Category: Interviews

CEELMDirect Profile Pick: A series of interviews with partners and firms with profiles on the new CEELMDirect online legal directory. Today’s interview: Toomas Prangli, Partner at Sorainen in Estonia.

CEELMDirect: Toomas, this year marks your 25th year with Sorainen – which you first joined as a trainee back in 1997. How have you seen the firm, and the Estonian market, change in that quarter-century?

Prangli: I joined Sorainen not because it was known (in fact, almost nobody had heard about it at the time), but based on my wish to join an internationally oriented team with a strategy to expand. Sorainen was the first law firm with the ambition to operate in all Baltic countries and still is one of the very few with a “one-firm” strategy in the region. Since 1997, we have grown from a five-lawyer firm into a leading firm in the region, with 300+ lawyers – but our strategy and values have not really changed. I think that this is the main reason for the success of Sorainen and what has kept me in the firm.

The legal market was very different in the 1990s compared to now. In my view, the firms which have controlled their egos and given more freedom to the younger generation have proven to be most successful over time. It is also incredible – and quite unique – how competing law firms collaborate with each other in order to develop the local ecosystem and improve regulations and market practice, and thus the investment climate of the country. For example, firms make joint efforts to collect and discuss market trends through a biannual Baltic Private M&A Deal Points Study (which is available online), compose and develop joint model documents, and so on. This has helped to increase confidence for foreign investors and is one of the reasons why the deal market is so active and why Baltic law firms top the league tables in the Nordic region and CEE. 

The local M&A market has grown tremendously over the years and, even within the last three years, growth has been unprecedented. For example, within the first four months of 2022, Estonian start-ups raised a total of EUR 1 billion in capital, whereas a total of EUR 962 million was raised in all of 2021, and EUR 464 million in 2020. On the frontline of raising capital is Bolt, the European rival of Uber. To date, Bolt owns the record for the three biggest funding rounds in the history of the Baltics: EUR 150 million in December 2020, EUR 600 million in August 2021, and EUR 628 million in January 2022 (which was the largest-ever funding round in both Bolt and Baltic history). It has been a true honor to be part of the Sorainen team that served as the sole legal advisor to Bolt throughout all of these record-breaking funding rounds, which put our region on the international private equity map.

CEELMDirect: Despite spending your entire professional career with Sorainen, you’ve spent time in a number of European capitals, including two years in Minsk managing and integrating Sorainen’s Belarus office, a year at CEU in Budapest obtaining an LLM degree, and another year obtaining an Executive MBA at the University of Vienna. How have those international experiences affected your personal practice, and your ability to assist clients?

Prangli: In order to see the bigger picture and understand different viewpoints, one has to experience a variety of cultures. I have received three university degrees in four countries and worked in three European capitals but, most importantly, I have always loved to travel to places where the package tours won’t take you. Seeing so many beautiful and unexpected things has helped me be prepared for – or at least not be frightened by – all sorts of surprises. This is a valuable skill as a business manager, team leader, and dealmaker, where one often needs to stay calm in stressful and unexpected circumstances.

CEELMDirect: These are unique times in the Baltics, with military conflict nearby, not to mention the recent experience with COVID and the current fluctuations of the economy. How is all of that affecting your own business, these days, and your clients’ businesses? 

Prangli: Indeed, it has been a rollercoaster ride since 2020. However, I try to find good things in every bad (or tragic) circumstance. When COVID-19 hit Europe, a shock-wave of uncertainty hit the economy. After the initial one-two month slowdown, the local M&A market again became active and tech fundraising activity boomed like never before. The Baltics are heavily tech-driven and this was a good opportunity for Baltic-founded international companies to seize the moment. In fact, our team has never been busier than during COVID times. What is also interesting is how deal-making has become increasingly virtual, more fluid, and faster. Even the more conservative legal sector realized that lawyers can work remotely and still be as or even more efficient.

The Ukrainian War has had a different impact. A number of Baltic M&A transactions were suspended as the conflict escalated. These primarily involved transactions where part of the business or value chain (e.g., suppliers) were connected to Ukraine, or to the sanctioned Russia or Belarus. There were also some transactions that, although not directly connected to these countries, were nonetheless suspended due to the uncertainties related to geopolitical security and their impact on the economy. Some of these transactions have since started to move forward again after the scope of the Ukrainian war was confined to parts of Ukraine rather than the whole country. Although the market seems to be somewhat less busy than predicted at the beginning of the year, it has gradually picked up over the past months. In fact, the sense of security has oddly increased in the Baltics, because we feel that the Western world is more aligned in its opinion of how to deal with Russia – that the rest of the world is finally speaking the same language as the Baltics. The expected accession of Finland and Sweden to NATO should further boost international security in the Baltic Sea region. Thus, what really affects the market is the unprecedented decline of (tech) stock markets in the whole world, which has postponed the appetite for fundraising.

CEELMDirect: You have a Premium profile on the CEELMDirect platform. What potential do you think the platform has to help you and your colleagues? 

Prangli: I believe that the CEELMDirect website brings value to all market players. For us, it will surely become an important tool in keeping up-to-date with developments in legal markets across CEE, as well as serve as a valuable opportunity to promote and showcase our expertise as a firm within CEE, a key market for Sorainen. A trusted platform that highlights market developments in the region has been long overdue and will help provide valuable insight for the entire market. Thank you for providing this!

CEELMDirect: Have there been any recent changes or developments at Sorainen Estonia that you’re excited about and would like to share?

