Reasons for Optimism

Research 2021

Ukrainian Law Firms. A Handbook for Foreign Clients is initially designed to connect business and lawyers, providing a comprehensive survey of topical issues, and navigating customers across doing business in this unprecedented period.

This publication traditionally presents the landscape of the Ukrainian legal market by practice areas and industries — in a way that can be easily navigated by clients.

The research is conducted in several steps.

First, the team collects the submissions from law firms and systematizes available public sources.

Second, we ask market participants for their individual feedbacks for peers’ reviews, hereafter we conduct in-depth personal telephone (Zoom, Skype or Teams) interviews. All interviewees are granted confidentiality at all levels.

In-house counsel is another valuable source of our research, and give us a sharper vision, especially on the industry-wise specifics of external outsourcing.

Third, the communication and collection of insights is done on a non-stop basis for many years and became an essential part of the further promotion of this publication.

As one of the key purposes of the research is to provide the complete market landscape, the firms that do not provide for their submissions but are highly referred during the polls and interviews, are still mentioned in the respective practices. As we don’t have information on their portfolios and available public information is not sufficient to determine their market position properly, we do not rank them.

The contents of surveys remained almost identical to the previous edition. The Capital Markets survey became an integral part of the Banking & Finance overview. In addition, we continue our research of the Fintech area and keep an eye on Aviation Finance developments.

The market landscape is presented in the form of corporate and individual shortlists.

The shortlists are composed of 3, 5 and 10 firms in those practices/industries where it is relevant for the current market situation. In certain narrow areas where the landscape is not sharply seen, we provided our selection in alphabetical order with supportive descriptions of the performance of market players in our editorial texts.

This, the nineteenth edition of the Handbook, includes 20 surveys and 32 rankings.

Inclusion in ranking tables is based on a reasonable combination of the project portfolio during the research period — 2020, complexity and significance of matters, client profile, practice versatility, the team’s expertise, its capacity and reputation, sustainable development during the research period and beyond it.

The category “Other Established Practices” encompasses firms with sustainable expertise and is proved by the subsequent track record during the research period, and an accomplished team of legal practitioners.

The category for personalities — “Authorities” — reflects individual achievements, referred to undisputable market professionals named as people establishing standards, less involved in each project at present, but playing a key role in client relationships, reputation and the market staying power of their firms or practices.

In response to market feedback in certain practice areas, in the current publication we introduced the category of “Celebrated Practitioners”, which determines practicing long-timers, and showcasing their many years of experience on the legal market.

We further continue to collect and systematize publishable deals (please, see Tables 1-4). The table of transactions in the antitrust area is not published this year due to the non-provision of foreign legal counsel, which is considered to be the most valuable part of this list.

 

MARKET EVENTS

Splits, Amalgamations and Expansions

In late September 2020 a well-known IP professional Oleksandr Mamunya and a group of lawyers left AEQUO law firm and started IP boutique Mamunya IP.

In December 2020 Sayenko Kharenko opened its office in Strasbourg to protect the rights of the firm’s clients in the European Court of Human Rights. The office is headed by Oleksandr Ovchynnykov, a French lawyer of Ukrainian origin.

In April 2021 Volodymyr Chyzhykov and Mykola Mishyn left KPMG and established A1 Consulting. The new firm specializes in transfer pricing, corporate tax and business assessment.

On 2 June Belarusian law firm REVERA opened an office in Ukraine, which is primarily focused on the IT business. Alexander ­Shtrykul, leading associate, became its head.

On 14 June 2021 Kinstellar announced the acquisition of DLA Piper’s practice in Ukraine. Now consisting of 60 lawyers, including 10 partners, Kinstellar is among the largest law firms in Ukraine. The firm is led by a management committee comprised of Daniel Bilak, senior counsel, and co-managing partners Margarita Karpenko, formerly the managing partner of DLA Piper Ukraine, and Olena Kuchynska, the managing partner of Kinstellar’s pre-merger Kyiv office.

 

Promotions and Transfers

In June 2020 Daniel Bilak, former chief investment adviser to the Prime Minister of Ukraine, joined Kinstellar as a senior counsel. Based in Kyiv, he works closely with Kinstellar’s regional and local management and business development teams regarding strategic and business development initiatives for the firm across the region as a whole.

At the beginning of July Eterna Law announced the joining of the banking and finance team led by partner Nikolas Likhachov (­previously the team was part of Spensers). Nataliia Koroviakovska (previously — individual practice) joined the firm as a partner and head of the dispute resolution practice in Ukraine.

In August 2020 Mykyta Nota re-joined AVELLUM as counsel, focusing on competition and antitrust, arbitration and cross-border litigation. Kostiantyn Likarchuk also re-joined as senior partner and head of the international arbitration practice, effective from 1 January 2021.

