Category: Issue 10.12

In antiquity, it was commonplace for people to sacrifice a goat to the gods – sometimes to pacify them but many times to simply bring good fortune. It took millennia to overcome the post hoc ergo propter hoc thinking of “something good happened to me after I killed a goat, therefore killing a goat got me something good.” Accurate or not, certain ideas, once set in our brains, have a nasty habit of sticking around way past their prime.

I’m just now slowly coming up for air after the insanity that was the week leading up to the Deal of the Year submissions deadline. I won’t whine to our readers about the flood of submissions that landed in the last hour – I’ve done that plenty to anyone willing to listen over the last couple of days and I think it’s out of my system. No, it’s not about methodology (the when in particular) that I feel the need to write. Rather, it’s the substance of it all that crushes my soul.

For those of you blissfully unaware, each year CEELM awards the most important deals (based on size, complexity, and impact/significance for the market) in each country that we cover. We don’t make those assessments. Each year, we put together a set of jurors – both at a country and regional level, consisting of senior lawyers – and we act purely as a conduit, aggregating submissions (while screening for completeness), developing a voting platform, and aggregating/tabulating votes.

We make that process clear. We tell participants in the submission form “this is where you talk to the jurors and try to convince them this deal warrants their vote.” Almost without fail, submissions state that deal X involved a “market-leading company buying another market leader.” Rarely do they try to give any info beyond that – turnover, headcount, market share, etc. All deals are “groundbreaking” and “unique” and require an “innovative solution,” but what new element they introduced is anyone’s guess. Lest we forget, all are “complex,” because of reasons.

As an editorial style, CEELM always cuts out qualifiers from our writing. If a company we write about in a deal news item is a significant market player, our readers will know that because we quoted firms giving us any data available about their revenue, size, market share, etc. If their sole description is that of a “market leader,” we simply cut that out from our final piece.

But, of course, we don’t do that with DOTY submissions. We pass them on to the jurors as received and they are left with comparing and picking between one groundbreaking deal and a unique one. The few submissions that provide the intel I described do stand out, but I would not hold it against either of our jurors if they ever told me that they had to flip a coin between a few entries based on what they were provided with.

The worst part is that, based on pure statistics, I am sure that many submissions that suffer from this ill do end up winning. Similarly, I’m sure that many similar submissions to ranking directories do end up being rewarded with a band 1 or a tier 1. And that just invites more “groundbreaking” talk in future submissions. But anyone who’s seen more than one such submission already simply glazes over such qualifiers without any substance and, if you’re preparing such a submission, know you’re inviting a game of chance when it comes to who gets picked. You’re just as well off sacrificing a goat.

This article was originally published in Issue 10.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In an era of unprecedented challenges, the legal profession in Central and Eastern Europe (CEE) is at the forefront of navigating these turbulent times. We face a vast array of challenges, including wars, the rise of nationalism, global tensions, energy crises, economic uncertainties, pandemics, climate change, and the rapid pace of digital transformation. Each of these significantly impacts both our lives and profession.

We witness the resilience of Ukrainian lawyers working under rocket attacks for nearly two years. Young Greek lawyers started rapidly to specialize in climate law. Impressive AIs like Allen & Overy’s Harvey and innovative legal tech products by Serbian and Hungarian colleagues highlight the evolving legal technology landscape, which is going to reshape dramatically the way we practice for sure.

As the end of the year is approaching, there is a sense of hopeful anticipation for what the new year may bring.

We see national independent law firms in CEE continue to grow and become more sophisticated and capable. There are brands with strong corporate culture, proper structures, and wide international recognition. They are attractive destinations to both clients and the younger generation of lawyers. While succession remains a challenge for some leading firms with over 25-30 years of history, alongside their famous veterans, a new generation of modern, knowledgeable, and innovative partners is emerging. The region has real leaders who not only navigate successfully domestic and international clients but also steer their firms through these dynamic times.

A critical aspect of our work is the role of law firms in democratic societies of CEE. These firms must be at the forefront, advocating for the rule of law and the values of civil society. Law firms are called upon to voice the improvement of the business climate and social conditions in our countries and the region.

Cross-border cooperation is another significant aspect. Our work often involves international elements, leading us to seek and create various forms of international collaboration, such as clubs, networks, alliances, and groups. This international coverage, while not homogeneous, offers both advantages and disadvantages compared to international law firms operating in CEE. Local firms in the majority of cases still have the benefit of deeper roots, broader experience, and contacts. Moreover, we strive to build international outreach and find proper partners who can deliver high-quality, speedy services to our clients. Of course, relations with international law firms help a lot and continue to be very important. International cooperation becomes increasingly essential for our firms’ existence and development. Imagine for a moment how a mid-sized independent law firm competes with an international law firm or a giant from the Big Four group in terms of spending on AI or business development, for example. There is much to be seen in the direction of international cooperation. The challenges will become so big that they undoubtedly will transform the nature and scope of the different forms of international collaboration. In addition, we expect to see more joint efforts between law firms and IT companies and other consultants.

Indigenous law firms in CEE will continue to face typical professional challenges such as an ongoing war for talent, different perceptions among the younger generation toward the profession, salary pressures from international law firms and clients from certain industries, limited capacity for substantial AI and other tech investments, cyberse-curity issues, the necessity of revaluation, and adapt law firm business models. Reflecting on the legal market’s developments over the last 35 years, however, we see that local lawyers are individuals of strong character, stamina, and intellectual capacity. They have managed to survive and thrive through various difficulties, a testament to their resilience and adaptability. Many of them are names of international caliber.

As we look toward the future, the challenges we face will only make us stronger, more connected, and more innovative. We are hopeful that the legal profession in CEE, with its deep-rooted resilience, stands ready to meet these challenges head-on.

By Borislav Boyanov, Senior Partner, Boyanov & Co

This article was originally published in Issue 10.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Discussing how the energy markets are evolving – diversifying, moving away from dependence on Russian gas, and becoming ever-greener – CMS Partners Horea Popescu, Blazej Zagorski, Thomas Hamerl, and Maria Orlyk take a deep dive into the dynamic shifts in the energy landscape post-2022.

CEELM: How is the CEE energy market different today compared to before 2022?

Popescu: The energy landscape has evolved considerably. The limited supply of Russian gas has catalyzed a shift toward diverse energy sources, including renewables and nuclear. There’s a clear directional shift toward different types of energy, targeting 2030 source goals. The dependency on Russian gas varied across the region, but overall, there’s been a stark decrease, through diversification in terms of sources and opening up opportunities for newer energy types across the region.