Prangli: The past few years have been great for Sorainen as a firm, as well as our Estonian office, both in terms of financial results and organizational culture. This January, Sorainen had the biggest number of partner promotions in the history of the entire Baltic legal market, with nine lawyers joining the partnership – all of whom were home-grown and internally developed leaders. In Estonia, the new partners are Kaido Kunnapas, a vocal proponent of modern and fair tax laws and the leading expert on designing employee incentive plans in Estonia, and Katlin Krisak, who works with Finance & Insurance matters, having recently advised, among others, the book-runners of the Enefit Green IPO: the IPO with the largest number of subscribers in the history of the Baltics, which was awarded the CEE Legal Matters’ 2021 Deal of the Year for Estonia.

In total, in 2022 we increased the total number of Sorainen partners from 33 to 44, an unprecedented number in the region.

As I am focused on M&A, Sorainen’s receipt of CEE Legal Matters’ Baltic Deal of the Year for its advice to Fortum on the sale of its district heating business in the Baltics to Partners Group – the largest M&A transaction in the Baltics in 2021 (which I had the pleasure of leading together with our Of Counsel Isabella Barbara Tisenhusen) – was a very special moment, as was being named CEE M&A Legal Adviser of the Year 2021 by Mergermarket, both for the entire Baltic region, which has grown much faster than other European regions in recent years, and for our team, speaking to the high level of trust from the market and quality of service we are able to provide. Furthermore, with excellence and innovation among the core values of Sorainen, it was a true honor for Sorainen to be shortlisted by the Financial Times as the Most Innovative Law Firm In Europe (non-UK), making it the first-ever law firm from the Baltics and Belarus to earn that recognition.

Looking at the future, I am most excited about our start-up sector group, as well as our new sector focuses, such as our dedicated team for private clients, as well as our latest addition, the defense sector group, which we launched in response to increasing market need in light of investments in defense rapidly growing in the Baltics due to the ongoing war in Ukraine.

CEELMDirect: Thank you, Toomas. It was a pleasure talking to you, and continued success in the months and years to come!

CEELMDirect Profile Pick: A series of interviews with partners and firms with profiles on the new CEELMDirect online legal directory. Today’s interview: Pavel Hristov, Partner at Hristov & Partners in Bulgaria.

CEELMDirect: Bring us up to speed, Pavel. How is your firm doing, in these interesting times? Have there been any significant developments or changes in recent years? 

Hristov: These are difficult times in every aspect, globally and locally, politically, economically, and humanly. In this challenging and rapidly changing environment, our firm’s focus and specialization in corporate matters and M&A transactions has paid off and helped us ride the wave of record M&A activity. We too had a record year in terms of volume of work, number of international referrals, and cross-border deals. 

CEELMDirect: What with Covid, global inflation, and a major military conflict not too far away, this has obviously been a challenging past few years in Bulgaria, as across CEE and the world. In your opinion, how has Bulgaria weathered those storms – and is there something you think the country could or should do better going forward?

Hristov: As during the Eurozone financial crisis in 2009-2010, Bulgaria has effectively managed the various (and mostly external) crises. Our country’s economic fundamentals are strong, and supported by export-oriented industries and EU funds. The pending application to enter the Eurozone will likely be delayed until the most pressing common challenges in the EU – inflation, potential recession, energy diversification, armed conflicts, emigration, and common defense and security – have been solved or contained. Each of those challenges will negatively affect our governmental policies and local businesses’ growth perspectives and financial results. The days of general growth and stability are behind us. Governments, businesses, and people will have to adapt quickly and become agile. I am not sure if the Bulgarian government and political class are mature enough to deal with and prevent the worst possible scenarios, but I am hopeful.

CEELMDirect: Several years ago, you participated in a CEELM Round Table conversation about the state of Bulgaria’s government – and the controversies surrounding it, which had brought the Bulgarian people to the streets in protest. Can you give us an update on the situation? What’s happening now?

Hristov: Those protests led to three early general elections (within a year) and ultimately to a change in government. A newly formed anti-corruption and reformist political formation, in coalition with other opposition parties, formed a new government, with a pro-EU, pro-Eurozone, and pro-NATO orientation. The government faced a huge number of external and internal crises (in the context of unfavorable media coverage) and, with no time and few resources, it has so far been unable to implement the most urgent reforms: judicial reform, e-government, effective use of the EU funds and the state budget, etc.

CEELMDirect: You have a Premium profile on the CEELMDirect platform. What potential do you think the platform has to help you and your colleagues?  

Hristov: CEELM has always been more than a publication. We have viewed it as a community: A community and a network connecting the people and organizations active in the legal services industry in the CEE region and beyond. The CEELMDirect platform and the profiles will enable us, the members of this community, to find each other more easily, to know more, to remain up to date about each other’s experience, expertise, and track record, and to communicate with each other. Thank you for having us and keep up the good work!

CEELMDirect: Thank you so much, Pavel. Have a wonderful summer!

 

CEELMDirect Profile Pick: A series of interviews with partners and firms with profiles on the new CEELMDirect online legal directory. Today’s interview: Damir Topic, Partner and Head of M&A and Co-Head of Banking, Finance, and Capital Markets at Divjak, Topic, Bahtijarevic & Krka in Croatia.

CEELMDirect: Damir, according to DTB’s CEELMDirect profile, this past year the firm won CEE Legal Matters’ Croatian, Bosnian, and overall Deal of the Year Awards. That’s remarkable. What was the deal, exactly, and can you tell us a bit about how the firm managed such a complex, challenging assignment?

