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  • Serbian Court System Changes

    Serbian Court System Changes

    On January 1, 2014, the new Serbian Law of Seats and Jurisdictions went into affect. Milan Lazic, Partner in the Dispute Resolution team of the Serbian Karanovic & Nikolic Law Firm, reports that the most significant effect of the new law is the change in the number of “basic courts”(which sit in the larger cities), and “basic court units”(which sit in nearby municipalities and smaller towns).

    Milan Lazic

       

    Milan Lazic, Partner, Karanovic & Nikolic

    Traditionally, judges have been required to preside over both basic courts and basic court units. As Milica Savic, Associate in Karanovic & Nikolovic, explains, this has meant that many judges are only able to spend one or two days a week at each of the basic courts and basic court units in their jurisdictions, which has in the past led to frequent and unavoidable delays in proceedings.

    Before January 1, 2014, there were 34 basic courts and 102 basic court units. Now, thanks to the new law, there are 66 basic courts and 29 basic court units. The Government’s underlying reasoning in the reform was that an improved allocation of resources would improve accessibility to courts and provide citizens with a more effective system to exercise their rights to trial. According to Lazic, as basic court units only handle civil cases, while criminal cases are exclusively heard in the basic courts, it is hoped that the increase in the number of basic courts will improve efficiency both in criminal trials and other cases.

  • Project to Create Three Professional Legal Tiers Dropped

    On December 14, 2013, the Romanian National Bar Union Council proposed to change how the competencies of registered lawyers in Romania are defined.

    Under the Council’s proposal, lawyers would have been able to appear in front of a Court of Appeal only if they had three years of uninterrupted practice after final bar admission (thus qualifying as an“Avocat Definitiv”) and could only appear in front of the High Court of Justice and Cassation and the Constitutional Court of Romania after five years of experience.

    Following considerable negative feedback from legal practitioners in the country, the Permanent Commission of the UNBR issued a statement on February 5, 2014, declaring that the UNBR Council will no longer pursue the changes it originally proposed. 

  • Interview: Adam Hornyanszky

    Interview: Adam Hornyanszky

    Interview with Adam Hornyanszky, the Counsel for International Operations & Business Development at Beres Pharmaceuticals.

    Adam Hornyanszky

       

    Adam Hornyanszky

     CEELM: Let’s start by telling our readers a bit about Adam Hornyznszky and his background.

    AH: While many think as of me as a lawyer first and foremost, my actual first degree was in Business Administration. Only once I graduated in this field did I start law school. After receiving my law degree and passing the bar exam I worked briefly as a trainee for an international firm but quickly found out that I was missing the business side of things. 

     CEELM: Indeed, you were lucky to find a role that allowed you to leverage both your business and legal training with Beres Pharmaceuticals. What does your current role entail exactly?

    AH: My official title is that of “Counsel for International Operations & Business Development”. Specifically, I am responsible with identifying and approaching potential partners outside of Hungary, following which, I need to use my legal training to negotiate and draft those international business development contracts. I do not consider myself a General Counsel really. I am more of a “special counsel” due to this dual nature of my role. 

    I have to say, I love my current role as I suspect I would get bored if I were only exposed to one of the two dimensions. When I worked as a trainee in the international law firm I mentioned, I hated not seeing the business part as well. Not being truly exposed to the clients we were advising meant I lacked a thorough grasp of the operations of the business. Here I am fully immersed. I understand our business from A to Z and I am not exposed strictly to dry and boring legal work. Instead, I get the opportunity to truly understand what we do, how our business works, what our partners’ business models are and I get the opportunity to develop creative business solutions that create a win-win situation for everybody, which I then translate into a legally binding agreement. 

     CEELM: Since you mentioned it, what is Beres Pharmaceuticals’ business model and what work does it entail for you?

    AH: When it comes to our international business, we have two working models. The first is opening up representative offices, such as in Romania and Ukraine, where we employ our own marketing and sales team on the ground. It made sense to follow this model in these two markets out of historical considerations. Because our flagship product, the Beres Drops, acts as an immune strengthener, especially useful for cancer patients undertaking chemotherapy, it became highly popular in Ukraine following the Chernobyl disaster. In Romania, the product, so popular in Hungary, gained a lot of traction due to the considerably large Hungarian minority present in the country. 

