LAW FIRM DIRECTORY

Legal Market

Expert Committee

Expert Committee

Denis BUGAY,

partner at VB PARTNERS

Tetyana GAVRYSH,

managing partner at ILF law firm

Ernest GRAMATSKIY,

president of Gramatskiy & Partners attorneys at law

Oleksiy Didkovskiy,

Co-Managing Partner at Asters

Mikhail ILYASHEV,

managing partner at Ilyashev & Partners LF

Alexey KOT,

Managing Partner at Antika Law Firm

Yevhen KUBKO,

senior partner at Salkom LF

Denis LYSENKO,

Managing Partner at Aequo Law Firm

Oleh MALINEVSKY,

partner at EQUITY LF

Oleksandr MARTYNENKO,

senior partner at CMS Cameron McKenna Nabarro Olswang international law firm

Denis MIRGORODSKY,

managing partner at Dynasty law firm

Sergey OBERKOVICH,

senior partner at GOLAW

Olga PROSYANYUK,

Managing Partner at AVER LEX 

Vladimir SAYENKO,

partner at Sayenko Kharenko

Mykola STETSENKO,

co-managing partner at AVELLUM

Serhiy CHORNY,

Managing Partner at Baker McKenzie Kyiv Office

 

Expert comments

Market assessment

 

Oleksiy DIDKOVSKIY,

Co-Managing Partner at Asters

 

Macroeconomic stabilization and partial implementation of reforms brought results in the form of moderate growth of business activity in the nation. Correlating with expected GDP growth of Ukraine at the level of +3.5 % in 2018, the legal market also increased its volumes slowly but steadily.

For many leading players on the legal market, including Asters, 2018 was a period of large-scale change. First of all, the year will be remembered for several high-profile mergers of law firms that went against the trend, prevailing in previous years, towards further market segmentation. The expansion of geography, strengthening of practices and sectoral expertise, strengthening of positions on the market were the factors that contributed to our decision to unite the Asters and EPAP Ukraine teams into the largest law firm in the history of Ukraine.

This step was also a response to the ever-increasing requirements made by clients to the level of legal services. This is particularly apparent in comprehensive international projects, where it is necessary to attract specialists from various fields of law. Clients appreciate the opportunity to receive the highest level of legal services in the ‘one stop shop’ format, as quickly and efficiently as possible.

 

Serhiy CHORNY,

Managing Partner at Baker McKenzie Kyiv Office

 

2018 was quite dynamic, and the assessment of its results is generally a positive one. In our key practices — corporate law/M&A and banking/financial law — we see a significant number and good quality of projects. There was more transaction work, and the value of transactions increased significantly. Some of our Ukrainian clients started to implement large M&A transactions in Central and Eastern Europe. This provides work to both Ukrainian lawyers and our colleagues from other offices.

As for the banking and financial practices, we emerged from a sufficiently long period when the majority of projects were related to debt restructuring. Major projects involving new financing have emerged, mainly in the areas of renewable energy and agriculture. There were several interesting projects in international capital markets (borrowing through the issue of foreign debt securities). Due to changes in legislation, especially in terms of currency regulation, the volume of consulting work also increased.

Traditionally, activity is observed in the dispute resolution practice. In addition to supporting a large number of court cases, we started to work more actively in the field of international arbitration. I would also like to note the good dynamics in pharmacy, telecommunications and technology segments (TMT), and the compliance practice. Specialists working in these areas have received a good amount of client tasks, and we plan to actively develop these practices in the future. Another promising practice is international trade. In addition to contractual work, we also dealt with appeals related to the application of sanctions.

 

 

Olga PROSYANYUK,

Managing Partner at AVER LEX

 

This year, several mergers of influential law firms took place on the legal market. It may be said that, in order to strengthen their practices and positions, the law firms, involved in the full cycle, make a choice in favor of mutually-beneficial instruments rather than aggressive competition. At the same time, the positions of specialized boutiques, which can fully support specific client requests, remain in great demand.