Tetiana Tyshchenko joined Asters as a partner responsible for leading all aspects of business development across the firm’s international offices, coordinating and enhancing communication with strategic international partners. Prior to joining she was the commercial director at AEQUO.

On 15 September 2020 Maksym Grekov joined Juscutum Law Firm as a business partner. He is an expert in the international structuring of corporate and private assets.

In October the real estate and construction practice of Sayenko Kharenko added Svitlana Gurieieva as a partner and Olena Denisova as a senior associate, both from Auchan Retail Ukraine.

In October Kinstellar announced the appointment of ­Olexander Martinenko as a partner and head of the dispute resolution and commercial practices at the Kyiv office. He came from the Kyiv practice of CMS Cameron McKenna Nabarro Olswang, where he was a senior partner.

In November Borys Danevych joined CMS Cameron McKenna Nabarro Olswang as a partner and head of life sciences. Danevych.Law, a life sciences Ukrainian boutique law firm was strategically integrated in the Kyiv office following his appointment.

In November two more business partners joined Juscutum Law Firm — Vladislav Belotskiy became head of the IP practice, and ­Taisiya Belotskaya — of the family law practice.

DLA Piper announced the appointment of Natalia Kirichenko as head of the intellectual property and technology practice at its Kyiv office. The appointment follows the departure of Natalia ­Pakhomovska, who led the team and decided to leave the firm.

The same month LCF Law Group announced the promotion of Iryna Kobets to counsel and head of litigation.

In December VB PARTNERS announced the expansion of its partnership team with the promotion of counsel Denys Shkarovsky to partner. He specializes in criminal proceedings, protection of business, its shareholders and top managers from the pressure of law-enforcement agencies.

From 1 January 2021 Maksym Maksymenko was promoted to partner at AVELLUM’s real estate and infrastructure practice.

AVER LEX has reinforced its litigation practice. Volodymyr Yenich, who was promoted to partner, is experienced in representing clients in commercial, corporate and administrative disputes. ­Kateryna Stashkiv was promoted to counsel and defends the interests of public officials in cases involving protection of honor, dignity and business reputation.

In March 2021 Mark Segall, a recognized lawyer with over 20 years of experience, joined Dentons as a partner in the banking and finance team in Warsaw. His experience covers a wide range of financial products, including acquisition and leveraged finance, structured commodity finance and project finance. Before that he was a Warsaw-based banking partner of CMS Cameron McKenna Nabarro Olswang.

The same month Redcliffe Partners announced the arrival of new partner Sergiy Ignatovsky, who joined the litigation and restructuring practices. He was previously chief legal officer at Mriya Agro Holding. Furthermore, Yuriy Terentyev, former chairman of the ­Antimonopoly Committee of Ukraine, joined the firm as a partner.

In April 2021 Asters announced that Sergiy Burnus had ­rejoined the firm as counsel and the head of its London office. He combines an extensive variety of legal advisory, regulatory policy, and business development projects in the UK and Ukraine in the banking and finance, capital markets, M&A, dispute resolution, immigration and ­international trade areas.

In May 2021 Eterna Law announced Andrii Trostin’s joining as a partner and head of its GR practice (previously — Philip Morris Ukraine).

Dr. Tatyana Slipachuk resumed her legal career and returned to Sayenko Kharenko as special advisor. In her new role she focuses on arbitration practice, cross-border disputes and multijurisdictional investigations and proceedings, continuing her activities as an arbitrator and expert.

In February the co-head of the judicial practice, Andrii ­Hvozdetskyi, was promoted to partner of the ADER HABER law firm. He specializes in doing business for leading companies and corporations, representing clients in banking disputes, debt restructuring ­projects, and conducting financial investigations.

At the beginning of July 2021, Oleksiy Filatov joined AEQUO as a senior partner and head of the dispute resolution practice group. He focuses on cross-border and local litigation and international arbitration, particularly corporate, commercial and investment disputes. He had previously acted as secretary of the Constitutional Commission and coordinator of the Judicial Reform Council under the President of Ukraine and his deputy chief-of-staff.

 

 

Practice Outlook at a Glance

The outbreak of the pandemic in spring 2020 provoked total business ambiguity. Many planned transactions were postponed or even cancelled, while the focus shifted on day-to-day operations until the situation become more or less predictable. The past autumn showed signs of recovery and return of postponed demand. Compared to other sectors, legal services demonstrated resilience despite the new waves of restrictions.

Labor and employment assignments expectedly kept law firms busy. This is not only the result of redundancies caused by the lockdown but also mass revelation of shadow employment. After political tensions and persecution in Belarus following the presidential election in August 2020, a huge wave of relocation requests arrived, especially from the IT sector.

The standstill in M&A in the second quarter of 2020 changed for the revival in summer and a truly busy end of the year. Interestingly enough, foreign investors are as always much more exposed to risks and behave traditionally more cautiously than locals. The average sum of deals fell, especially for internal Ukrainian transactions. Thus, for the year 2021 and beyond M&A experts predict the main activity will be in the mid-market.