Topic: This remarkable deal was about the acquisition of the entire frozen food division of one of the largest regional companies, Fortenova. Our client, Nomad Foods, acquired production facilities and the entire network from Croatia, Bosnia, Serbia, Slovenia, North Macedonia, Kosovo, and Hungary at a price of over EUR 600 million. It was critical for us to enable (through our SEELegal Network) the seamless execution of the transaction, from obtaining all regulatory approvals to closing the transaction simultaneously in all jurisdictions. This was successfully done for two reasons. Firstly, because of our long-standing cooperation with our peers from our network and, secondly, because of our firm and our peers’ deep workforce capacity enabling us to carry out this demanding assignment in parallel with our other engagements. DTB is, and for a long time has been, structured in a way that it is constantly open to accommodate the most demanding engagements by maintaining the number of our experts at a level above our competitors. This strategy has put us in a position to carry out all sorts of engagements without snowing our lawyers under or pushing them to the limit in their work. Instead, we make sure our lawyers are focused on and dedicated to the client they are serving at the given time and not just running errands on several parallel transactions.

CEELMDirect: According to the Activity Rankings function of the CEELMDirect website, DTB has worked on far and away the most reported deals in Croatia in the past decade – more than doubling the next firm’s. That’s amazing, and I can’t imagine there are many other countries where one firm so dominates the market – if any. What do you attribute your firm’s success to?

Topic: As I have mentioned in my response to your previous question, we believe the reason for such a high presence in the transaction market lies in the strategy of having a strong focus on maintaining a good balance between the workload and the number of experts who are serving the clients on such deals. The fact that our lawyers can commit themselves fully to a deal and a client, from the preparatory phase to the completion of a deal, including the partners’ actual work and participation in critical phases of the deal, has been recognized on the market. Clients have been coming to us because they are certain that they will get from us all that we can professionally give. We believe that our ability to motivate our people to give their best performance each time does not go unnoticed by clients – and then the success you mention is the well-deserved reward.

CEELMDirect: What with COVID, global inflation, and a major military conflict not too far away, this has obviously been a challenging past few years in Croatia, as across CEE and the world. In your expert opinion, how has Croatia weathered those storms – and is there something you think the country could or should do better going forward? 

Topic: Indeed, these were and still are challenging times for all of us and Croatia certainly hasn’t been the worst performer, although there were areas where we could have done better. When it comes to COVID, I think we handled it reasonably well, balancing the needs to safeguard people’s health and preserve tourism as one of the key economic drivers. The health system proved to be robust, not just because of its relatively solid organization, but primarily because of the tremendous personal sacrifice of doctors and all medical staff. As regards inflation, Croatia is not the worst and it will be confronted with the reality of inflation after January 1, 2023, when it becomes a member of the Eurozone. The introduction of the euro as the new currency in other countries has always contributed to inflation. Therefore, even without the current inflationary pressures, we will face additional challenges on inflation. Finally, the developments in the energy market are troubling, but it seems Croatia is doing well, not just because we have an LNG terminal giving us a reasonable level of energy independence, but also because of other natural resources (hydro, solar, gas, and oil) available in our country. In that sense, I’m an optimist when I say there won’t be a cold winter here.

CEELMDirect: You recently upgraded the firm’s profile on the CEELMDirect platform to Premium status. What potential do you think the platform has to help you and your colleagues?

Topic: I think the awareness of how other peers are doing and the potential for sharing experience are the takeaways we are counting on here. We recognize the platform as a tool that can enable our people to expand their visibility, and have a place to measure themselves and the firm’s position in the local and regional communities. We are looking forward to the feedback we will gather from within the firm and will try to communicate it with you when we have some constructive proposals.

CEELMDirect: Finally, are there any major or significant changes or initiatives underway at DTB you’re proud of and would like to tell us about?

Topic: We are currently dealing with the introduction of several new IT tools designated to improve our billing and project management and the handling of our know-how. We are also participating in several initiatives related to the use of AI in firms of a similar scale to ours. Finally, we have had a pilot coaching program that has exceeded our expectations. For that reason, we are going to run a permanent coaching program for our lawyers. The idea behind all these initiatives is to reduce the time our lawyers spend on matters potentially distracting them from the main goal – performing the best legal practice.

CEELMDirect: Thank you so much, Damir, and we’ll look forward to hearing – and reporting on – the many deals you and your colleagues at DTB work on going forward!

 

The Polish law firm of Traple Konarski Podrecki is in a position of running and maintaining a network of 15 firms, covering 19 jurisdictions, all working in unison for one of the biggest tech companies the world has ever seen – Google. To gain a deeper understanding of how this network of law firms functions and operates, we reached out to TKP Senior Partner Xawery Konarski and Partner Piotr Wasilewski.

TKP at a Glance

TKP is a Polish independent law firm with Krakow roots and a history spanning 25 years. “Most of our partners have academic backgrounds, so we are not just practitioners but also scholars, with many still working at top Polish universities,” Konarski says.

First starting as a boutique IP, TMT, competition, and data protection law firm, TKP grew in all directions and, nowadays, encompasses “almost 100 members, including administrative staff, divided into ten practices, operating in Warsaw and Krakow,” Konarski says proudly.

Google, as Konarski puts it, had a difficult time managing its regulatory affairs across 19 jurisdictions in CEE, with the principal problem of developing a standardized approach. “For example, if they were to use Google Street View in Romania, Hungary, or Poland – what would the requirements be, how would they structure their operations, etc. – none of these questions was, seemingly, getting comparable answers, with one country having a 20-page long legal reasoning produced by a law firm, and the other having but a few sentences,” he stresses. “These were the problems they were facing, and they contacted us to help them with standardizing the work of outside counsels and overall compliance,” Konarski says. “Our cooperation with Google started seven years ago – with them approaching us,” he continues.