As for the conditions, due to the peculiarities of providing protection, partners of law firms (regardless of specialization) had to take care of the safety of their firm and employees this year in Ukraine. Some firms conducted special training for their teams in the event of search of a law firm, attempts to access information about clients or other possible ways in which pressure can be applied. As our practice shows, one effective way of protection in such situations is a legal assistance agreement pre-signed by a partner/attorney/lawyer with an attorney.

 

Alexey KOT,

Managing Partner at Antika Law Firm

 

There were several trends in the legal market in 2018, which can hardly be called new. Thus, companies in the real sector of the economy still tried to close most legal issues via in-house lawyers. They resorted to the help of external advisors in emergency cases or when it came to performing tasks in highly-specialized industries, where unique expertise was required. This may include support of various projects in the field of energy (these are projects related to subsoil use, renewable energy, as well as transforming joint venture agreements into production sharing agreements).

In addition, the level of competition in the field of legal consulting remained traditionally high. The situation was fueled by the appearance of young, rather ambitious players who were actively, and sometimes even aggressively, involved in competing to attract clients. It should be noted that the competence of their lawyers is sometimes not inferior to the expertise of "experienced" law firms, which, in turn, stimulated the latter to search for new ways of developing business and maintaining their market positions. I believe that in this context, innovation, technology and, of course, a high level of expertise, quality of services provided and focus on clients come to the fore in the battle for the trust and loyalty of clients.

 

 

Denis LYSENKO,

Managing Partner at Aequo Law Firm

 

The Ukrainian legal market spent 2018 in anticipation of the completion of judicial reform and the launch of full-scale bar reform, which met strong resistance from the nomenclature and other persons interested in maintaining the disappointing status quo. A notable trend was the merging of teams of experienced lawyers to other law firms with strong local brands. The prospects for such consolidation in the upper market segment will become clearer as investment activity in the country recovers and, until then, the changes taking place are likely to lead to tougher competition, including within the bigger teams too. Individuals who come from large legal businesses continue to supplement the staffing of public authorities, but there was a reverse trend, namely the return of experienced lawyers from the civil service to private legal practice.

 

 

Practices in demand

Tetyana GAVRYSH,

managing partner at ILF law firm

 

Judicial practice products are traditionally the leading ones on the market. 80% of judicial projects in our profile are accounted for by asset protection of owners from dynamically developing Ukrainian companies (this relates to land, real estate, reputation and business). Property disputes have been the trend for last few years. This was previously facilitated by legal loopholes regarding land title, especially in agriculture, as well as the equity rights of business owners. Currently, the issue is the appearance of flexible tools in corporate management at legislative level (in particular, the law on limited liability companies) and cancellation of the moratorium on the sale of agricultural land. In my opinion, there are prerequisites for long-term growth in medical disputes (clinic v. patient, clinic — patient — insurance company) and protection in the European Court of Human Rights. However, these are highly-specialized products that require deep exposure in the internal processes of medical institutions and treatment guidelines, as well as practice of the European Court itself.

When it comes to consulting, it will also develop, especially in corporate and labor law. This will happen on various markets, including the new medical one. In 2018 our team provided services to more than 60 medical institutions in 15 regions on issues of reorganization, adjustment of management systems, development and legalization of management processes and staff motivation.

 

Oleksandr MARTYNENKO,

senior partner at CMS Cameron McKenna Nabarro Olswang international law firm

 

I believe that the trends present in 2018 will be maintained in general. Dispute resolution practice is the leading one. Especially in cases related to Russian aggression against Ukraine.

Power industry practice is also riding high, first and foremost, in issues related to renewable power sources. Many participants are eager to jump into the last carriage of the green tariff train. Their hurry may be explained not only by favorable conditions offered by the State of Ukraine, but also by the highly adverse policy reversal on this issue in the European Union. It is common knowledge that the majority of European countries radically cut  "green tariffs", thereby preventing an inflow of investments into this area. Furthermore, they refuse to pay according to tariffs promised at the time of investment. People began to apply to courts and investment arbitrations and win cases. But at some moment the European Commission claimed that any payments made by any EU member state under such court/arbitration decisions will be qualified by the European Commission as providing government assistance to business entities, which is forbidden without its permission. Therefore, the situation in the European Union reached gridlock. So, people came to us with their money.