Privatization and public-private partnership make up another lucrative area, where law firms are actively promoting their services.

Transformations are ongoing in tax practice, provoking vivid changes in its structure. Due to the moratorium on tax inspections the practice of subsequent legal support shrunk, while demand for administrative and court appeals fell. However, auditing and unblocking of tax invoices, determination of the category of risky taxpayers, as well as VAT refunds, are sought after.

The changes in tax legislation that incorporated new institutions, such as controlled foreign companies (CFC) rules, place of effective management (PoEM), gave impetus for development of tax planning, as businesses were forced to reconsider and simplify their corporate structures.

Pharmaceuticals and healthcare obviously became a field of strong concern compared to any other industry. The firms with sector specific experience report on increases in client inquiries in corporate and business law, intellectual property, regulatory issues and dispute resolution. Public-private partnership in healthcare is another prospective area of legal work.

Ukrainian IT and R&D were on top in the last few years and continue to secure both confident growth and rapid spread to other businesses and everyday life. For example, the retail industry is moving online, facilitating e-commerce and e-markets; the shipping and delivery service moved to mobile applications, drastically transforming customer experience. TV medicine rebooted itself as one of the most fast-growing areas. Furthermore, cybersecurity and extra data protection appeared to be a pending issue for many industries.

After being prohibited for more than a decade, the gambling business in Ukraine was legalized in August 2020. So, gambling is now another rapidly launched practice in a number of law firms, including online casinos.

The development of infrastructure in Ukraine is driven by state projects supported by international financial institutions. These are projects of public-private partnerships in railways, highways, aviation and port infrastructure. State enterprises of Ukrainian sea ports are being prepared for privatization. The signing of concession agreements in relation to Kherson and Olvia sea ports in 2020 was a positive sign for investors.

Expansion plans and aggressive export strategies of national business are postponed for better times. On the contrary, national manufacturers became keener to protect their local markets by preventing imports from abroad. Matters of export control, trade investigations and imposition of anti-dumping and safeguard duties facilitated the development of this niche practice over the last few years. Nevertheless, insiders argue that it is more and more difficult to initiate a trade investigation in view of the broader geopolitical perspective, and GR plays an extremely important role in trade matters. In addition, recent trade wars with neighboring countries brought a new nature of work for international trade practitioners.

The COVID-19 outbreak disrupted established relationships ­between business partners and caused failure to execute contracts for reasons beyond the control of the parties, entailing a series of commercial disputes. Market participants confirm that dispute resolution in arbitration will increasingly go online. Lots of oral hearings take place online due to the pandemic. It is also expected that even the resolution of complicated arbitration disputes may completely shift online, alongside the development of appropriate electronic tools. Perhaps this is an inevitable positive development that may speed up the dispute resolution process, making it faster, easier and cheaper.

Corporate bankruptcies are an enviable consequence of each economic crisis. The big share of non-performing loans of the banking sector in Ukraine gives rise to a huge number of credit disputes in courts.

The lodging of appeals against sanctions imposed by the ­National State Security and Defense Council is currently considered to be a lucrative area of litigation work for the near future. And, of course, white-collar crime and the criminal law practice continued to boom, as the state fuels criminal defense attorneys with a huge portion of work with declaring its “imprisoning course”.

 

TOP-10 Market Trends

The lessons of uncertainty and turbulence obviously led to ­changes in legal business operations, management of fee earners and support staff, client relationships, and to rethinking marketing and investment strategies. The ULF team has been keeping an eye on market trends for almost 19 years and, by way of tradition, provides for your attention our vision of trends based on visible market changes and exclusive insights.

1. Splits and team departures

The year of 2020 and the first half of 2021 brought a predictable misbalance in the incomes of partners and certain legal practices. Conflict situations are inevitable and result, naturally, in splits and departures. As long as the turbulence within the business environment prevails, the internal storms inside law firms will remain. This is a crash test for partnerships, values, flexibility, and ability to preserve ethics in terms of possible “divorces”.

Another trend initiated in 2020 and which is likely to continue in 2021, is lateral hiring of partners and teams to open new practices and re-launch existing ones. Entry requirements are specified by quite significant targets on annually-generated business. This is perhaps the main factor that limits mass transfers.

2. Shrunken budgets and keeping sophisticated work inside legal departments

In addition to postponed business expansions and transactions that are on hold, in-house lawyers confirm that high-profile work is being performed more and more by their internal legal departments without the hiring of an external counsel. It’s important to place this trend in a wider context, basically expanding the role of corporate legal departments. Not only were budgets reduced, but control on their use became more precise.