Zagorski: Poland’s energy market, particularly regarding nuclear power, has seen significant changes. We’ve moved from gas plants seen as a key component of the energy transition to exploring nuclear energy more intensely, including investments in both large-scale and smaller innovative nuclear projects. An example of that is the joint venture between Orlen and Syntos to construct several small- and mid-sized nuclear reactors.

Hamerl: Even markets that heavily relied on Russian gas like Austria or Bulgaria managed to find different suppliers easier than expected, supported by large storage capacity like in Austria and replacing natural gas with LNG, especially via markets like Germany and the Netherlands. Nuclear power is quietly gaining ground, with increased interest in photovoltaic energy. We’ve however learned that despite all the efforts for a green transition, oil and gas will remain important for much longer than we thought.

Orlyk: Although the Ukrainian energy system has been severely damaged by Russian missile and drone attacks and is currently in dire need of support from our international partners, Ukraine still continues to play an important role in the European energy supply network. We are still responsible for gas transit and we have proven to be a reliable partner to European countries in procuring gas storage.

CEELM: What new opportunities have emerged?

Zagorski: Challenges often lead to opportunities. This is true also for the energy sector. For example, gas supply issues brought nuclear energy to the forefront. Grid-related challenges opened up substantial investments in infrastructure, and battery storage is emerging as a crucial component, offering numerous opportunities.

Hamerl: Absolutely. We’re seeing new business models and innovations, such as collaborations between energy producers and large users. Our clients are actively exploring these new avenues rather than waiting for governmental solutions.

Popescu: Each crisis brings innovation. Rapidly adapting to reduce dependency on certain energy sources is a testament to our resilience and innovation capabilities. We’re now exploring areas like offshore wind and tapping into new gas reserves in the Black Sea.

CEELM: In terms of the energy sources mix, what specific trends have you observed?

Popescu: In the region, there’s been a significant increase in solar project investments, as shown by CMS’s Emerging Europe M&A Report (to be published in January 2024). Wind energy, though slightly decreased, remains a key player due to longer deal processing times.

Hamerl: Photovoltaics and wind energy are already well-established. However, investments in battery storage are gaining momentum and hold great promise for the future. Photovoltaics still has the potential to grow. Investors are regaining confidence and we are likely to see more and more hydrogen projects – but this might take two or three years.

CEELM: Could you elaborate on the specific energy developments in your respective regions?

Popescu: In Romania, we’re considering mini-reactors with US technology. While it’s an untried approach, the interest in standard nuclear power plants is growing, with Hungary and Bulgaria also exploring similar options. We’re particularly attentive to developing our third and fourth reactors at the existing nuclear power plant.

Zagorski: Poland’s energy market is evolving with numerous challenges. Supply stability issues are to be addressed with solutions like battery storage facilities. We’re also seeing the emergence of hybrid renewable projects that combine wind and solar sources, optimizing the use of the grid.

Hamerl: The current challenges include high interest rates and construction costs, coupled with falling energy and commodities prices, which put many business models in crisis. We’re also dealing with a complex transition due to an incomplete legal framework, slow permitting processes, dealing with state aid law restrictions, and political resistance to new technologies like wind parks or hydrogen solutions. While there were many laws that have been successfully passed – there have also been many that are simply not thought through sufficiently or secondary legislation was missing, like the ones tackling subsidy schemes, which could deter potential investors.

CEELM: How are these changes impacting the legal landscape?

Popescu: The energy sector is bustling with large deals and a growing interest in renewable projects. We’ve been involved in numerous aspects of these projects, from permitting to financing. CEE was lagging a bit in terms of renewables compared to Western Europe and now, with all the EU funds for the energy transition being online and the increase in demand – there has been a lot of activity. Looking at the past two or three years alone, many existing production facilities have changed hands and many projects have been put on the market. CEE aims to achieve carbon neutrality by 2050, and we’re seeing a consistent increase in financing for renewable energy despite high interest rates.

Hamerl: Banks are gaining experience and requiring fewer securities. Of course, risk premiums and securities could be partly replaced by corporate power purchase agreements. Still, a reliable legal framework is crucial to mitigate surprises like limited grid access or re-access costs. Somewhat interestingly, grid operators are not allowed to run battery storage facilities on their own. In those instances where improving the local grids is too expensive, operating battery storage facilities would solve many problems.

CEELM: What developments are expected in the coming years?

Hamerl: The EU-level electricity market reform will have a significant impact. We’re also expecting an increase in innovative start-ups, leading to more diverse and complex legal advice opportunities. As always, innovation is key. Our clients are at the forefront of this transformation, exploring and implementing novel energy solutions.

Popescu: In the next 12 to 24 months, we foresee new developments, including potential nuclear projects and possibly the first offshore wind projects. With predictions of warmer temperatures in the coming years, our focus is on promoting effective strategies to combat climatic trends.

Zagorski: The regulatory framework in Poland is evolving favorably for energy investments, and we anticipate further progress, making Poland an even more attractive investment destination.

Orlyk: For Ukraine, it is currently most important to keep its internal energy production and supply afloat. At the same time – it is also essential to remain a reliable and active partner for the EU in achieving energy stability and in the long run – climate neutrality. For this reason, while restoring the Ukrainian energy infrastructure, which will take an enormous effort, is a priority, a great emphasis will be placed on renewable architecture and the green transformation of the country. And this is something for which Ukraine will rely on EU support a lot.

This article was originally published in Issue 10.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

As 2023 comes to a close, reflections on the year reveal challenges and achievements across Romania, Bulgaria, and Ukraine. Tuca Zbarcea & Asociatii Managing Partner Gabriel Zbarcea, Schoenherr Bulgaria Local Partner Ilko Stoyanov, and Avellum Managing Partner Mykola Stetsenko share their thoughts on what kind of a year it has been.

Romania – Steady as She Goes

To start off, Zbarcea says that, for him, the glass is always half full. “Another year together, another year spent with our families and friends, with our team members and our clients is yet another great reason to celebrate. Therefore, for me, 2023 was better than the previous year.”

Taking a closer look at the strongest drivers of business for 2023, Zbarcea shares that, for their firm, corporate and M&A and dispute resolution are areas that have “always been busy.” On top of those, “real estate, banking and finance, as well as employment, competition, and tax areas have been on the rise. We also received lots of interesting mandates in energy and infrastructure.”

