UKRAINIAN LAW FIRMS 2018 SURVEY

UKRAINIAN LAW FIRMS SEEK NEW NICHES IN BOOMING BITCOIN AND IT SECTORS

The latest annual Ukrainian legal industry analysis finds law firms looking ahead with a growing focus on the fast-emerging crypto currency sector and other IT-related niche segments as the post-Maidan market for legal services continues to evolve

UKRAINIAN LAW FIRMS SEEK NEW NICHES IN BOOMING BITCOIN AND IT SECTORS
Ukraine is at the forefront of the global rush to capitalize on Bitcoin and other crypto currencies. This is creating entirely new sectors of activity for the country’s legal services industry
Oleksiy Nasadyuk
Saturday, 10 March 2018 14:56

The legal industry in Ukraine continues to play a key role in the reform processes taking place in the country, both in terms of directly contributing to the reform of the judiciary and in response to the fast-evolving economic climate. The latest edition of the “Top 50 Leading Law Firms in Ukraine” survey, conducted by Yuridicheskaya Practika publishing house annually since 1997 and published this month in English-language format by Business Ukraine magazine, reveals a legal sector firmly on the road to recovery following the slump of 2014-15. It is also an industry seeking to reinvent itself in order to meet the changing demands of Ukraine’s shifting economic landscape.

 

Contributing to Ukraine’s Post-2014 Transformation

The past year has been a particularly dynamic one for law firms practicing in Ukraine. Along with developments in the legal services industry, the professional community has also been intricately involved in the broader national process of judicial reform. Notably, in 2017 practicing lawyers were able to put themselves forward as candidates for the new-look Supreme Court, with nine candidates eventually becoming judges following a lengthy selection process. The effectiveness of Ukraine’s recalibrated Supreme Court will be one of the key issues to monitor over the coming year. It is part of the wider judicial reform process central to Ukraine’s post-Maidan transformation. “The key challenge for lawyers and for the whole of Ukraine is the pace and success of judicial reform. This will directly affect the investment attractiveness of the country. When the prospects for domestic and international investors of Ukraine become clearer, we can expect to see significant economic growth. This growth will also impact the legal market,” says Asters law firm Managing Partner Oleksiy Didkovskiy.

 

Niche Appeal

While traditional legal sector focuses such as litigation, corporate and tax law are still the most profitable segments of the market, there are signs of a shift towards specialization amid growing levels of interest in emerging fields of practice connected with tech innovation and the most impressive sectors of the Ukrainian economy. This acclimatization fits well with the Ukrainian legal services industry’s famously well-versed adaptation ability. Indeed, the Ukrainian legal business is so adept at changing step to accommodate economic and political turbulence that many professionals prefer not to talk in terms of difficulties but rather to speak about crisis opportunities. 

As the industry continues to recover from the lows of 2014-15, market analysis points increasingly towards the appeal of niche sectors. The most profitable niches at present include energy and agriculture – both sectors that have witnessed significant increases in activity since 2014. The most striking current trend is the growing popularity of IT-related legal services. This reflects the rising importance of the IT sector for the Ukrainian economy as a whole, as well as the rapid physical expansion of the sector.

The emphasis on technical innovations extends to the sphere of legal services connected to bitcoins and crypto currencies, while crossing over into the Legal Tech sector. Ukrainian legal services professionals are now regularly speaking about Legal Tech in the context of industrywide modernization, with bots carrying out tasks like patent research and producing draft contracts. The vast majority of Ukraine’s legal market participants have now come to recognize the futility of ignoring technological progress in their field, and the most forward-looking market players are actively looking to introduce artificial intelligence tools and other innovations into their day-to-day operations. “Legal consulting in the IT sector and FinTech innovations both look like attractive prospects for 2018 and in a longer term perspective. Considering the ongoing digitalization of business and the pace of development, today this sector is one of the most prospective for everyone including for lawyers,” says Antika law firm Managing Partner Alexey Kot.

The booming world of crypto currencies has rarely been out of the headlines over the past year and Ukrainians have been among the most responsive audiences to the opportunities presented by this emerging financial sector. Unsurprisingly, this focus has also made itself felt in the legal industry. “The market is seeing demand for legal support for transactions with ICO (Initial Coin Offering) elements and IT solutions involving blockchain technologies. There is also interest in services related to the investigation of fraud in these spheres,” says Sayenko Kharenko law firm Partner Vladimir Sayenko. Meanwhile, according to Lavrynovych & Partners law firm Managing Partner Maksym Lavrynovych, we can expect to see significant development of legal services protecting the rights of crypto currency miners in Ukraine over the coming two to three years. “The current absence of a legal response to issues related to mining and crypto currencies is the prerequisite for this growth,” he explains.

 

Industry Overview

Market analysis identifies a somewhat paradoxical situation in the personnel sector of Ukraine’s legal services market. On the one hand, the market appears to have an oversupply with legal experts, but on the other hand, many law firm partners note the difficulties of finding lawyers who meet all their requirements. This is particularly true when it comes to niche specializations. We can expect this picture to develop in the coming years as lawyers and law school graduates seek to hone their skillsets to meet the needs of the industry more specifically, but it is unlikely to change significantly in 2018. While there is clearly an expanding market for lawyers with niche skills, the levels of movement within the industry are relatively modest at present. Indeed, more than half the employees from surveyed law firms have not changed their place of work for the past three years. 

The portrait of a leading law firm in Ukraine has not changed much over the course of the past year. Based on the latest survey results, it is more than sufficient to have a team of 25 to 30 lawyers in order to manage a top law firm in Ukraine, while less than half this number will suffice to achieve success in the boutique category. However, it is worth noting that the three law firms occupying the top spots in this year’s Top 50 ranking all have more than 80 lawyers on their staff. In terms of senior management, law firms featured in the Top 50 have an average of five to six partners. Just two of the Top 50 have more than ten partners, while at the other end of the scale, 13 law firms have three partners or fewer. Overall, the average ratio of partners to salaried lawyers across all surveyed law firms is one to six. 

According to the results of this industry survey, Ukraine’s legal sector is a particularly experienced segment of the Ukrainian economy. Almost two-thirds of surveyed lawyers, or 62.5%, have legal industry experience of more than five years, while 34% can boast over a decade of practicing law in Ukraine, and 11.9% are real veterans with 15 years or longer under their belts. This creates the impression of a mature and adult legal services sector, but it is also important to note the role played by young specialists. With the industry emphasis slowly but surely shifting towards new tech-related segments and other niche markets, younger market entrants may soon find themselves in growing demand – assuming they have acquired the requisite skills to tap into the needs of the evolving industry.

 

About the author: Oleksiy Nasadyuk is Head of the Top 50 Leading Law Firms of Ukraine annual research program

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