    The second model, and the one we use a lot more often, is a natural one in light of the fact that, despite its flagship product being an internationally recognized brand, Beres Pharmaceuticals is still a mid-sized, family-owned, Hungarian company. Since the founding family wanted to avoid international financing, we chose to expand in other countries by finding partners on the ground that have a strong track record in launching products in those markets. This is the approach we took in a number of markets, including Russia, Belarus, Slovakia, Lithuania, Albania, Serbia, Montenegro, Macedonia, Vietnam, Mongolia, and others. 

    The specific nature of the partnership does vary. In some cases, we look at deals where we offer them a good wholesale price on top of which they add their margins to cover their marketing and sales costs on the ground. Others include co-branding of our products with other Pharma companies on the ground. Lastly, deals might include licensing of our products to be sold completely under the partner’s name, which may or may not include clauses to our own branded products to exist in that specific market. At the same time, the scope of the partnerships differ as well as we cannot force upon our partners our entire pallet of about 70 products, especially since it is usually they, with expertise on the ground, who will know what the market will be most receptive towards.

    As to what that means for me, I am the sole person responsible for managing all of these partnerships, as I mentioned, starting from identifying the best possible partners to negotiating and closing the agreements and following up on their accurate implementation.

     CEELM: I assume this is where you legal training comes in particularly useful.

    AH: Yes, and no. It is definitely incredibly useful to be able to have the exploration of potential partners and the first approach under the same umbrella with negotiating the specific terms and drafting the actual contracts. In the latter, it is obviously that my knowledge of corporate and contractual law is quite useful but there are rarely other areas of law that I still use on a day-to-day basis. 

    There are, of course, other legal aspects that Beres needs to address from tax to debt recovery and even, on rare occasions, litigations but those tend to be outsourced to external counsels. What is particularly useful is the dual nature of my qualification as it allows me be at the center of both of the mentioned aspects.

     CEELM: Your role entails interacting with a lot of CEE markets. Which ones do you find to be the most challenging and why?

    AH: I would have to point to Ukraine on this topic. It is particularly difficult to work in the market these days due to the current unrest, but even in the past few years, the market posed quite a few challenges. Constant legislative changes are difficult to stay on top of and each new government, and there have been quite a few, likes to “pick on” the pharmaceutical industry to address any existing budget deficits. It is difficult for an international company to operate such uncertain waters, especially when you dedicate yourself to stay within the legal framework without having envelopes flying around as we do. It also makes sense that it is one of the main markets we look at since we have an actual representative office there. 

     CEELM: What about jurisdictions where you are looking to set up partnerships in?

    AH: Those are a different story. The challenge there is not operating in the market itself since the operational aspects of running the business are the partners’ to deal with. The challenge that we have in these instances is the same irrespective of the market we deal with, which is to identify the right partner. This is a critical aspect long before anything else since we need to identify players that we will feel comfortable building a long-term relationship with. We always look at securing such agreements for at least a five year period making the discovery of potential partners stage by far the most important one. 

     CEELM: As a last thought, is there any change from a legislative perspective that you would like to see implemented because it would help Beres Pharmaceuticals develop further?

    AH: Since almost all of our products are registered over the counter/food supplement products, most of the regulatory frameworks under which most pharmaceutical companies operate do not affect us. Even in terms of R&D/developing new products, Beres has a “well-established use” approach where we use standard active ingredients that have already been tested in different combinations. This means that, even R&D regulations generally, not just those applicable to the industry, rarely affect our daily operations.

    In light of this, it is actually my business side, rather than my legal one that can see how the company can grow. I understand that, in light of our products, elements affecting us are general market factors such as supply and demand. In fact, this is also evident in the fact that, unlike most companies in the industry that employ former doctors within their marketing/sales teams for example, we tend to hire people coming from the FMCG industry.

  • Norton Rose Fulbright Advises on High-Yield Bond Offering of Play

    In an item related to the story reported by CEE Legal Matters on February 7,  Norton Rose Fulbright has announced that it advised J.P. Morgan and Bank of America Merrill Lynch as global coordinators on the EUR 900 million high-yield bond offering of P4 Sp. (the Polish mobile network operator operating under the ”PLAY” brand).