3. Cost-cutting and aggressive cost control measures

Despite cost-cutting being an unpopular topic for an honest discussion many firms, nevertheless, took immediate steps to reduce their costs – decreasing their headcounts, working hours, compensations and bonuses, as well as marketing and business development expenditures, office rent, etc. According to insights from the market, as of autumn 2020 many of them had repaid the cut salaries or at least returned them to the previous level. Although, as for the summer of 2021, there is much greater confidence than there was in 2020, though many firms are still rather cautious about additional internal expenses.

Despite a turbulent 2020 and many business activities finding themselves on hold, significant reductions in spending resulted in growth of profits per equity partner (PEP) in Western markets. This is a noteworthy trend and one that was reported by various professional media. As for Ukraine, the high-end market certifies that PEP for 2020 remained more or less at the level of 2019.

4. Contract lawyering

The trend outlined by in-house lawyers and rather spread in Western countries, is attracting lawyers on a project-by-project basis. This is a quite flexible solution in having such a roster of legal practitioners — quite efficient in terms of the cost-cutting and right-sizing trends of the disruptive spring of 2020. Law firms benefit in terms of employment expenses, while both sides could achieve the so critical work-life balance. In the US this category is called contract attorneys.

5. Pricing pressure in high-margin practices

The competition in the segment of premium and high-margin work is often won by big full-service firms not only because of their reputation and market position, but due to a banally favorable price. Possessing a significant level of financial safety, Big Law can afford temporary price drops and even dumping prices. It might have looked strange 5-10 years ago, but now the strategy of grabbing a big client is aimed at acquiring a project due to pricing advantage and further efficient cross-sale of other services. Some mid-market firms that are competing to provide this elite work for average rates confirm that they are gradually losing tenders to market giants.

On the contrary, overrated pricing may play a bad game with firms who attempt cherry picking. This may work for a certain category of clients and services, but could be harmful for other clients in a firm’s portfolio. Law firms seeking to follow a unified rates approach already face internal conflicts between partners and a certain fall in client retention.

6. Temporary alliances for tenders

The qualifying requirements for tenders are rising alongside the complexity of projects. Some ambitious mandates require specific expertise which could be absent even in big full-service law firms. Earlier on, this problem was mainly resolved by hunting for subsequent practitioners from the market, but now law firms intend to cooperate as ad hoc alliances on a project-by-project base.

It gives us reason for optimism, as it brings value to clients and improves the quality of legal service as such. Even more, this is an important step forward in developing civilized competition.

7. Strategic client management

Strategic client management is getting more and more sophisticated, extending to a full circle of legal service delivery and post-communication, tailored pricing models, cross-sale. The situation has forced law firm leaders to review their relationship with clients and enhance their focus on the client experience. A boosted level of client service and permanent availability of core executives could be the most efficient tool for client retention and ensuring long-term relationships. Interestingly, at one of the recent professional forums in-house counsel confirmed that Ukrainian law firms preserve a much more client-centered approach as compared to firms abroad, where lawyers are less responsive to non-working hours in emergency situations.

In general, this is a very meaningful trend that may be a tipping point in boosting the quality of legal advice in a sustainable evolutionary way.

8. Hybrid mode of work

After several waves of lockdown, many law firms introduced a ­hybrid mode of work, whereby employees may stay at home and work at the office depending on the situation. Since March 2020 perhaps all businesses have expanded the boundaries of what can be done virtually. Among the key lessons learned is experience in arranging working process remotely, building virtual teams, transition to full electronic document management and online data storages, establishment or improvement of cyber security.

Apart from the technical side of remote working, there is also the rather sensitive but quite widespread problem of the burnout and emotional state of some employees. Certain firms, especially internationals ones, shared their experience in attracting coaches and psychologists for preserving the mental health of their teams.

That said, it is important to preserve the personal touch for strategic relationships. Personal meetings enhanced their value in the long-term perspective. Soft skills in maintaining communication with clients, the art of negotiation and project management became no less important than hard skills. As some firms revealed, it has affected the hiring process.

9. Video communication era

Internal and external communications in a video format acquired a new sense. It brought more flexibility and time-savvy options. ­Despite the pandemic impacting the ability to travel with business and networking purposes in mind, video conferences brought local and foreign clients even closer than before. Law firms explained that rapidly extended communication online enabled the discovery of new queries and prompt reaction, which led to some being rewarded with new work.

10. Digital environment

More sophisticated content and ways of delivering it became a true challenge for business development and marketing teams. Online platforms and interactive online reporting with timely notification on rapid legislative responses to pandemic became a rather common effort that ensured interactive feedback to emerging requests.

At the same time, with the Internet and social networks oversaturated with webinars and legislative news, legal marketing professionals attempted to find new visual solutions, video content, streaming tools as well as other technological innovations so as to stand out from the crowd.

But the good news is definitely that increased investment in technologies is taking place, even in conservative firms.