Looking at the overall legal landscape, Zbarcea reports a few updates of note. “We’ve had quite a few legislative changes this year, but I’d say that those affecting the labor market are the most important ones, along with the changes in the fiscal area,” Zbarcea says of Romania. “Equally important, another major amendment which was brought to the PPP and concession laws will further pave the way for more public-private partnership projects and works concessions and service concessions in Romania,” he adds.

“If there is one lesson I learned from the pandemic, it is the one of resilience and hope,” Zbarcea says, taking a cautiously optimistic approach when looking at 2024. “We need to be prepared for change and resilient in the face of unpredictability,” he adds, concluding: “Of course, challenges are ahead for the business community, especially following the implementation of the fiscal consolidation package, but, at the same time, I’m sure there will also be different opportunities, including private and public investment opportunities. For example, I’m confident that the EU-funded investment in public infrastructure will act as a strong stimulus to growth for the Romanian economy.”

Bulgaria – Busy as Ever

From Stoyanov’s perspective, 2023 went by better than expected. “The year was trended to be a bit slower than 2022 given the start of Q1. However, there were several interesting and challenging projects in the first half of the year,” he reports. “Alongside the different projects we have been working on in 2023, we started a few strategic ones in the middle of the year that led to excellent results.”

He says that, for their office, it was all about M&A. “Our busiest practice in 2023, as it has been always, was M&A. I would say that this is representative for the whole market, as M&A makes the largest part of the activities of the big law firms in Bulgaria,” he explains, somewhat resonating with what Zbarcea outlined as well. Moreover, Stoyanov reports that, for Bulgaria, “the biggest impact on the legal market in the past year were made by the strategic investments in the telecom industry,” which were led by foreign buyers according to the Schoenherr Partner.

Finally, Stoyanov adds that he is hopeful that the trend for increasing investments and stability in Bulgaria will remain. “We do believe that the Bulgarian economic growth will recover in the second half of the year bringing a lot of new opportunities for the market,” he stresses.

Ukraine – Resilience and Hope

“2023 so far has been quite a challenge for us as a firm and for Ukraine in general,” Stetsenko says of his country. “On the one hand, we had a lot of aspirations about the end of the war with Russia and the potential reconstruction of Ukraine. So far this has not materialized, although some serious discussions about new investments have been underway in recent months,” he shares. “On the other hand, Ukraine managed to increase its air defense potential with Western help thus creating a high level of security for large cities where people and businesses returned to their normal lives – almost to a pre-war level.”

Furthermore, looking at the year from a business perspective, Stetsenko reports a steady rhythm for Avellum. “We hoped that the flow of large projects would increase in the second half of 2023, but it was not the case. Work levels remain stable, but they are roughly at the level of the COVID-19 year of 2020,” he says.

“Our disputes practice has been very busy with diverse cases ranging from high-profile white-collar crime investigations to successful defenses of our international clients at the Supreme Court to investment arbitrations representing the Ukrainian Government,” Stetsenko continues. “I think this is quite representative of all major law firms on the market since disputes work is generally on the rise.” In addition, he also stresses similar areas of note as Zbarcea: “Our transactional practices, namely M&A, finance, competition, and real estate have been generally active, especially competition and M&A. We see some inbound investments both from private equity and strategic investors and it is very encouraging.”

However, looking at the legal market as a whole, he still thinks that transactional practices are underperforming and that it is “reflective of the state of the Ukrainian economy. Hopefully, as war insurance becomes widely available, there will be even more investment and lending in Ukraine.”

As for the road ahead, it does not appear to be a smooth one. “Next year will be a challenge for Ukraine and the world in general, and it will reflect upon us a firm, too,” Stetsenko says wearily. “We still hope that the democratic world will find a solution to end the war with Russia, as well as to ensure that it does not repeat. This is the number one priority for democratic nations across the world. It is now clear to everyone that Ukraine is fighting pure evil, and it is very important to call it that way,” he stresses. “Politicians and opinion leaders should paint it black and white to their voters and followers. Otherwise, dictatorships and the rule of the strong will spread around the world.” He adds that, with this narrative in mind, “we pray for the end of this war and look forward to doing an enormous job of building a new Ukraine after the war. Ukraine is on the path toward the EU and a lot of work is yet to be done.”

This article was originally published in Issue 10.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In The Corner Office, we ask Managing Partners at law firms across Central and Eastern Europe about their backgrounds, strategies, and responsibilities. As we bid farewell to 2023, this time around we turn our attention forward: What is your one main wish for 2024 and what do you see as the biggest potential risk?

Octavian Popescu, Managing Partner, Popescu & Asociatii: Unfortunately, we are going through quite a difficult period, with a war right on Romania’s borders and other armed conflicts around the world. The human and financial implications are enormous, causing humanitarian and energy crises, political instability, economic disruption, cybersecurity threats, etc. Thus, in terms of the biggest potential risk, from my point of view, this would be the regional insecurity derived from armed conflicts.

In this regard, my main wish for 2024 is to have economic security at the national and international levels. Each of us can contribute to strengthening the level of economic security by considering long-term investment strategies, being adaptable and open to new opportunities, building and maintaining strong professional network, and, of course, being permanently updated about trends, investment options, etc.

Andrej Leontiev, Managing Partner, Taylor Wessing Slovakia: We believe that 2024 will be a year of immense economic, political, and environmental challenges for Slovakia. As a result of the general elections, the risk of institutions being weakened and threats to democracy are growing. The probability of economic recession and demographic polarization is rising. Tackling climate change and boosting a knowledge-based economy will become more difficult. In general, during challenging times decentralized law firms like ours are better positioned to quickly adjust to changing, even deteriorating conditions. Therefore, I wish we and our clients will have the opportunity and ability to make important decisions further down the corporate hierarchy – where the decision-making process usually matches with local expertise the best.

Radan Kubr, Managing Partner, PRK Partners: Quite immodestly, I do not have a single wish for 2024, but several. I wish that the bloody conflicts rocking the world and its economy, including the Russian aggression in Ukraine and the war in Gaza, are brought to an end. The war in Ukraine has wreaked havoc and devastation on Ukraine, a country that is almost a neighbor of the Czech Republic and for which the Czechs have particular sympathy, as citizens of a country that has lived under 40 years of USSR-imposed communist rule.  The biggest risk is obviously that those conflicts will drag on in 2024 and beyond and that new conflicts will break out. I also wish that the Czech Republic, which has recently been called the “sick man of Europe” by the German daily Die Welt, will eventually find a new path to prosperity. As a dual Czech-Swiss national, I wish the country would draw inspiration from a competitive one like Switzerland, which has an excellent education system, invests heavily in R&D, and has created a favorable environment for start-ups.