    The funds raised were used to refinance PLAY’s existing funding arrangements and distributed to PLAY’s shareholders. The debt offering consisted of EUR 600 million fixed rate senior secured notes due in 2019, PLN 130 million (EUR 30 million) floating rate senior secured notes due in 2019, and EUR 270 million fixed rate senior notes due in 2019. The transaction also involved a PLN 400 million revolving credit facility granted to PLAY by Bank Zachodni WBK (Santander Group) and Alior Bank.

    Norton Rose described the transaction as “one of the largest ever EUR denominated high-yield bond offerings made by a company based in Central and Eastern Europe.”

    Grzegorz Dyczkowski, Partner in the Warsaw office of Norton Rose Fulbright, commented that:“The issuance of high-yield bonds by PLAY is one of the most significant transactions in the Polish and European debt securities market in recent years. Polish companies are with increasing frequency seeking financing from the international capital markets in addition to or in place of bank financing. We are very pleased that we have, in cooperation with our clients, PLAY Group and other advisers, brought this transaction to a close within an extremely short timeframe and at a price very advantageous to PLAY.”

    The Warsaw team was led by Partners Dyczkowski and Piotr Strawa, assisted by Tomasz Rogalski, Marta Kawecka, Krzysztof Gorzelak, Agnieszka Braciszewska, Joanna Braciszewska-Szarapa, Jan Grochowicz, Michal Blaszkiewicz, Adrian Kozinski, Konrad Leszko, Daniel Popek and Aneta Janecka.

    Latham & Watkins acted as English and New York legal counsel to the global coordinators. PLAY was advised by White & Case. Mandated lead arrangers and agent under the revolving credit facility were advised by CMS Cameron McKenna.

    Citibank, N.A., London Branch acted as security agent and was advised by Reed Smith.

     

  • Gide Advises Meridiam and CNP Assurances on Call for Tenders for Acquisition of Vinci Park

    Gide Loyrette Nouel has been selected by the Meridiam and CNP Assurances consortium to advise them on the call for tenders initiated by the Vinci group – the French construction and concessions group – for the sale of Vinci Park, ultimately won by Ardian and Credit Agricole Assurances.

    Vinci is in exclusive talks to sell three-quarters of Vinci Park – the massive parking concession business, which manages more than 1.6 million parking spaces in 14 different countries – to private-equity fund Ardian and Credit Agricole’s insurance arm for about EUR 1.425 billion. The deal values the whole parking division at EUR 1.96 billion. Seven banks are reported to be providing around EUR 1.2 billion of infrastructure loans to back the acquisition.

    The bespoke team set up by Gide consisted of 33 lawyers from seven Practice Groups working from the firm’s Paris, London, Brussels and Moscow offices, and Gide also called upon its partner firms in the United Kingdom, Belgium, Spain, the United States, and Canada for assistance. Gide’s team advising Meridiam and CNP Assurances was coordinated from Paris by Partners Guillaume Rougier-Brierre and Stephane Vernay and Counsels Alexis Pailleret and Marie Bouvet-Guiramand. Also involved were Partners and Counsels Eric Cartier-Millon, Fernand Arsanios, Thomas Courtel, Stephane Hautbourg, Sophie Quesson, David Lasfargue, Guillaume Jolly, and Foulques de Rostolan.

    The Meridiam / CNP consortium was advised by merchant bank HSBC, Gimar & Cie, Deloitte (financial audit), and Taj (tax audit). Legal counsel to CNP Assurances was provided by Herbert Smith Freehills. The banks supporting the financial offer made by the consortium were advised by Linklaters.

     

  • The First Issue Is Out: Get The Full Picture

    The First Issue Is Out: Get The Full Picture

    We’re excited to announce the launch of the premiere issue of CEE Legal Matters. With this, we move closer to fulfilling our mission of providing in-depth coverage of the news and newsmakers that shape Europe’s emerging legal markets.  

     

    “CEE Legal Matters Magazine – Year 1, Issue 1”

    Regular visitors know that the CEE Legal Matters website provides daily updates on deals, transactions, promotions, hires, and dispute outcomes from across Central and Eastern Europe. But successful, ambitious lawyers need more than just news to stay ahead. They need analysis, perspective, background, and context. They need to hear from colleagues and counterparts, learn about best practices and alternatives, and consider common problems and innovative solutions. In other words, visitors settling for the daily news updates … are only getting half the picture.