“To be able to manage this work,” Wasilewski chimes in, “we had to unearth high-profile expert law firms in CEE, those that would be able to work with us and be accepted by Google.” To that end, TKP filtered the CEE countries by three criteria – EU member states, members of the Council of Europe, and others – and began their search.

“Choosing the correct law firm was not an easy task, and we had to do a lot of traveling, meeting each potential candidate firm and getting to know both it and its experts – on all levels,” Wasilewski continues. “We built robust professional relations with these firms over all these years and haven’t yet had a case of having to exclude anybody from the network.” Moreover, he says that “even the department heads in the firms are still the same!”

Googling the Network

The network itself, Konarski says, numbers 15 law firms, some covering more than one jurisdiction. “In total, there are up to 1,000 professionals working within the network each year,” he says. “and 83 lawyers accompanied by administrative staff are currently active on the project.”

Constructing the network itself, TKP relied on Google’s inputs. “Google’s regional HQ in Poland is quite close to us, so we had the chance to cooperate closely with them from day one,” Konarski says. “They had some ideas for who we could partner up with – which did help us choose our partners for the network.”

“It is a pretty diffuse landscape,” Wasilewski says. “Some firms are quite large and cover many markets, while others are almost boutique sized. As a result, our cooperation with each had to be well thought out.” As Wasilewski puts it, having hundreds of pages of agreements with the firms would be “untenable,” so TKP cooperates with them all based on letters of understanding.

“There is a huge amount of trust between all parties involved, built on the experience of each of the partners, as well as our relationship with them,” Wasilewski says, adding that all the law firms within the network tend to meet up as frequently as possible and organize boot camps to transfer knowledge and experience more efficiently.

Running the Search

The way that the network itself functions is “like a legal proxy, in a way,” Wasilewski says. “We receive a task from Google, and the first step we take is preparing it so that it could be sent to other law firms within the network. We prepare all of the accompanying materials and documentation and send it to our hub members for further processing,” he explains. Afterward, relevant deadlines are defined – an internal one for the hub and an external one for Google.

“A few years ago, we moved completely to working via Google Workspace, completely cloud-based, which sped up our work greatly,” Wasilewski says. “After they receive their tasks, the law firms get to work, with us all the while being able to monitor their progress. This gives us complete insight into each task, its history, projected deadlines, and ultimate completion.”

When the tasks are completed, TKP goes over them and prepares a unified harmonized report for Google. “At that point, we stand by for any potential follow-ups and further clarifications, but our principal role is in creating a unified approach – be it for commercial and regulatory matters or even litigation,” he says.

Indeed, Konarski adds that “Google faces a lot of claims” and that, with the help of TKP, it can “implement consistent approaches to each of these challenges, which is very important both for internal corporate policies and outside regulatory compliance requirements.” Often, legal reasoning used in one jurisdiction can help with an ongoing matter in another, and intra-network cooperation between law firms is what breeds synergy.

TKP processes approximately 30 projects each month (or even more). “Currently, we have 31 pending litigation cases,” Wasilewski shares. “From the start of 2022, we saw 18 new cases, whereas 16 were closed in the entire hub. In 2021, we had 15 cases that spanned more than ten jurisdictions and 13 that covered more than 15 jurisdictions.” In total, TKP has 76 pending projects since the beginning of the year, some of which “are as simple as preparing a translation for a policy amendment, but some are quite challenging.”

Harmonizing Search Results

Getting this massive amount of work to harmonize is no small feat. The way the process gets standardized is multifold. “Firstly, there are the boot camps we set up,” Konarski says. “We usually discuss legal problems and share experiences and best practices.”

“Together with our counterparts in Google, we take to discussing all of the process issues, like not delivering a task in time, handling invoicing, and the like,” Wasilewski adds. “It is an open discussion process with Google, which includes not only us but our entire network.”

An additional way of unifying the process is working in shared documents. “By using cloud-based resources, all of our network members can have real-time insights into the work of their colleagues,” Wasilewski says. “This allows them to cooperate more frequently and help each other out – which saves time and effort for all.”

A Success Story that Keeps Growing

With the TKP-run CEE legal hub operating on Google’s behalf going strong for seven years now, it is an objective assessment that it is a monumental achievement. “Hubs such as this are the future of how multinational companies will organize their legal services,” Konarski says. “It enables such a strong transfer of knowledge and experience between all its members that it only gets stronger each day.”

And while this “synergy exists in its raw form, it still requires a strong coordinator,” he continues. “I believe that using a shared platform for work, creating standardized approaches to problem-solving, will define how legal work is done.”

Indeed, the hub’s operation was so successful that Wasilewski reports that Google wanted to apply the same approach to its African markets. “The African hub covers almost twice the size of what we do here in CEE. They had a chance to learn from our previous work and could hit the ground running, which is an amazing achievement,” he says, adding that the hub in Africa has been operating for “almost four years now.”

Ultimately, it’s about the bottom line, and the hub approach “saves a lot of time and money for clients of such size,” Konarski concludes. “This is the proper way of organizing legal work in a given region.”

This Article was originally published in Issue 9.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

With Baker McKenzie’s Budapest office celebrating its 35th anniversary this year, we spoke with Partners Zoltan Hegymegi-Barakonyi and Akos Fehervary to learn more about the firm’s track record in the country as well as what we can expect with the former passing on the Managing Partner role to the latter this July.

CEELM: With Baker McKenzie’s Budapest office celebrating its 35-year anniversary in 2022, how has the legal market changed over the years?