Nazar Chernyavsky, Managing Partner, Sayenko Kharenko: To end the war. I believe this wish is shared by millions of Ukrainians and people all over the world. It has become evident that we are not getting sufficient support to reclaim the occupied territories. Thus, we should switch to defending what is under our control and ensure it is rebuilt, so that after the fall of Putin’s regime we can easily integrate those other territories. The biggest threat accordingly is if the West chooses to stop its support of Ukraine, and we are not able to protect our people and prove they were not fighting in vain. Now is the best moment to consolidate the nation around its future and democratic values, implement all needed reforms, and start the rebuilding process, which should create growth opportunities for the whole EU. It will be a shame if this chance is not used.

Ewelina Stobiecka, Managing Partner, Taylor Wessing Poland: My main wish for 2024 is to continue to build the firm’s reputation for excellence and expand our client base with a stable team of committed and talented people. We want to strengthen our presence in the new technology sector, maintain key client relationships, and attract top legal talent to ensure sustained growth. Recognizing that 2024 will be a pivotal year for our main practice areas, including cyber, technologies, and renewable energy, we intend to drive growth in these critical areas. This includes investing in cutting-edge technology to streamline operations and improve client service, positioning us as a leader in the legal landscape. We are aware of the potential risks arising from the geopolitical and macroeconomic landscape. Navigating these uncertainties while maintaining compliance and fostering innovation will be central to our success in the year ahead.

Erwin Hanslik, Managing Partner, Taylor Wessing Czech Republic: My wishes for the coming year are positive economic development, satisfied clients, and happy employees. I am optimistic that these are not just wishes to Santa Claus, but that their fulfillment is realistic. With regard to the Czech market, I still see the biggest risk in the very low unemployment rate and the associated daily challenge of attracting new employees while retaining the existing team. Our employees are not only our capital but also multipliers; if they are not satisfied, they will not only leave the company but also speak negatively about us. We are therefore constantly endeavoring to counteract the trend of “job hopping” by investing in our team.

Ivana Ruzicic, Managing Partner, PR Legal: My primary wish is to witness a transformative chapter in our development. Our focus remains steadfast on the three pillars of success: fostering client relationships, attracting new corporate clients, and nurturing the internal growth of our talented team. In the pursuit of attracting new corporate clients, we aim to leverage our expertise and adaptability to meet the evolving needs of the business landscape. Our commitment to staying abreast of legal trends and technological advancements positions us as a dynamic legal partner for companies seeking reliable counsel. The internal development of our team is paramount. We envision a workplace that thrives on innovation, collaboration, and continuous learning. Through tailored training programs and mentorship initiatives, we aspire to empower our associates, enabling them to excel and contribute meaningfully to our clients’ success. However, amidst this optimism, it’s crucial to acknowledge potential risks that could impede our trajectory. Market volatility, regulatory changes, and unforeseen global events pose significant threats. A proactive approach to risk management, including scenario planning and continuous monitoring of external factors, will be pivotal in mitigating these challenges. By fostering a culture of resilience, innovation, and adaptability, we are confident in our ability to navigate the complex legal landscape in 2024.

Ana Tosic Cubrinovski, Managing Partner, Tosic & Jevtic: I wish for legislation that mirrors the evolving pulse of society, eliminating unnecessary barriers and obstacles. Within our legislation, we encounter instances of outdated and unenforceable provisions, as well as legal loopholes that extend deep into the system, presenting tangible challenges. Even newly enacted laws, at times, offer solutions that lack legal coherence. Our business communities often grapple with the challenges posed by ambiguously defined legal terms, which, in turn, lead to the dissemination of perplexing and impractical decisions affecting managers and their teams, resulting in additional costs but also causing significant delays, impacting overall productivity and efficiency. I strongly advocate for urgent reform within our system, specifically in the meticulous formulation of accurate concepts when adopting new laws and amending existing ones. Failing to address this concern heightens the risk of fostering an unfavorable economic climate and discontent among citizens. Swift action is imperative to prevent these repercussions and ensure a more responsive and effective legal framework.

Guenther Hanslik, Managing Partner, CMS Vienna: My main wish for 2024 is that we continue to strengthen and grow our teams in the jurisdictions we cover and across our practice groups. For us, growth means personal and professional growth for each and every one of our team members. We want to enable our colleagues to develop their skills and take the next step in their development. If we do this right, we can provide a better service to our clients. The war in Ukraine, where we also have an office and a team on the ground, remains one of our biggest challenges. As such, the biggest wish for 2024 is still that the war in Ukraine will come to an end and that the CMS team will play a major role in rebuilding the country.

Uros Cop, Managing Partner, Senica & Partners: As the Managing Partner of Senica & Partners, I anticipate that Slovenia’s legal framework will require robust adaptation in 2024 to support economic resilience. While economic slowdown and labor shortages persist, our legal system must catalyze sustainable growth, fostering innovation and protecting workforce interests. The most significant risk is the widening gap between wage growth and productivity in high inflation. If not addressed, this imbalance may lead to prolonged economic downturns, negatively impacting our competitiveness in the global market. To mitigate this, we must focus on harmonizing labor laws with market realities, ensuring they facilitate rather than hinder economic stability and growth. Slovenia’s response must be twofold: firstly, revising employment and corporate regulations to attract foreign investments and promote domestic business expansion. Secondly, implementing legal reforms that enhance workforce skill development aligns with industry needs. This proactive legal approach can bridge the gap between current economic challenges and future prosperity, positioning Slovenia as a resilient and dynamic economy in the European landscape.

Alina Popescu, Managing Partner, MPR Partners: I hope that 2024 will bring a more extensive use of technologies by small and medium law firms. This would require better access to technology education and information, tools adapted to their specific needs, and pricing models that make sense. In addition, legislation fostering innovation and investments in legal services is paramount, as rigid laws amount to unwarranted barriers to development in this field. Considering the outstanding progress of AI, in lack of an accelerated adoption of legal technology there is a real risk that smaller firms will be seriously affected. With clients very much expecting lawyers to use cost-saving technologies, bigger firms having the requisite vision, teams, and budgets are likely to increase their market shares very quickly, to the detriment of smaller firms. At the same time, firms based in countries where legislation allows more flexibility for investments and innovation are likely to continue earning the lion’s share of the global legal fees. This will only accentuate with the development of legal technologies. Furthermore, liberal legislation governing legal services will contribute to fostering foreign investment and entrepreneurship in those countries, since streamlined, cost-effective legal services greatly reduce transactional costs and the speed of investment projects, amongst other things.