    And at CEE Legal Matters, we’re committed to providing the full picture. The first issue of the CEE Legal Matters magazine — full of opinion, analysis, and informed perspective — is printed and on its way to subscribers even now. In addition, starting today, subscribers can access premium content on the CEE Legal Matters website — including interviews with experts, and, starting from Monday a new feature — the Frame — providing regularly updated information about legislative, judicial, and business developments of note across CEE. And on Monday, February 24th, subscribers unable to wait for their copy of CEE Legal Matters to arrive in the mail will be able to access the magazine’s content on the website as well.

    Get the full picture. Subscribe today.

  • Interview: Emre Derman

    Interview: Emre Derman

    Emre Derman is the Managing Director and Senior Country Officer for Turkey at JP Morgan. Derman was a freelance consultant for many years at White & Case in Istanbul, New York, and London, and was the Executive Partner of the firm’s Istanbul office from 1998 to 2008. In 1994 he also spent a year at the European Bank of Reconstruction and Development in London.

    Emre Derman

       

    “I think what has suffered is the personal attention that top clients expect from senior members of the firm”

     CEELM: Emre, thank you so much for talking with me today. Let’s get right into it. You’ve referred to the “fragmenting” of the law firm market in Turkey. Can you elaborate?

    People who were struggling to make partner at an international firm, and when I say struggling I don’t mean it in a negative connotation, what I mean is, because of market pressures, because of what the world economy has been doing, people just didn’t have enough revenues to make it to equity partnership in an international firm had said, “well, life can’t be this difficult, let me go and establish my own firm and at least I’ll have my nice office and my name on the door.” And a number of people have done that, so we’ve had an outflow of significant, qualified, good, trained people, who’ve gone out and established their own offices. Now once they’ve done that, and in order to increase productivity, I think what they’ve done is they’ve essentially over-delegated.

    A number of lawyers in Turkey feel that they’ve arrived and therefore they don’t feel the need to personally pay too much attention to their clients. Instead they now have to pay the bills, get the administration right, recruiting, hiring, this, that, etc. So I think what has suffered is the personal attention that top clients expect from senior members of the firm. So in the past for example if you were working with X, when he or she was working with Y international firm, X used to give you a lot of time. You were his number 1 client, and X would be working for you, actually drafting the document, actually attending the negotiation, etc. Doing all of that personally. But when X goes and establishes X law firm, you know, he wants to bring in A, B, C, as his associates, as his younger troops, etc., and I think they hurry up in doing that, there’s an unnecessary acceleration, and they delegate down a lot more than they should in my humble opinion.

     CEELM: You mean associates are doing more of the work than they should be?

    I think that is the case. I think people who become partners – quote unquote – in the Turkish law firms have this sense of entitlement where they themselves are not going to get their hands dirty all that much any more, and that’s a mistake. The profession is one where you, personally, regardless of how senior you are, as a partner you personally have to be very involved if you want to keep the client’s loyalty.

     CEELM: Do you think this is a natural step in the process, or is the Turkish market going down a wrong path?

    I don’t think it’s going down a wrong path. I think it’s a natural process. I think the market is too fragmented, and that’s what leads this change. If you had a bunch of them coming together, then you’d have one partner dealing with management, administration, etc., and all of the others would have to do something, so they’d start refocusing on their clients, actually doing the legal work at which they’re very good. As opposed to trying to run the firms – at which they’re not necessarily all that good. So, you know, I think the fact that there are just too many firms out there, in a fragmented approach, is the reason that drives this change.

     CEELM: And so the next step then would be for the clients to become sophisticated enough that they stop giving their business to the firms that aren’t really giving them the personal attention that they need.

    I think the clients are sophisticated enough. The issue is, Turkey is a case of one-time deals, it’s not a case where clients produce deal after deal after deal. So there are a lot of people coming into Turkey and going out. And except for a very few names, there aren’t that many clients that continuously do large deals in Turkey. That translates into many one-night-stand kind of relationships as opposed to long-term commitments. And therefore to the extent you’re unhappy with a particular lawyer you say, “well next time I’m not going to use this person,” but then, you know, “next time” may come 3 years down the road for you, because there aren’t that many opportunities. So the next natural step in the Turkish market would be one of consolidation, but for that to happen you need a broader base, you need a deeper market, you need more revenues being generated. You need the ability to actually charge higher hourly fees, and hence support a larger infrastructure, as opposed to the 20-lawyer, 30-lawyer smaller firms.