There is also some revival in transactional practice. Activities on the merger and acquisition market began to recover, as was the case in the financial sector related to the debt financing market.

Special attention should be paid to agricultural markets and segments. Powerful investors are still looking attentively at this area. Ukraine finds itself under powerful pressing from international institutions in terms of canceling the moratorium on the purchase and sale of agricultural land. I believe the issue is not about whether the moratorium will be cancelled, but when this will happen.

 

Sergey OBERKOVICH,

senior partner at GOLAW

 

As we know, the legal services market is very dynamic. There were no sea changes on the market, though it did undergo some changes. Priority orientations and an approach to business change, together with changes in the Ukrainian economy and legal framework. Issues related to business restructuring, its optimization and cost saving are highly relevant. Additionally, the services related to banking system also hold sway. Monetary and financial regulations change constantly, so the demand in this area is maintained. Bankruptcy, debt restructuring and debt recovery issues are also relevant under conditions of a faltering economy. Currently, there is a trend of legal services increase in the energy and natural resources area. Due to frequent corporate conflicts arising due to breach of contractual obligations, judicial dispute resolution practice is still a promising direction of the legal services market. Tax advisory services are also in demand.

 

 

Vladimir SAYENKO,

partner at Sayenko Kharenko

 

The profitability of law firm practices can be traced by their specialization and market positioning. However, there are no two identical firms. One and the same practice may show absolutely different results in different firms. We diversified our business a long time ago, so both our transactional practice and dispute resolution practice are traditionally successful for us. We expect growing demand for the tax advisory service and dispute support. For that reason, we have recently strengthened this practice with the arrival of new partner Svitlana Musienko. At the same time, we are not counting on further increase in transactional practice activity 2019. Elections can only restrict investment. Lawyers specializing in electoral campaign support will certainly see growth. However, this is more about boutique law firms and lawyers practicing privately. Large law firms usually do not play these games, since political affiliation has adverse effects on a legal business.

 

 

Denis MIRGORODSKY,

managing partner at Dynasty law firm

 

Transactions, legal proceedings and criminal investigations still remain the three main pillars for law firms. But there are significant changes compared to the previous year. Firstly, a number of disputes involving the state-run Deposit Guarantee Fund increased due to the holding of auctions on the sale of assets of insolvent banks. Secondly, the fiscal burden on business grew  this year, and due to this the number of tax disputes increased sharply, with very large additional amounts charged. The next two years are expected to be productive for business structuring and international trade practices due to the adaptation of Ukrainian legislation to the BEPS plan and the need to reconsider relations with controlled foreign companies.

 

 

Oleh MALINEVSKY,

partner at EQUITY LF

 

Under conditions of permanent economic crisis, the main amounts of profit are for clients are in banking, tax law, judicial and criminal, and bankruptcy practices, which are the most sensitive for them. These practices have the preconditions necessary for growth. Thus, the total monopoly held by attorneys over legal representation will strengthen, heightening demand for attorneys in judicial practice. Establishment of the Supreme Anti-Corruption Court will complete the creation of a single anti-corruption vertical structure and, together with tightening of state anti-corruption policy, will require entire teams of high-profile attorneys specialized in White Collar Crime. Adoption of the Bankruptcy Procedure Code of Ukraine will strengthen demand for the bankruptcy and distressed assets practice. The ongoing policy of reforming the banking sector will facilitate the development of the specified practice, as well as banking law practice. Economic factors will be favorable for growth in the land (agrarian) law and intellectual property law practices.