Pavel Dejl, Managing Partner, Kocian Solc Balastik: My main wish for 2024 is to see our legal practice continue its trajectory of growth and innovation. We aspire to strengthen our position as one of the leading Czech law firms, as well as expand our international footprint and enhance our client-centric approach. Embracing technology and fostering a collaborative culture within our team is pivotal to achieving this goal. The greatest potential obstacle lies in navigating the evolving global regulatory landscape. As laws and policies continue to shift, staying abreast of these changes and ensuring compliance will be a dynamic challenge. Geopolitical uncertainties and the potential impact of unforeseen events could also pose significant risks. Therefore, our focus in 2024 will be on maintaining agility, proactively adapting to legal developments, and fortifying our risk management strategies.

Ion Nestor, Co-Managing Partner, Nestor Nestor Diculescu Kingston Petersen: Each year, December is the moment when you feel the need to look back at what you have achieved and make a wish for the year to come. Looking around, it is easy to notice that our world is unfortunately in one of its most difficult periods in over 75 years. We are witnessing a combination of growing political and military tension, harsh climate changes, and serious economic problems, facing a polarized and divided world, so what could my main wish be for next year?  In terms of priorities, I would like to see a gradual disengagement on the Ukrainian front with, possibly, the initiation of peace talks and an end to the current tragedy in the Middle East crisis. Only then, could the other major problems that we are facing on planet Earth – economic, social, environmental – be taken care of efficiently. Otherwise, I fear that all the wishes that we can make, each of us, at the local level, may prove insufficient and ineffective.

Cristina Filip, Managing Partner, Filip & Company: My one main wish for 2024 is for us, the people, to mend our way towards hope, peace, and wholeness in our souls, in our homes, and in our countries. I see it as the biggest potential risk for us to fall prey to fear and hatred and spiral down on the broken path of discord, extremism, violence, and annihilation.

Bernhard Hager, Managing Partner, Eversheds Sutherland Slovakia: My main wish for 2024 is that we continue where we stopped in 2023 – a firm where people like to be and who clients like to work with. In CEE we are not immune from geopolitical and economic risks. The economic outlook for the region is worse than in recent years and investors are skeptical over political developments in the region and the war in Ukraine. 

Borivoj Libal, Co-Managing Partner, Eversheds Sutherland Czech Republic: I wish people would appreciate simple things more, respect and cherish our relations, and protect basic values that are often taken for granted. A potential risk: the escalation of wars without bold international peacemaking efforts to restore security.

Bogdan Gecic, Managing Partner, Gecic Law: I am deeply convinced that we are witnessing a revolution with the immense potential to rapidly redefine the role of a law firm in a dynamic regional market like ours. Heading into 2024, my main wish is to see the true integration of cutting-edge technology into our legal practices, enhancing the efficiency and accessibility of services. This transformation is poised to be predominantly marked by the adoption of rapid advancements in the field of artificial intelligence. By leveraging AI to automate routine tasks, we can focus on more complex legal issues that demand in-depth expertise and strategic thinking. This paradigm shift will greatly benefit our clients by expanding the impact and scope of our services while optimizing costs. A primary concern for 2024 is the ongoing threat of a recession in major global economies. Such instability could further dampen the region’s economic prospects, increasing upward pressure on costs. The repercussions of this could manifest in our region through heightened inflation, diminished exports, and a downturn in both foreign and local investment activities. This uncertain economic landscape could create an unfavorable market for legal services, thus presenting significant challenges in terms of strategic planning and client relations.

Pal Jalsovszky, Managing Partner, Jalsovszky: My wish is for peace and economic stability. Risks … there are plenty of them in our global world: climate change, migration, wars, and US/China commercial disputes, just to name some of them. And specific Hungarian risk factors are added to this list. The main internal risk factor is, in my opinion, the bad shape of the national budget. Tax revenues are lower than expected, EU funds are still missing, and interest costs on government debt are skyrocketing. The question is how the government will restore the balance and what impact it will have on businesses.

Nemanja Stepanovic, Managing Director, JPM Partners: Choosing just one wish for 2024 would certainly be a challenge. While world peace, prosperity, and equal opportunity are all noble aspirations, my wish is much more prosaic – it relates to JPM and JPM only. I wish to further expand our coherence, team spirit, and drive to work together not because it’s our profession (which it definitely is) but because we genuinely care and like what we do, where we do, and with the people we do. As for potential risks in the coming year, accurately predicting specific hazards in Serbia is a kind of Mission Impossible.  The equation is too complicated and with too many unknowns that I would not dare (considering my previous experiences) to name one. On the bright side, whatever risks we may face in 2024 are within the “been there, done that” realm. So instead of risks, we will remain focused on nurturing our relationships as those will be what carries us through 2024.

Tarik Guleryuz, Partner, Guleryuz Partners: We have gone through very rough days since December 2019. Pandemic, wars, earthquakes, economic and political shifts, and several others. All these have left a mark on our lives, business, and global markets. This has underscored the importance and necessity of volunteer work once again and why it should never fall off the agenda. We heavily invest in our pro bono projects in Turkiye and work together with institutions, foundations, and other organizations to provide legal advice to persons in need of help. I would like to see more and more firms support charitable organizations in 2024 so that we can expand our reach to those in need globally. The biggest potential risk against this might be the increasing economic instability (including as a result of local elections in Turkiye due to take place in March 2024), which is likely to shift many into a survival instinct where the focus will be on corporate stability only.

Tomasz Stasiak, Co-Managing Partner, Wolf Theiss Poland: My biggest wish for the upcoming year is for the Russian invasion of Ukraine to end, bringing peace to the people of Ukraine and adding to the economic stability of the region. That said, my greatest concern is the possibility of Western societies stepping back and leaving Ukraine to face the aggression on its own. If this happens, predatory nations may learn that aggression pays off. CEE is a stable region with a positive economic outlook for 2024 and beyond. In particular, Poland is expected to achieve 3% GDP growth next year. This means a great opportunity compared to so-called “stable” economies which are torn by social conflicts with stagnation on the horizon and a shortage of educated labor force. CEE nations are used to hard work and are willing to put effort into continuous economic development.