     CEELM: Yes, I was just going to get to that. A number of the people I’ve talked to have talked about this sort-of insane downward pressure on fees that they’ve never seen before. Is that sort of what you’re talking about as well?

    Yes. The fact is that fees have come down very significantly in Turkey in the last decade. I don’t know how it’s going to go back up. It does need a significant change in the market. But I would agree that there is increased fee competition today. And unfortunately with so many well-trained, good English-speaking, good lawyers out there, and not necessarily all that many deals to go around – particularly deals of a significant size – fee competition is what drives the marketplace in Turkey.

     CEELM: Is it divided, you think, so that the more established, Fortune-500 companies that know the value of good legal work for more sophisticated, complicated deals, will seek out the firms that will probably charge more, whether it’s White & Case, or Baker & McKenzie, or whoever, whereas the smaller companies needing one-off deals are going to go to the splintering firms? Is that the dynamic, or is everyone pushing down for the same fees right now?

    I think it’s both. First of all everyone is pushing for lower fees. And frankly, you know, people like us – the clients – are to blame for it as well, because once you get used to fees in the range of a couple hundred thousand dollars for a particular type of transaction, let’s say an IPO, then it’s very difficult to – next time you do it – it’s very difficult to accept a quote for 800,000 or 900,000 dollars.  But I think the Turkish market itself – I think it’s simply a result of the fact that there just are not enough deals in Turkey. You need more deals to support this kind of a broad base of lawyers. And I don’t mean smaller deals. I mean larger deals. In Turkey last year I think there were like only two public offerings of a significant size that got completed. Maybe three. Now, that’s not an environment that’s conducive to increasing fees. You need like 10, 15 of those to be able to say, “ok, fine, we’re only going to be able to do this if you accept our fee proposal of 1 million dollars.”

     CEELM: Do you think Turkey is over-lawyered? Are there too many firms, too many lawyers, fighting for the same clients?

    I think right now Turkey is over-lawyered. I think Turkey became a gem of emerging markets, and everyone looked into Turkey, and everyone decided that they’re going to establish shop here, and I think we now have a number of partners who are trying to prove themselves to the international organization by getting more business, and frankly they’re getting it at the cost of profitability.  

     CEELM: You mentioned briefly the quality of the legal work. I understand what you’re saying about not enough partners rolling up their sleeves and getting to work. But in a more general sense do you think the lawyers of Turkey are better than they were 15 years ago? Or not noticeably, or worse?

    No, no, of course they’re much better than they were 15 years ago. There is no doubt. They are clearly much better. In terms of their capacity, their ability to do good work, I think they’re clearly better – on average, right? But I’m exposed to the very crème de la crème of the crop, right? And I think attention to detail has waned, I think the personal attention to clients has waned, at the very top.  But on average there is no doubt that the legal profession has grown by leaps and bounds. Not just in terms of quantity but in terms of quality as well.

     CEELM: What do you attribute that to?

    Well I think clearly, the opening up of the economy, number 1, then 2, the good performance of the economy in the last 10 years, the acceptance of the fact that there is something called “international law,” and “anglo-saxon law” is not something that you need to be afraid of – you can master it. The fact that a lot more high-school students now graduate with very good English as opposed to 20 years ago. So I think you can boil it down to essentially to being more in tune with the global markets. It has affected law as much as anything else.

     CEELM: Do you think the law schools, by the way – or at least the very best law schools – are any better at preparing the students, or is that not really a factor?

    It is definitely a factor. Looking back to my time you had a couple of state schools that offered law as a discipline, and the better schools were concentrating on engineering, medicine, etc., so law was not a fashionable subject. So it’s a virtuous cycle. As law becomes more fashionable, the educational institutions – privately-owned, good educational institutions – started offering law faculties, and that of course led to law becoming more fashionable and a better-paying profession, which then increases the number of applicants, and it becomes economically feasible for better universities to offer law school as a discipline, so right now I think there are very good law schools in Turkey, as compared to when I graduated.