 

 

Development forecast

Denis BUGAY,

partner at VB PARTNERS

 

The key market trend is the enlargement of law firms. Foreign law firms will strive to work with national clients, and not only with foreign business. I believe that the trend I call "brand for one day" will be maintained. The Ukrainian legal market has a well-developed infrastructure. We have several professional associations, professional advisors on promotion, lots and lots of conferences are held, including those arranged by legal media, and various ratings are compiled. All this in aggregate results in efficient promotion of a legal brand. Some companies actively use this infrastructure. They invest large resources in order to receive immediate results, which is high awareness. But I am sure that, at the same time, many do not pay attention to procedures and standards. Such a success is a temporary phenomenon. Bright stars will fade fast if, in addition to investment in the brand, they will not increase expertise, manage the team and establish efficient business processes and client care.

 

 

Yevhen KUBKO,

senior partner at Salkom LF

 

There will be no drastic changes on the legal services market until the end of 2019. Alongside that, the trend towards merger, or at least reorganization of existing law firms, will be maintained, as well will be the appearance of new players on the legal services market. At the end of year and after that these trends will definitely strengthen under the influence of the economic situation and political processes related to presidential and parliamentary elections.

 

 

Mikhail ILYASHEV,

managing partner at Ilyashev & Partners LF

 

The incoming year will probably make adjustments to the situation on the legal services market. I use the word "probably" since it will depend on the results of presidential elections.

With a new President of Ukraine now in place, it is highly likely that this will lead to staff changes in many leading positions in state companies, banks which will, in turn,  result in different law firms serving these institutions. Since the share of such clients is very high in the revenue structure of some law firms, it will have an impact on their market positions, if not in 2019, then certainly in 2020.

International players are hardly expected to enter the Ukrainian market in an election year, with the parliamentary elections now scheduled for July. However, the closing of offices of foreign companies is possible though unlikely. I believe everyone will prefer to wait for the results of the July vote.

As to the structure of legal services, it will not change much. The main source of income will be court representation, as was the case before. Criminal law will be a promising branch of law for large law firms. As to IPO-related services, they will be, to put it lightly, in very low demand.

 

 

Mykola STETSENKO,

co-managing partner at AVELLUM

 

The expansion of all practices is expected in 2019 if there are no political or macroeconomic cataclysms. The market itself is becoming more mature, and the quality of services is gradually improving along with the increasing degree of complexity of Ukrainian legislation. In the long term one should, with further economic growth, expect the arrival of some international law firms on the Ukrainian market, most likely from the USA. Mergers between national firms are likely to continue, since competition for the best employees will become stronger on a growing market, and administrative expenses will increase. Accordingly, larger firms will address these challenges better. Although I do not deny that highly specialized boutique firms have a future this is, rather, an exception to the rule.

 

Ernest GRAMATSKIY,

president of Gramatskiy & Partners attorneys at law

 

 

It is quite likely that the demand for criminal practice services will increase in 2019, including for White Collars Crimes. This is associated with the presidential and parliamentary elections, election campaigns and the political consequences that elections will bring.  Legal Tech will continue to gain pace, as it showed its competitive ability in 2018.

Significant changes will occur in the area of tax consulting. I believe that 2019 will be marked by deepening of implementation of the BEPS action plan, as well as significant amendments of provisions on collection of corporation tax.

I would like to mention separately the upcoming full start of the attorney monopoly in courts of all instances, as well as electronic document flow of all participants of legal proceedings. According to forecasts by the State Judicial Administration, the Unified Judicial Information and Telecommunications System will start operating throughout Ukraine in 2019, which will significantly simplify the work of conflict resolution practice specialists.

We expect interesting judicial practice in land disputes in Real Estate. In early October the attention of legal market was drawn by the Resolution of the Donetsk Court of Appeal dated October 12, 2018 in case No. 227/1505/18, which recognized as lawful the transfer of land plots under contracts of exchange. In my opinion, its significance is overestimated. Despite the fact that the court used the decision of the ECHR in the Zelenchuk and Tsitsyura vs Ukraine case for justification, the exchange of land plots is an exception and the moratorium on the sale of agricultural land is not applied to it.

Therefore, in 2019 we look forward to decisions by the Supreme Court in cases associated with land relations and application of the above decision of the ECHR, since this could be a way for the opening of the land market in the near future.

In general terms, 2019 may bring us both pleasant and unpleasant gifts. We won’t be bored, that's for sure!