Branislav Zivkovic, Managing Partner, Zivkovic Samardzic:  The goldfish would give me three wishes, yet you allow only one, so a bit of a tough choice. 2024 world peace would always be a good choice, but let’s be more specific: Serbia has been, for decades, a hostage of Kosovo. Approximately 90,000 Serbs are still living there in a hostile environment. My wish is for this issue to be resolved in 2024 so we can move forward and become a part of the civilized world, a part of Europe. This would have a huge impact on all businesses – law firms included – and would make us a respectable country and allow us to fully utilize the new nearshoring policy of the West. With other advantages, we could become real leaders in the region in many areas. And all that would truly transform and modernize the legal profession. The biggest risk is, in my opinion, choosing the opposite – to continue to fight the already lost battle and throw our country back in the mud of the 90s.

Kostadin Sirleshtov, Managing Partner, CMS Sofia: My main wish for 2024 is for CMS Sofia to continue its sustainable development – to promote a new partner and head of the group, to be in a position to increase salaries and benefits for the team, and to continue providing best services for our growing client base. The biggest potential risk for our wish for sustainability is an event that disturbs our plans: global economic downturn, escalation of conflicts, etc. In my view, an economic downturn has the highest likelihood of happening.

Done Yalcin, Managing Partner, CMS Turkiye: Attending COP28 in person gave me the extraordinary opportunity to participate in numerous meetings and discussions. These experiences underscored the magnitude of the threat that the climate crisis poses to our economies, livelihoods, and existing systems. At the same time, it represents a significant opportunity for transformation and prosperity. As a result, my hope for 2024 is a seismic shift toward global sustainability, with companies, nations, and other stakeholders embracing the transformative potential of consistently integrating ESG principles into their decision-making and operations. I would like to see a convergence of legal, corporate, and societal efforts to address the pressing challenges of our time. However, the greatest potential risk lies in the failure to take the necessary action with the necessary speed. As awareness grows, the absence of comprehensive and rapid action poses a serious threat. Insufficient commitment to sustainable practices and the absence of robust, enforceable regulations could hold back progress and increase environmental degradation and social inequalities. To mitigate this risk, lawyers, businesses, and policymakers must unite to advocate for transformative policies and create a sense of urgency.

Timur Bondaryev, Managing Partner, Arzinger: Given the circumstances that Ukraine and the people of Ukraine have been living in since February 24, 2022, the main wish for all of us for 2024 remains peace and victory. We sincerely hope, that the war will be over in 2024 and that Ukraine and the world will go back to normal. Most recent developments in the world have not been really promising and it looks like we will have to adjust to the new-old reality and embrace the brutal fact, that we will have to learn to live and do business during a war for quite a long period of time.

It’s obvious, that the prosperity of a major corporate law firm largely depends on the economy of the country, and developments in the frontline will be the main factor to influence the situation in the country in the years to come. Major Ukrainian businesses have already adjusted to the new-old normal and have demonstrated tremendous resilience, in living and doing business under the missile strikes. Moreover, my prediction is, that if the situation will not become significantly worse and will, at least, remain as it is, we will see further economic development and growth. The West tends to forget, that our country has been living at war since 2014. This means that we have been adjusting ourselves to the war-time reality for a long time, even if the scale of the most recent horrible full-fledged invasion cannot be compared with the previous status quo.

Alexander Petsche, Managing Partner, Baker McKenzie Vienna: In 2024, my aspiration is to continue to build on our cross-border collaboration as well as our local knowledge with our teams all over the world. The CEE region remains a strategic anchor for our offices worldwide, especially in Vienna. Looking ahead, the predominant risk will entail navigating diverse – and stringent – regulatory landscapes, demanding proactive strategies to mitigate legal complexities, and ensuring continued success amidst uncertainty, all of which pose both challenges and opportunities for businesses.

Serhii Sviriba, Co-Managing Partner, Asters: In recent years, humanity has had to overcome a number of challenges such as pandemics, natural disasters, armed conflicts, and nuclear threats, which have caused much suffering, loss, and destruction. It is not in our power to stop the forces of nature, but what we can do is influence the disasters that humans cause. Undoubtedly, the greatest wish of many Ukrainians and the entire civilized world is to stop Russia in its brutal full-scale invasion and force the aggressor state to pay for all the suffering. We do not harbor the hope that this will happen next year. The enemy is strong, but Ukrainians will continue to fight for their freedom, democratic values, and independent future. This fight is hardly possible without support from our international partners. This statement gives rise to the greatest potential risk – if there is not enough support for Ukraine, the entire democratic world with its values will face even bigger threats: a chain of aggressive wars against democracies clearly being the greatest risk for humanity.

Akos Fehervary, Managing Partner, Baker McKenzie Budapest: My foremost hope is for a resolution to the ongoing conflicts in Ukraine and Gaza. Beyond the devastating humanitarian impact, global business is evidently tied to geopolitical stability. A peaceful resolution not only serves the affected regions but also establishes a more predictable environment for international business and, thus, our legal practices. For Hungary, I wish for the settlement of the long-standing process with the EU toward releasing those funds due to the country, which could give a great boost to the national economy. Moreover, a significant concern in 2024 revolves around the responsible integration of AI into business processes, as well as within the legal sector. As AI permeates various facets of our work, the associated risks related to data privacy, ethical considerations, and the necessity for robust regulatory frameworks become paramount. Balancing the advantages of AI-driven efficiency with the imperative to uphold ethical and legal standards poses a formidable challenge. It is crucial for organizations – law firms included – to adapt swiftly and responsibly to this technological shift, but adequate safeguards are to be established regarding the development and use thereof.

Oliver Werner, Managing Partner, CMS Bratislava: In 2024, I hold two key aspirations: (1) Enhancing Legal Compliance: I envision a year marked by heightened adherence to legal standards in all aspects of business operations, including transactions; and (2) Accelerating M&A Activity: I foresee a surge in M&A activity in 2024, driven by a favorable economic climate and a growing appetite for innovation and expansion. As Slovakia’s business landscape continues to evolve, M&A deals will play a pivotal role in driving growth and consolidation.

The primary risk I foresee is the potential for legal non-compliance to hinder M&A activity and tarnish Slovakia’s reputation as a business-friendly destination. Failure to adhere to regulatory requirements, such as anti-corruption laws, can delay or derail transactions, potentially undermining investor confidence. By embracing legal compliance and fostering a favorable environment for M&A activity, Slovakia can position itself as a leading destination for investment and economic growth in 2024 and beyond.