     CEELM: I guess part of what I was getting at is that I know in some of the countries of Eastern Europe, law is still taught as an academic or intellectual discipline, not very much as a commercial concept, and I’m wondering if the best law schools are increasingly preparing their students to be commercial lawyers.

    That is the case, and that is the correct analysis. There has definitely been a shift from, well, you go to law school and you become a law professor, to you go to law school and you could be really influential in business.

     CEELM: What’s your take on the international firms coming in? Is that an irrelevant consideration for you, or do you think there’s too many, or not enough? Do you have any thoughts on that?

    No, it’s obviously a very relevant consideration. I think the international firms ought to be here. But they ought to be here with the right attitude. What I mean by that is that sometimes … well, in a number of the cases I look at, there is the international firm, and then there is the local lead person, and the local lead person feels like it is his or her shop. That it is not necessarily the international firm. And that is quite evident when you talk to the junior associates, etc. Inevitably I compare it to what we had at White & Case. We never had the “Derman Law Firm” in anything more than name. For us, it was always White & Case, it was always the international firm. We made sure that the junior people who came on board felt that they were joining White & Case, and nothing else.

     CEELM: Is that ego, you think, or is that a function of the firms not perhaps choosing the best Turkish counterparts?

    No no, I think they’ve chosen good counterparts, but perhaps they’ve chosen people who already have been established and therefore are used to doing their own thing. You know, you look at me and you look at my colleagues, we started as interns at White & Case, and we grew up through the system, so it was in our blood. It wasn’t like “well, we have our law firm, and we’ll do an agreement with whoever writes us the largest cheque.” So I think that’s a very different perspective.

     CEELM: Okay, my last real question is that, if you were recommending to other in-house counsel abroad, London, or New York, or wherever, as they’re starting to look for Turkish lawyers to help them,and obviously it depends on what the particular project is, but, what sort of criteria … do you think Legal500 is good, or how would you try to make this particular evaluation?

    I have very little trust in publications like Chambers and Legal500, etc., beyond the initial stage of identifying the top candidates. I think there’s a lot of … advertisements, buying, etc., that goes on, that sort of puts you into places in those places. I think taking a look at the international firms is a safe bet for most everyone looking into Turkey. Particularly if you’re looking into cookie-cutter transactions like M&A, Equity Capital Markets, Debt Capital Markets, Joint Ventures, etc. You look at the top firms, and you interview 2-3 individuals there, you’re going to find something that adequately services your needs. It’s only when you’re really looking at a very interesting issue of Capital Markets law or Employment Law, or you name it, when you’re really looking at a niche product, that you need more word-of-mouth reference, more discussions with people who’ve been in Turkey, to get to the right person.

  • Interview: Emre Ozer

    Interview: Emre Ozer

    Emre Ozer is a Partner at the Gen & Temizer / Ozer Law Firm in Istanbul.  Before opening Gen & Temizer / Ozer with two partners in 2011 he spent seven years with Slaughter & May in London and two more with White & Case in Istanbul.

    Emre Derman

       

    “But actually I think the vast majority of transactions including many big size deals are able to be serviced by smaller firms.”

     CEELM: Can you give me a little perspective – when did you guys open up, and where did you each come from?

    The three of us came from White & Case.

     CEELM: Oh, you as well?

    Yes. I worked from 2009-11 in Istanbul. Before that I was at Slaughter and May, but I came directly from London to White & Case. And then Baran [Gen] and Ebru [Temizer] were local lawyers at White & Case. Prior to that they had also worked a bit at Ece Guner’s office when it was allied with Dentons.  But not for very long.

     CEELM: So you all came from White & Case to open your new office?

    Yes. That was in October 2011.

     CEELM: Let me explain the phenomenon people have described to me. What people have said to me is that in some circumstances – either because partners are passed over for equity or for whatever other reasons – go out to start their own shops, and then offer incredibly low fees. So your sized firms are often being blamed for this incredible downward fee pressure. But then also because the firms are small, you guys – the partners – are having to do so much of the administrative and managerial work that you’re pushing a lot of the actual client service work down to the associates. So that clients perhaps aren’t being served by partners as much as they used to be. What do you think about that?

