of work with local clientele, and tried to establish their own rules of the game not those that actually operate on this market. As a result, cooperation didn't work out that way.

Nevertheless, Arzinger LF, which has been working on the regional market for more than ten years, managed to not only successfully use its advantages and experience as a  large player, but to also become the leading team in the region. Currently, we actually compete not with local, but with Kyiv and international law firms, which is primarily due to administration of key projects in the region and package transactions with a foreign element.

Bar reform has even more deeply divided the market into "corporate" and "trial" lawyers. This difference will become even more distinct with the passing of every year. While earlier "corporate" lawyers could combine their main practice with occasional "visits to court", now they should either refuse clients in terms of judicial disputes or involve in-house attorneys. The regional legal market "follows the client", therefore refusal to take part in judicial work will mean letting the client to competitors not for one project, but probably forever. The similar problem concerns that part of legal start-ups whose partners simply did not have time to become attorneys due to the lack of length of service.

Global informatization has reached the legal services market. Clients independently receive more and more information through the use of search systems, apply online agreements in their practice (a bot will fill in a template of an agreement or decision of general meeting of members for you for a token sum). It will be more complicated to work with such a "simple" legal product with every year, since a client will not pay for what he/she can get for free. Therefore, the future lies in complex legal services requiring a deep level of expertise and industry-specific qualification.

The above circumstances dictate certain rules of the game on the regional market. The advantage will move to large law firms with a sufficient number of attorneys, lawyers with a good command of a foreign language and considerable experience in the industry who, at the same time, understand region specifics. Such a "legal supermarket" will ensure qualified and efficient implementation of complex projects in a short time through the use of large teams and niche specialization. Daily work will transferred in full to small regional law firms.