Hegymegi-Barakonyi: Baker McKenzie’s Budapest office was established in 1987 as the first western law firm behind the iron curtain, and is one of the most successful firms since then. In the early 1990s, during the large privatizations and opening of the market economy, more than 25 international firms were present in Hungary. Though only a few of these firms had the intention to stay longer and expand their operations beyond those transactions. Baker McKenzie, however, wanted to be a full-service firm, serving clients even after the wave of privatizations and the transformation into a market economy were over. Due to the long-term focus, we developed capabilities beyond pure major transactional work, and, once that decreased, we had the resources to service other areas, such as disputes and general corporate and commercial work.

Fehervary: Indeed, we can be proud of and build on our office’s great history. Nevertheless, the rapidly changing business environment, different client demands, new industries and technologies, as well as our drive for great talent requires us to be able to quickly adapt to such changes and even be ahead of the curve to be successful in the market. Over the years, the changing market led to a new perception of what “lawyering” means. It’s not enough anymore to know the law and draft a contract well. Rather, one should understand the market and industries and provide excellent service to achieve the highest level of client satisfaction. It requires a completely different mindset, skills, and attitude, for which we have always been training our colleagues.

CEELM: Looking back, what were the biggest challenges that the firm had to overcome over the years?

Hegymegi-Barakonyi: We faced the same difficulties as other law firms, such as the financial crisis, the pandemic, etc. We are proud that we have had highly-ranked practices in many areas and provided a full service, meaning we could always balance things out. Specializing in different industries helped us to have a kind of safety. Another reason for our continued success is our strategy to hire the best local talents and a focus on the successful transition of generations. We didn’t have any big mergers or lateral hires, instead, we focused on homegrown talent.

Fehervary: We didn’t experience any drastic internal changes or turbulences. Quite the opposite, the organic growth and the broad coverage of every aspect of business law have helped us even during the more difficult times. We have developed new practices over the years to cope with new challenges, such as compliance, tax, data privacy, and energy. Another major factor was having a combination of foreign and local clients. Having strong roots in the local market – 50% of our clients are local – gives us a better balance than some other similar firms have had.

CEELM: Others also aim to have roots in the local market – what helped you succeed?

Hegymegi-Barakonyi: One of the primary factors is our long-standing deep relationship with our clients. Also, talent has always been an important focus of our firm. For instance, Baker McKenzie organizes nationwide competitions for law school students and many of them come to us to work in the end.

Fehervary: The other reason is the ability to serve every type of client with every kind of operation. Our attention to industries in addition to legal areas is also a distinctive factor, as is the fact that we are often pioneering legal technologies. As a result, we were awarded the International Financial Law Review’s Law Firm of the Year – Hungary title for the second time in a row in 2022, which honors the most innovative cross-border M&A and Banking & Finance transactions.

CEELM: Akos has taken over the position of Managing Partner from July 1. What prompted the change?

Hegymegi-Barakonyi: I made this decision of stepping down after nine years of holding the position of Managing Partner. This is already a record-long tenure at our firm. During the past nine years, I was dealing with client matters as well, especially in competition law, but your focus can never be the same as an MP. Akos joined the firm in 1997, so he knows everything about our firm. Four years ago, he became a principal and thus got into the management of the office and, during the pandemic, he was very actively involved in all strategic decision-making processes. Thus, we thought the time is right for the change. It is a great feeling to pass the position to a colleague that I fully trust.

CEELM: Akos, how are you planning to cope with the additional challenge of also being in charge of the firm?

Fehervary: Definitely, it is an additional challenge but I very much intend to keep on advising clients, in addition to the management of the office. Ultimately, Zoltan and the Partners did a great deal to transform the office into a modern, well-operating company by establishing certain functions, policies, and procedures to operate as a successful firm.

CEELM: If you could look forward to five years from now, what would be your mission statement?

Fehervary: My aim is to continue building a highly business-minded and solutions-oriented system, taking into account technological and industry-focused challenges. The legal profession is becoming a mixture of legal and business advisory, good legal work now requires understanding business motivations, financial aspects, tax, audits, etc. There is a very fine line between what is “legal work” and what is not, and we must be able to assist our clients with a holistic approach.  Our firm must be a space where the best talents are eager to work, and which is an attractive, diverse environment for colleagues, irrespective of their age, gender, or orientation.

CEELM: Zoltan, what would be one nightmare for you, once you pass over the keys?

Hegymegi-Barakonyi: First, I look forward to finally sleeping. Jokes aside, everything that Akos mentioned was important to me for years. With current geopolitical movements, we will especially need to focus on our clients and the challenges they face. If our clients’ business is booming, they will need help in investing, while during financial difficulties, we need to provide support on sanctions, restructuring, disputes, etc. In a nutshell, whatever keeps our clients awake at night, should keep us awake as well.

Fehervary: I feel the need to stress that Zoltan is not disappearing. We will still be partners, working in and leading the same office. I know that I can rely on his knowledge and experience, while he will focus more on his competition and IP practices and strengthen the firm through that.

This Article was originally published in Issue 9.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

CEELMDirect Profile Pick: A series of interviews with partners and firms with Premium profiles on the CEELMDirect online legal directory. Today’s interview: Krists Berzins, Head of Marketing & Communications at Cobalt Latvia.

CEELMDirect: Why did Cobalt decide to claim and fully populate its profile on the CEELMDirect website?

Berzins: We found it another great opportunity to showcase our firm and leading experts among fellow colleagues and in-house counsels operating in the same legal market. CEELMDirect is well structured to offer quick and easy insight and overview of the key service providers and lawyers of the CEE legal market and, to us, as the pan-Baltic law firm, it felt natural and valuable to be reviewed in it.

CEELMDirect: Was there anything about how Cobalt’s CEELMDirect profile is structured and set up that you see as particularly valuable?