    Actually, it’s completely  the opposite for us. The challenge we have is that we spend so much time on transactions that we don’t do enough admin work, or business development. We just do deal to deal. We just kind of fall from one transaction to the next. But that’s deliberate. Our perspective is that being a boutique … the key way you can differentiate is a kind of personal service. From my perspective the disadvantage of the big firm is that you’re never going to see the partner. Unless it’s a mega-deal. If you’re talking about the sale of a major bank, that will be a partner who will be involved every day. But if you’re talking about a mid-size sector deal which is where most of the sector is focused in Turkey, they don’t have time to do it, to focus on it. It may not give them a profit margin. So that’s kind of what we’re trying to focus on, actually, is partners giving that client attention. On the fee side, well, we may be competitive – I’m sure our peers are competitive. But … I mean on one or two occasions we’ve actually given fee quotes, and the client would say, “well, you know, a big international firm has offered half of what you’ve just asked for.” So I’m not sure … what I’ve heard is that big firms have offered very cheap fees, where they may get a significant margin on another transaction which they can kind of then cut on another deal.

     CEELM: Is that because to some extent they’re able to have cheaper junior and mid-level associates do the work than the partners?

    Yes, exactly. That’s something that I didn’t really think about until we started this. (laughs). I mean the advantage of being a very big firm is that you’ve got bulk, you’ve got economy of scale. I mean, you know, I agree with the general problem in the market about fees … it’s not profitable for many.

     CEELM: What do you attribute that do?

    There’s a lot of competition. And there’s a lot of competition for people who may be considered, rightly or wrongly, perfectly competent in one way or another to do a “plain vanilla” transaction where it is a “plain vanilla” one. That’s one. Second, you know, it’s still a developing market. I’m not sure there’s that many big-ticket deals. A lot of the sector is crowded into mid-size, smaller transactions.  And there’s a lot of firms who are offering that. It’s not like America or the UK where there may be many more M&A deals in those markets.

     CEELM: So a lot of people competing for smaller deals?

    Yes, I’d say mid or smaller deals. I think if it’s really big ticket work, where a client may say “I need a firm with a presence in 20 jurisdictions,” then that suddenly cuts it down to, what, two or three firms that are capable of bringing sufficient team members to do that kind of deal. But actually I think the vast majority of transactions including many big size deals are able to be serviced by smaller firms. And I think the other thing is … and this is a cultural thing, professional services are … I think clients in Turkey are quite demanding in terms of fee expectations. I think if you can demonstrate a real value add, then that’s what you have to focus on. Whether it’s a specific sector expertise, or you can genuinely add value to a transaction through, you know, negotiation or structuring or something like that. Otherwise it can be seen as just a commodity. I think it’s quite a demanding market from that perspective. Whereas if you go to Switzerland, people say, “these are our hourly rates,” and they’ll say “thank you very much. Send the bill.” (laughs). 

     CEELM: So do you not always charge hourly fees, or do you cap them, or how do you handle that?

    I’d say generally in the market it’s much more common to give either caps or very clear estimates, and people are expected to stick to them.

     CEELM: It sounds like you guys are at least open to alternative fee structures.

    Yes, if we have a good reasonable idea of how complicated a transaction is going to be. If we have a term sheet or we know the client and their expectations, then you can be more flexible on fee arrangements. And as I’ve said it’s a competitive market. I’m not sure it’s entirely the fault of smaller firms. I think it’s a matter for both big and smaller firms to consider and it’s a small pie compared to some of the mature markets. And I think law firms are competing.

     CEELM: It’s been suggested to me that there’s an unusual number of lawyers splitting off to start their own firms in Turkey.

    It’s something you wouldn’t see in the UK market, which has solidified. You just couldn’t set up a M&A practice that could compete with the big City firms. There’s just no way. Whereas in Turkey you actually can, and clients are prepared to see different alternatives. Because I think it’s still a maturing market. One of the reasons we split is that, before the market gets very consolidated or kind of rigid in terms of the firms available to give this kind of service … there is space to offer this kind of boutique service. That’s one of the good things about Turkey is that you can do that, compared to other jurisdictions. I’m pretty sure that in the big jurisdictions you just couldn’t do this kind of thing.