Istvan Szatmary, Managing Partner, Oppenheim: My one main wish for 2024 is meaningful dialogue. There seem to be so many significant topics on the table both globally and locally that need to be solved very soon to make sure that our life – as we live it now – remains sustainable. That is why we need to listen to each other much more than ever before, remain calm, and pursue meaningful discussions on our long-term visions for the global and local economy, our businesses, the role of science, technology, and AI in our life and the impact of all these on our everyday life. Each of us needs to find out how we personally can contribute to our common visions. In the post-industrial era, we all struggle to filter relevant and reliable information – fake news, information bubbles and all the noise on social media make it almost impossible to decide what to accept and what to doubt. My biggest fear is that sounds of sobriety would not be heard in the information noise and we have no plan(et) B. I hope we all realize in 2024 what we need to do and what we can do to overcome all these challenges.

Marcin Wierzbicki, Managing Partner, KWKR Konieczny Wierzbicki and Partners: As I reflect on the challenges and dynamic changes of the past year, it becomes apparent to me that the modern world operates at an accelerated pace, requiring quick responses and adaptability. Looking ahead to 2024, my main aspiration is to continue to support clients in navigating the current regulatory landscape, coupled with a passionate call for regulatory simplification as soon as possible. I believe this is the key to increasing business opportunities in Poland. The legal environment must support this development. As opposed to striving for calm, I am emphasizing the tangible delivery of our ambitious forward-looking plans, which have already been set in motion. Recognizing the potential risks associated with Poland’s unfavorable regulatory environment, I approach them with unwavering confidence, reinforced by our firm’s resilience to the challenges of the past year. I see the legal landscape not as an obstacle, but as a sphere of unlimited opportunity for a company capable of dynamic responses.

This article was originally published in Issue 10.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In The Inside Track, General Counsels across CEE share the nuances of their roles, challenges, and strategies for success. Since now is the time when plans for next year are made (and budgeted for) this time we asked GCs: Is your in-house legal function’s budget increasing, decreasing, or remaining the same in 2024?

Eleni Stathaki, Head of Legal, Upstream: As all in-house lawyers know, the only certainty when creating the annual budget for the legal function is uncertainty.

In our case, the budget for in-house legal functions for 2024 remains largely the same, although any savings we can achieve would be appreciated.

Looking at historical trends, we have observed that for the last few years, our legal spending has not greatly varied year on year. One factor for this is that there are some recurring costs that are relatively easy to calculate. Further, we have done our homework, identifying any tasks that may come up as well as any cost items that we could do without or bring in-house. In addition, keeping track of spending and cash flow on a monthly basis enhances visibility. Last but not least, solid relationships with outside counsel certainly help in keeping the budget stable from year to year, despite any unforeseen events that may come along.

Wioletta Kaloska, General Counsel, Symfonia: The IT industry is known for its dynamic nature, characterized by continuous change and innovation. At present, Symfonia is undergoing a phase of rapid development, marked by both organic growth and acquisitions of other companies. To stay aligned with the evolving business landscape, all back-office teams must either automate processes or engage additional personnel and external experts. The legal team at Symfonia is expanding alongside the business to ensure seamless support for the company’s evolving needs. Consequently – much to my satisfaction – there is a growing budget. The more companies we acquire at once, the greater the need for resources to engage external law firms. Following such acquisitions, the number of individuals in the organization grows, and each of them may potentially approach the legal team for advice, problem resolution, or recommendations. However, every organization has its limits, and over time, we will increasingly focus on automating certain processes and leveraging new technologies, such as AI, to handle some of the more straightforward tasks. We must be ready for that.

This article was originally published in Issue 10.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In our Looking In series, we talk to Partners from outside CEE who are keeping an eye on the region (and often pop up in our deal ticker) to learn how they perceive CEE markets and their evolution. For this issue, we sat down with Slaughter and May Partners Jonathan Marks and Richard Jones.

CEELM: What was your first interaction with CEE?

Marks: My first involvement was as an Associate working alongside one of the firms in the Czech Republic when the market first opened up on various transactions subject to English law. There have been a variety of transactions since, including acquisitions, JVs, and shareholder disputes.

Jones: I’m not sure I can remember my first interaction with the CEE region, although advising a government in the region in the aftermath of the financial crisis stands out as a particular early memory (although I’m sadly not able to say anymore)! Other memorable interactions include a very large leveraged acquisition finance deal that involved around a dozen jurisdictions, including Austria, the Czech Republic, and Poland.

CEELM: As for the current pipeline, what has been keeping you busy in the last 12 months?

Marks: Despite this being a quieter year for M&A, I have been involved in an acquisition of a stake in a CEE alternative energy business, worked on some interesting shareholder disputes relating to a couple of different jurisdictions in the region in conjunction with our disputes team, continued to advise the UK government on various projects, and advised on a number of high-value financial services transactions under which corporates have bought insurance policies to cover the risk on their staff pensions schemes.

Jones: An enormous variety of different things – investment grade and leveraged loan financings (including some difficult refinancings), bond issuances and liability management exercises, public and private securitizations, derivatives, and a few commercial contracts. In terms of work in the region, I’m currently in the middle of a complicated loan refinancing (which started life as a proposed securitization!) for a large family-owned business and have just finished agreeing on a banknote supply agreement (which was a new experience for me) for a Ukrainian client. I’m also about to close a retail bond cash and exchange offer for International Personal Finance, a consumer lender with operations in many jurisdictions, including the Czech Republic, Hungary, Lithuania, Poland, and Romania.

CEELM: How has London’s role in CEE evolved over time and what is it now?

Marks: We are very fortunate that English law remains a common choice on transactions as well as London being seen as a good place to bring court or arbitration proceedings. In addition, the ongoing strength of London as the location of key markets such as the London Stock Exchange and Lloyd’s of London means that we continue to be a hub not only for liquidity but also for expertise, including cutting-edge legal advice.

Jones: Much of what is new in the financial markets in Europe continues to be done first in London (often as a result of it coming over from the US), so – combined with English law’s position as one of the globally important legal systems – we’re lucky enough to continue to be involved in lots of transactions in the CEE region where there is – save for the use of English law (and possibly London as a location to resolve disputes) – no connection to the UK. However, nowadays, we almost always find that the CEE-based lawyers and other advisers are all well-versed in many of the key legal techniques and commercial issues, so we are often only providing advice on key aspects of the transaction (whether legal or commercial), with much of the day-to-day work being handled by local advisers. It’s also interesting to hear more and more frequently from our contacts in CEE that firms in the region, which have previously looked for investment locally, are now at a stage where they’re thinking about the possibility of London as a listing venue or place to raise equity or debt finance.