Berzins: The activity ranking is a very helpful tool, providing instant overviews of the market players and their placement. The filter section is also a go-to tool to get to know top firms and experts in the specific jurisdictions and practice areas. Both are good sources to discover the market offering.

CEELMDirect: According to the Activity Rankings feature of CEELMDirect, of all the Baltic law firms, Cobalt has published the most thought leadership articles on the CEE Legal Matters website over the years. How does legal analysis of this kind fit into the firm’s mission?

Berzins: We believe that providing legal updates and alerts for our existing and potential clients is an important element in building a reliable image and sustainable relationships. From our experience, it is something our audience expects, and we – as their current or future counsel – must provide it. In our case, we still hope the quality overcomes the quantity, especially nowadays when competition for attention is so tight, and irrelevant or too general content becomes an annoyance.

CEELMDirect: Similarly, the CEELMDirect Activity Rankings function shows Cobalt to have had either the most or the second-most deals reported on the CEE Legal Matters website in each Baltic country since the firm’s creation. Congratulations! What do you think clients respond to the most about the firm that keeps the mandates coming?

Berzins: It might sound obvious but, first of all, we are grateful to all our clients who entrust their legal issues to us. No matter if it is a ground-breaking case, a large-scale deal, or a short questionnaire, it is important to our clients, and we always strive to deliver the best possible service.

In response to the question, of course, there is no universal answer. However, we are certain that our large and varied team, with their knowledge and experience, is the main asset that, at the end of the day, is the most essential.

CEELMDirect: Has the firm made any big changes or launched any strategic initiatives in recent months or years you can tell us about that will keep it at the top of the market in years to come?

Berzins: We are continuously working to offer an inspiring and safe work environment facilitating talent development. The past few years have been very challenging for all of us. Adapting to a new reality in combination with a high workload has required a lot of intellectual and emotional resources, highlighting the necessity to rethink working habits and organizational culture to help our people to avoid the risk of burnout. In this mission, we found great associates – the signatories of the Mindful Business Charter – and since late 2021 we are proud ambassadors of the charter in the Baltics, implementing and promoting practical solutions into our daily routines to ensure a better work-life balance for our employees.

CEELMDirect: Thanks so much, Krists. We wish you and your colleagues at Cobalt continued success and growth in the future – and a great summer!

 

CEELMDirect Profile Pick: A series of interviews with partners and firms with profiles on the new CEELMDirect online legal directory. Today’s interview: Mark Harrison, Founder and Principal at Harrisons in Serbia and Montenegro.

CEELMDirect: According to your firm’s CEELMDirect profile, Harrisons was the first international law firm to set up an office in Serbia and Montenegro, and it remains the only English law firm with offices in the two countries. In what way is your status as an English/international firm a unique selling point? What’s the particular value of that to your clients?

Harrison: Western investors, banks, and law firms feel very comfortable when they know they are dealing with an English law firm – in particular when they have had no prior experience of Serbia and Montenegro. They know we are regulated very strictly by the Solicitors Regulation Authority – a body I have to obtain a Practising Certificate from every year. They know matters such as know-your-client, anti-money laundering, confidentiality, and conflicts of interest (or even potential conflicts of interest) are sacrosanct to us. Likewise, knowing we have professional indemnity insurance cover from Lloyds of London is very important to them – as is the high level of insurance we offer. We are also unique in having an office in the City of London as well as Belgrade and Podgorica.

CEELMDirect: You, Mark, are described on the firm’s profile as being both the first English solicitor and the first European lawyer to become a member of the Serbian Bar Association. That’s quite impressive. When did that happen? Was it controversial within Serbia?

Harrison: In effect when I opened an office in Belgrade in 1998, I was persona non grata to the Serbian Bar Association. There were no international law firms. We did face a lot of “skepticism” from other law firms, which I found very concerning. However, I pointed out that a Serbian law firm could open up in London any day without any permission on the basis of reciprocity. I invited the International Division of the Law Society of England & Wales over to meet the Serbian Bar Association and was instrumental in having Serbian law qualifications recognized by England & Wales (and likewise from Montenegro), and finally, in 2013, I was accepted and sworn into the Serbian Bar as the first European Lawyer – which I am very proud of.

CEELMDirect: Why did you decide to upgrade your CEELMDirect profile to Premium status? What do you think the primary value of CEELMDirect is?

Harrison: I will have been qualified as an English solicitor for 40 years in October 2022, and I recognize the importance of good, effective, targeted marketing. Being a lawyer is a “contact sport.” I am selective on where we market. I have been very impressed with CEELM and its growth over the years and decided now was the time to increase our involvement with CEELM, and therefore we decided to upgrade our profile to Premium status. 

CEELMDirect: How does your own business in the past year illustrate what sectors are most active right now in Serbia and Montenegro?

Harrison: In the last two COVID years we have kept the same team; no one has left, and we are optimistic about the future. We are known as the Banking & Finance firm, which is our core business. However, we realize the need to keep evolving into new markets and for the last 10+ years have been extremely active with the MENA region (Middle East & North Africa) where, for example, we act for three sovereign wealth funds. Abu Dhabi is now the second-largest owner of agricultural land in Serbia. Additionally, about five years ago we noted the strength in Serbia of software talent, and we are now heavily involved in IT start-ups.

CEELMDirect: Thank you, Mark, and continued success and growth in the months and years to come!

 

CEELMDirect Profile Pick: A series of interviews with partners and firms with Premium profiles on the CEELMDirect online legal directory. Today’s interview: Roman Pecenka, Partner at PRK Partners in the Czech Republic.

