LEGAL SECTOR

REGIONAL TRENDS: Lviv leads regional reinvention of legal sector as growing international investment creates new demand

Economic and legislative changes along with the arrival of international investors are forcing law firms across Ukraine to rethink their professional priorities

REGIONAL TRENDS: Lviv leads regional reinvention of legal sector as growing international investment creates new demand
Lviv is leading the regional revival of the Ukrainian legal sector. A slowly rising tide of international investment in western Ukrainian is fuelling demand for new services and creating new markets for legal sector professionals.
Khrystyna Posheliuzhna
Saturday, 07 April 2018 13:12

The transformations taking place in Ukrainian society since 2014 have also left their mark on the country’s legal industry. The appearance of new state institutions, wholesale changes to legislation, and the emergence of entirely new economic priorities have obliged many Ukrainian law firms to rethink their professional focuses. This trend is evident across the country, with numerous regional nuances reflecting Ukraine’s diversity.

The overall picture in early 2018 is one of guarded optimism throughout Ukraine’s legal industry as law firms throughout the country complete their adaption to the new environment and begin to anticipate a return to growth. The economic shocks of the past four years are clearly subsiding. In their place are expectations of consolidation based on solid if unspectacular GDP growth and positive indicators in sectors as diverse as retail and IT outsourcing.

 

Lviv Leads the Way

Lviv is leading the regional revival of the Ukrainian legal sector. A slowly rising tide of international investment in western Ukrainian is fuelling demand for new services and creating new markets for legal sector professionals. This comes as no surprise to those monitoring the regional breakdown of Ukraine’s investment appeal. Relatively speaking, Lviv has been one of Ukraine’s few post-2014 investment success stories. The city’s close proximity to EU markets, coupled with its strong academic traditions and business-friendly local authorities, have helped to attract a number of international investors and generate considerable demand for suitable legal services at the local level.

Lviv-based law firm Advice Group’s Managing Partner Anton Podilchuk says demand has been strongest for one-stop-shop legal services ranging from company registration to launch. This mix can include everything from M&A, tax planning, personnel issues, land and real estate agreements, licensing and certification, to support in establishing the terms of cooperation with international financial institutions.

Fellow Lviv specialist lawyer Serhiy Matviyiv, who serves as Managing Partner at Matviyiv & Partners, concurs. He says the increasingly attractive investment climate in the Lviv region is contributing to the development of a new legal services market for international clients based on what he calls “a turnkey basis”. This growing demand for legal services is also helping to fuel the creation of so-called startup law firms in the Lviv region, some of which fall short of the standards international clients might expect to encounter. “Many of the new market players are not able to provide the necessary quality of service,” says Matviyiv, adding that they tend to drive prices down by engaging in dumping practices. Unsurprisingly, this is not a popular trend among the city’s more established legal services practitioners. 

With more and more international companies seeking to develop presences in Lviv, the city’s legal industry professionals are also finding themselves increasingly called upon to address issues of international compliance. “EU and US regulations encourage businesses to implement compliance policies and to adopt a zero tolerance attitude towards corruption. This leads to rising interest in these kinds of services. There is also a marked increase in demand for investigations to search for possible “white collar” crime within companies. Investigations of this nature have been the flavor of the month recently,” says Podilchuk. 

 

Zakarpattia Battles Brain Drain

South of Lviv and across the Carpathian mountains in Ukraine’s Zakarpattia region, legal innovation has taken a back seat to more immediate challenges presented by a local workforce that is shrinking due to the recent rise in economic  migration to nearby EU countries Slovakia, Poland, Romania and Hungary. “For many companies, legal services have become a secondary issue compared to the simple struggle to hold on to sufficient personnel and keep the business afloat,” says Rostislav Pazyna, Managing Partner at Collegium law firm. He notes local frustrations with the quality of the region’s judges. Pazyna says this has led to fewer cases going to court locally.  

 

Odesa Market Expansion

Ukraine’s largest Black Sea port city Odesa has witnessed growing interest in legal services related to all things nautical over the past year. The city has always been a hub for legal practices relating to international trade and the protection of seamen abroad, but there has recently been a marked upturn in demand for legal support in areas connected to sea transport and infrastructure. This is in part due to rising international investment in Ukraine’s river port and seaport infrastructure as the country seeks to develop its international trade capacity. With local maritime expertize already in place, Odesa law firms are ideally positioned to take advantage as international companies and Ukrainian businesses alike look to upgrade the country’s nautical gateways and seafaring traffic.

The Odesa legal sector is also attracting additional market participants. Jurline law firm Managing Partner Volodymyr Zubar says one of the most prominent trends in the Odesa region legal sector over the past twelve months has been the appearance of new law firms. “This growing number of small and medium-sized law firms appearing in the city will inevitably affect the balance of power within the Odesa legal services market over the coming two to three years,” he says. Zubar believes this will add to the evolution of the market, a process that has already seen Odesa law firm clientele increasingly inclined to use the services of several law firms in parallel while also maintaining their own in-house legal teams.

 

Dnipro: Gateway to the Breadbasket

As Ukraine’s agricultural sector goes from strength to strength and attracts growing levels of international interest, law firms in Dnipro are finding themselves faced with rising demand for agribusiness-related services. Although primarily seen as Ukraine’s industrial capital, Dnipro is also the largest city and biggest river port terminal in the heartlands of Ukraine’s famed breadbasket, making it a logical focus for many of the new companies entering the Ukrainian market and seeking agribusiness legal services. Evgeniy Smirnov, the Managing Partner of Smirnov, Tarasevich & Partners law firm, says services relating to agribusiness acquisitions were among the most popular in Dnipro throughout 2017. “Foreign investors tend to acquire Ukrainian agricultural enterprises that come complete with considerable volumes of long-term land lease agreements for agricultural purposes,” he comments. Smirnov says that in line with recent market trends, many of the international companies investing in Ukraine’s agricultural sector tend to seek out regional law firms located closer to their assets. This has providing the Dnipro legal sector with additional business that might have previously gone to Kyiv-based law firms.

Another agriculture-related area of Dnipro region legal practice experiencing growing demand over the past year is protection against so-called raider attacks and illegal land grabs. “Despite the frequent statements made by various state agencies underlining their commitment to preventing raider attacks on agrarian enterprises, the protection of businesses throughout the agriculture sector remained just as relevant in 2017,” says Smirnov. “Over the past year, new raider schemes have emerged focusing on entire enterprises and also land banks under long-term lease.” This aspect of the legal services industry remains in high demand throughout Ukraine, where complaints over lax law enforcement remain all too common. 

 

Kharkiv Wealth Management

In eastern Ukraine’s largest city, one of the most striking trends of the past 12 months has been the growth in demand for wealth management services from law firms. Maksym Sheverdin, the Managing Partner at Sheverdin & Partners law firm, says that while requests of this nature are nothing new for the Kyiv legal sector, they are now becoming more commonplace in regional centers like Kharkiv as wealthy members of the local business community seek more secure and transparent ways to manage their assets. “Wealth management requirements tend to involve a complex cocktail of legal consulting services covering all aspects of the financial life of private clients with large personal fortunes. This can include advice on investments, taxation, long-term planning, and things like corporate rights management,” explains Sheverdin. “It is not yet time to talk about the emergence of an entirely new legal practice as wealth management tends to involve a synthesis of various different legal specializations. Nevertheless, it is becoming a more popular service in all of Ukraine’s regional capitals. This is true of Kharkiv in particular.”

About the author: Khrystyna Posheliuzhna is a correspondent for Yuridicheskaya Practika

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