     CEELM: Does that mean you sensed that there were let’s say mid-level deals that you were either not getting at White & Case because the fees were too high, or frankly could be taken from White & Case … obviously you’re not going to compete for giant M&A deals, but for mid-level deals there was niche in the market you thought you could fill?

    Yes, exactly. Exactly. That’s right. You’re probably familiar with the structure of … even the big firms there’s often just one Turkish partner that really runs the show.  And there’s salary partners, they have a title, whatever. But you know there’s not the same kind of collegiate partnership structure that you can find in other jurisdictions, I think.

     CEELM: And so even at White & Case, it wasn’t like at some point you were going to be part of the international team, you felt that that opportunity wasn’t there?

    I think it is there. But you know, before getting a real management role, you’d have to wait for somebody to retire.

     CEELM: So management was something that was attractive to you – an ability to guide your own firm and career?

    Yes, exactly. To take control of your career. Your business planning, business development. Which is something you’d learn much later down the line. I think in places like White & Case those opportunities were open to us in terms of being a local partner, or salaried partner or fixed income partner. However you want to call it. Those are available. But in terms of having real management control, and control of your career this was very attractive to us.  

     CEELM: So less than the fee, one of the nice things about the structure you guys have is the ability to stay hands-on in a way that perhaps some of the bigger firms don’t, or can’t.

    Yes, I think that’s a concern for many clients.

     CEELM: Is that PR, Emre, or do you actually have clients that respond to that?

    Yes, that’s what they expect.  The interesting thing that you said before is that it’s fundamental for firms like us to deliver that.

     CEELM: So there are clients who will pay slightly higher fees with the knowledge that they’re going to get your personal involvement, or do they always go for the lowest fee?

    To be honest, it’s a mix. Sometimes it’s the lowest fee, sometimes it’s, they like you. And, you know, recommendations are important. I think especially here. If a guy’s worked with you before, and happy with your work, then they have recommended us. Actually it’s just as important as a brand. But yeah, we have to differentiate, because, you know, the brand and the scale of the bigger firms we have to compete with. Not just in fees, but for the long term it has to also be in terms of the personal delivery of the services as well. Otherwise I think the big firms can always compete on fees. For a period anyway.

     CEELM: Do you find yourself competing for deals with the big firms, or are you competing more with the local market firms. Or both, sometimes?

    I suppose the biggest deals we did last year … we were both competing with very established firms, actually. I know the clients went to several different firms, which were both very big firms, and also very established Turkish firms, let’s say, that have a very good reputation.

     CEELM: That must be rewarding when you get those deals, those clients.

    Yes, that’s the most exciting. But on another big-size deal where you know, it was actually just a recommendation. We’re either competing with somebody who’s similar to us, or it’s actually just one-to-one. 

  • Wolf Theiss Hires New Chief Human Resources Officer

    Wolf Theiss has hired Hubert Beykirch to become the firm’s new Head of Human Resources during the maternity leave of former Human Resources Manager Barbara Stimpfl-Abele.

    Beykirch has spent the past several years in Frankfurt as Head of HR Germany at Linklaters, where his projects included the development and implementation of a new career website.  At Linklaters Beykirch was also a member of the Management Team and part of the international HR-Leadership Team.

    Beykirch, who is German, also has previous experience as HR Manager and Operational HR Leader Germany at PricewaterhouseCoopers.

    Erik Steger, Management Board Speaker at Wolf Theiss, said that, “With 20 years experience, including at a Magic Circle firm, Mr. Beykirch is a very valuable addition for our team. We are delighted to welcome him to Wolf Theiss and wish Mrs Stimpfl-Abele all the best for her maternity leave.”

     

  • JPM Advises on MetLife Life Insurance Portfolio Transfer in Serbia

    The National Bank of Serbia’s Administration for Supervision of Financial Institutions has approved MetLife’s application to transfer a portion of its life insurance portfolio to the joint-stock insurance company Wiener Stadtische osiguranje.

    The approval was granted on January 17, 2014, and the portfolio transfer is effective as of December 31, 2013.

    JPM Finance Senior Partner Jelena Gazivoda and Partners Aleksandar Hadzic and Nikola Dordevic supported MetLife in the transaction.