CEELMDirect: Your CEELMDirect profile is packed with articles about deals you’ve worked on, legal analysis and editorials you’ve written, interviews with you, contributions you’ve made to a CEELM Comparative Guide on Real Estate … and even an article about your position as Vice Mayor of the Czech village of Podolanka! When do you find time to sleep?? 

Pecenka: I have heard that you do not get tired of passionate work. I am afraid that this is true – and I am a perfect example. All my jobs fit in what I like: real estate, working with people, and creativity.

CEELMDirect: This is an unusual question, but given your diverse profile and interests, it seems appropriate. What’s your favorite part of being a lawyer?

Pecenka: Freedom, as this is still a very independent profession. The working with clever people, which motivates you to make permanent improvements. And the constant challenges, which offer you a lot of satisfaction once solved.

CEELMDirect: What single element of your profile on the CEELM Direct website are you proudest of?

Pecenka: Being part of PRK Partners.

CEELMDirect: This is an unusual time in CEE, with COVID apparently waning (but certainly not completely gone), the war in Ukraine continuing to rage, and inflation in the Czech Republic reaching 10%. How is this cocktail of potential problems affecting business in the country – both for your clients, and for your firm?

Pecenka: With clients, we have to address new issues, such as the unexpected rise of prices in the construction sector, which overlaps with many other businesses. New clauses are being discussed between parties, existing contracts are being revised, and possibilities for both parties are considered.

Within the firm, the origin of the client’s ultimate beneficial owner became an important element for our consideration. Although we have maintained our pace during the COVID-19 crisis thanks to our preparedness, the astronomic prices of energy and inflation rates above 10% were not expected. They will certainly impact all of us, but if that would be our contribution to the Ukrainian victory in war, personally, I am ready to pay it.

CEELMDirect: Great. Thank you, Roman. Have a great summer!

 CEE Legal Matters spoke with CMS Partners Agnieszka Skorupinska, Kostadin Sirleshtov, and Varinia Radu about the impact of ESG on the energy sector in CEE.

Growing Pains

“The energy sector is very much at the heart of the Green Deal and all the regulations around ESG,” says CMS Partner, CEE Head of Environmental Law Practice, and CEE ESG Lead Agnieszka Skorupinska to kick off the conversation. “For years,” she adds, “conventional energy production has been a strain on the environment, so it is no surprise that regulators looked at it closely when developing the EU Green Deal. As a result, these regulations have been, are, and will impose limitations on the sector – but that is complemented by stimulating renewables, which is a positive tendency.”

From a regulatory perspective, she notes that the Fit for 55 package will have a massive impact as it touches on the carbon trading scheme, renewables, taxation, alternative mobility, and introduces a carbon border adjustment mechanism with the “purpose to reshape the energy sector and not only.” In addition, according to CMS Partner and Romania Head of Energy and Climate Change Varinia Radu, the introduction of the Taxonomy was a momentous change as it brought together the sustainability criteria in the energy sector.

Taking a closer look at the CEE specifics, CMS Managing Partner of the Sofia office and CEE Head of Energy and Climate Change Kostadin Sirleshtov notes that developments in the field have been happening at break-neck speed, with some having difficulties keeping up: “I had a meeting with the Bulgarian Ministry of Energy yesterday and he explained that countries like Bulgaria and others are facing real challenges in keeping up with the speed of EU regulatory changes.” Indeed, Skorupinska notes the “Polish approach is to contemplate trying to challenge the legal basis of some of these updates by arguing that the EU is going too far and that, to adopt these changes, unanimity should be required.” Resorting to such technicalities, she says, might have a political drive behind it, but, ultimately, “we’ve simply seen a terrific jump over the last 20 years and it has been really hard to get here – with the unfortunate reality in the background that a lot more still has to be done – and we’re approaching the limit in terms of the time, money, and technology we have access to.”

Playing Catch-up

Why is it that CEE countries feel this burn more? Radu explains that CEE has been more reliant on fossil fuels traditionally: “more coal and more gas or other non-renewables have been the focus and we’ve been lagging in this wave of investments in renewables.” There is a variety of reasons for this, she explains, with the regulatory framework being a big one. “PPA’s were not an option for too many of our jurisdictions until recently, for example.” This, she adds, has been slowly addressed and the region is slowly catching up as EU states have been integrated more and more into the EU market, which provides predictability in these countries.

On this element of predictability, Sirleshtov notes that a distinction needs to be made between CEE markets since “M&A investment levels are dependent on their specific conditions.” Specifically, Sirleshtov says there is a “very limited number of countries that have close to zero retroactive measures” – with Croatia standing out in this regard. “Then we have countries with some negative measures registered but that are still seeing good returns,” he adds, pointing to Bulgaria, Poland, and Romania. Lastly, some imposed “heavy cuts,” like the Czech Republic, and “here we’ve seen quite some backlash from investors.”

But while Radu agrees that each CEE country has its own DNA, she reports an “increased appetite in renewables and new tech investments in Poland, Romania, Hungary, Bulgaria, and the Czech Republic.” She says this is both because of the environmental ESG element being at the forefront of investment drives these days and also “because we have the S aspect of ESG – the social aspect, which, in energy principles such as security of supply, affordability, and sustainability, starts leaving a mark.” This helps explain Sirleshtov’s assessment that “across CEE, the investment market is solid. We have far more buyers than the market could sustain – more investments are looking to be made than there are projects available.”

Skorupinska echoes the level of activity saying that, in Poland, there is “a huge number of investments in renewables with photovoltaic and wind plants at the forefront”. Commenting on the success of Poland in particular in renewables over the last few years, Sirleshtov explained that the country is both simply much bigger than most and it was a very coal-dependent country: “They were dragging their feet until the last minute on coal and now we see a huge influx of investors, I believe because the market opened up at just the right time, when incentives could be zero, or very close to it. We saw a big market opening up at the right time and with a very strong supply chain – very capable developers, construction, and maintenance companies.”

But Skorupinska mentions that some of that progress “might slow down in light of the geopolitical situation. We are still a strongly coal-focused country, and the current context might bring forward some new opportunities in coal, such as new mining opportunities that were not present.” And, commenting on how the current context has impacted the regional overview, Sirleshtov sighs and explains that, before the war in Ukraine, the country was looked at as a similar rising star for renewables.

The War’s Impact on Energy and ESG

What the impact of the war will be on the energy sector is “the million-dollar question” at this point, according to Sirleshtov, but he points out that the sector was facing a “challenging time even before it, due to the COVID-19 pandemic and the demand/supply challenges and regulatory changes.” On top of these, “the Russian invasion has created several short-term issues: it gave rise to concerns over the safety of nuclear plants (with Ukraine having 15 reactors and six plants), it exacerbated concerns over the security of supply of natural gas, and has led to international escalation with new sanctions being introduced every day.” The latter in particular, he says, “while justified from a diplomatic perspective, adds a layer of complexity that is challenging from an energy perspective.” According to him, some countries, such as Bulgaria, have imposed a moratorium on changing energy prices. Others, like Romania, have reacted by imposing a windfall tax for producers, according to Radu, who explains that this government scheme was already introduced in November but is now due to be extended for another year and is also complemented by capped prices for final consumers and the industrial segment. This, she argues, “has created significant distress for all market participants – producers, traders, suppliers. They’ve been crediting the market for two months now and compensation was due to start soon and this mechanism will be extended until March 2023.” And all of this is happening “just when we were enjoying finally achieving a deregulated market. We’re now going back to a regulated market which, while only temporary, may create a lot of distress for investors.”

And the conflict is influencing policies at an EU level, according to Radu: “gas is coming back at the forefront and we see more emphasis on investments in gas in Romania, for example, where we might see a new bid run for exploration to facilitate Black Sea investment decisions.” Another potential investment direction is in gas interconnectors, so Radu expects we’ll likely see oil & gas companies stepping up and increasing production – “or even go back to the drawing board to revisit some decisions such as OMV Petrom wanting to sell off some mature oil fields.” 

Skorupinska notes that, “while looking at the developments in Ukraine, one might be afraid that the Green Deal might end up not being as strongly implemented, because it introduces a lot of limitations – I believe we will actually go further – we have to think about increasing energy efficiency and security by focusing on renewables, and that’s exactly what the Green Deal is promoting.” Skorupinska does acknowledge that some elements from the Fit for 55 package are “less likely to be feasible, such as the CBAM, because it would introduce additional costs.”

Looking at it from a broader perspective, Skorupinska predicts that ESG is becoming more important than ever, in light of the recent developments. She explains that ESG requires companies to look at their supply chain and the sustainability of that chain, which “some companies were not taking seriously enough. A day before the invasion, we had a draft come out – the Corporate Sustainability Due Diligence draft – which adds further obligations on checking one’s supply chain and making sure that it doesn’t violate human rights or harm the environment. This, I expect, will become all the more critical in the current climate.” Radu adds that “the directive will amend and increase the financial reporting obligation – with companies knowing they will be closely scrutinized on how they perform operations and what assets they acquire, which will have a huge impact on M&A.”

Ultimately, “the war in Ukraine was a wake-up call for various areas, but also for the energy sector,” says Sirleshtov. “Governments are now focused on the need for real diversification and interconnectivity,” which, he concludes, means that “despite the high price, will be taken on since energy independence and security of supply will be at the very top of every government’s agenda in the region.”

This Article was originally published in Issue 9.3 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

CEELMDirect Profile Pick: A series of interviews with partners and firms with profiles on the new CEELMDirect online legal directory. Today’s interview: Katarina Mihalikova, Co-Founding Partner at Majernik & Mihalikova in Slovakia.

CEELMDirect: Can you tell us a bit about Majernik & Mihalikova? When was the firm established, how big is it, and what do you and your colleagues specialize in?

Katarina: Majernik & Mihalikova is a boutique law firm based in Bratislava. It dates back to 2005, and has been operating under the current brand since 2011. It is a middle-sized law firm, with 15 fee earners and staff members. We advise clients on M&A, venture capital and technology deals, IP/IT, real estate development, energy and insurance  assignments, labor, law and general corporate and commercial matters.

CEELMDirect: Is there anything new happening with the firm in 2022 you can share with us? Any new initiatives, developments, or significant changes you’re excited about?

Katarina: We have been active in the start-up community for over 14 years  through various means – mentoring, lecturing, financial support, pro bono work, legislatives initiative, and the drafting of template documents for innovateslovakia.sk. This year we aim to foster our commitment by engaging, in cooperation with other start-up community stakeholders and leaders,  in various structural initiatives in the knowledge economy.

CEELMDirect: Why did M&M decide to claim and fully populate its profile on the CEELMDirect website?

Katarina: We perceive CEE Legal Matters as a successful project devoted to a region that fully deserves attention and its very own specialized platform. CEELMDirect is a natural next step, hence we have populated the profile as soon as the occasion arose.  

CEELMDirect: Was there anything about how CEELMDirect profiles are structured and set up that you see as particularly valuable? 

Katarina: The directory is well structured, intuitive, with all features one would reasonably expect. Its recognition amongst CEE-based law firms is a pre-condition of its success and we should realize that it has got potential to become an excellent marketing tool.

Thank you, Katarina. I hope the rest of the year is successful, enjoyable, and profitable for you and your colleagues.