CEELM: What is your perspective on internationals in CEE – how will their presence evolve?

Marks: I expect that there will continue to be more of the same. We will see a mixed approach, with some international firms seeking to open or maintain offices in a (possibly reduced) number of jurisdictions, others seeking to be present in only a selected number of (often larger) jurisdictions, and yet others (like ourselves) seeking to serve the region from London or another major financial center. In some ways, this mirrors the approach of the independent law firms in the region which we spend a lot of time speaking to and working with – some are located in only one jurisdiction, others in a small number of jurisdictions, and others have a regional network. I am pleased to see the strength of independent law firms in key markets very much in line with our own experience.

Jones: Essentially, there is room for more than one approach in the market – we believe the way we operate (focusing on delivering English law advice from London and working with a range of the region’s (and the world’s) best independent firms) best serves our clients for the type of work we do for them, as well as offering advantages in terms of flexibility and conflict management, but there are obviously plenty of firms that take a different approach and make that work.

CEELM: Where do you see the most activity in the next 12 months?

Marks: I hope that we will see a return to stronger across-the-board activity levels as interest rates and inflation hopefully have peaked and start to fall. This should lead to more M&A – both trade and PE purchasers – assuming no more material international flare-ups leading to political or economic shocks.

Jones: In terms of finance, which is my practice area, I think the tougher economic climate, coupled with higher interest rates, will continue to drive some difficult financing conditions (as well as a reminder of the long-forgotten relevance of hedging interest rates!). As such, I suspect we’ll see an increase in distressed refinancings, debt-for-equity swaps, other recapitalizations, restructuring, and, when all else fails, insolvencies. That said, some sectors and companies are clearly still performing strongly, so they will continue to be able to obtain credit (including for acquisitions and other major projects) on favorable terms. There is obviously a general expectation (including in many jurisdictions across the CEE region) that infrastructure, energy, and natural resources work, particularly in the area of renewable and nuclear energy (where we have done a lot of work in the UK and across Europe), will be a growth area over the coming decade – hopefully, this will prove to be the case! We also hope that, following an end to the war in Ukraine, efforts can begin in earnest on reconstruction and the restoration of the devastation inflicted by the Russian invasion.

This article was originally published in Issue 10.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

In 2023, Croatia’s M&A market faced unexpected challenges on several fronts. Lovric, Novokmet & Partners Partner Mate Lovric and Divjak, Topic, Bahtijarevic & Krka Senior Partner Damir Topic discuss the market’s slowdown in the year behind us.

Slower Times

Lovric’s assessment is that the M&A market in 2023 was “worse than expected.” He highlights the complexities in finalizing deals, which increased considerably compared to previous years. “For instance, in 2023 few deals that came close to closing did not go through which is something we have not really experienced before,” Lovric explains.

Echoing Lovric’s sentiment, Topic attributes the downturn to a “global slump in M&A activities across EU and US,” emphasizing that both the number and size of transactions have fallen short of previous years’ levels. “Transaction value is not even close to the values of deals completed in 2021-2022,” Topic also reports.

Focusing on specific sectors, Lovric identifies IT and tourism as the front runners. Topic expands on this, pointing out the energy sector’s prominence due to the global energy crisis and Croatia’s rich renewable energy sources. According to the latter, there is a “rush to ensure renewable sources for the next stage of energy consumption transformation. Croatia has a vast number of available renewable energy sources – from wind and sun to hydro and geothermal.” Topic adds that “M&A deals have been done in each of the mentioned,” and agrees with Lovric that the IT sector remains buoyant despite economic downturns.

The Cost of Buying Business

Discussing the types of buyers in the market, Lovric reports some deals involving local buyers succeeded. In contrast, others with funds and strategic investors did not. Topic offers a broader perspective, stating that “strategic buyers took the lead over PE funds,” mainly due to the rising costs of financing, which have hit the funds harder. As for the originating jurisdictions, “there are still more foreign buyers than the domestic, and more domestic sellers than the foreign ones who want to go out of Croatia,” Topic stresses.

As Topic notes, the increase in financing costs is a critical factor impacting the M&A market. Lovric explains that higher interest rates reduce the margin of error, making fewer deals attractive. “On the other hand, the sellers are not willing to decrease their price expectations because if their business is ok then why should they decrease the price due to the overall environment – so, the price gap is bigger and harder to overcome,” he adds.

Topic agrees with Lovric, highlighting the adverse effect of rising interest rates on private equity activity: “It also affects all sorts of acquisitions not only because of the rising costs but also because of uncertainty as to where the ceiling for the price of money is. That is to say, some buyers are ready to buy even with these high interest rates – if they would know that this is the same rate available once the deal is completed,” he explains. “From the perspective of a buyer, who has to carry out due diligence and negotiate the deal for months, there is no option to go into a transaction if in three or six months they won’t be able to get the same interest rate as at they could at the beginning of the transaction.”

The New Eurozone Vibe

Lovric believes that while entering the Eurozone has simplified M&A processes by eliminating the need for foreign exchange discussions for EU buyers, “it has not notably increased M&A activity in Croatia.”

Topic views the transition more positively, citing reduced red tape and elimination of exchange risks as significant benefits. “Without this, I believe the situation for M&A would be even worse.”

Looking ahead, Topic offers a cautious outlook for 2024. “The perspective for 2024 remains bleak,” he states based on feedback from his colleagues at the recent International Bar Association conference in Paris. The consensus is that “2024 will probably be a bit better but still not ‘business as usual’ in the M&A sector,” he concludes.

This article was originally published in Issue 10.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Infobip General Counsel Tomislav Pifar first joined the company in 2011 and has been a witness to the company’s remarkable growth over the past 12 years. In reflecting on his journey, he explores the evolution of in-house legal work and international exposure, placing a particular emphasis on the transformative impact of AI on daily operations.

CEELM: Tell us a bit about yourself and your career path leading up to your current role.

Pifar: I spent the past 12 years at Infobip, and it has been quite an interesting ride. I initially joined the company as a young lawyer with brief prior experience at a small local law firm and at a public notary office.

The move to an in-house position turned out to be the start of a captivating phase – when I first joined, Infobip had a relatively modest global footprint, employing around 200 individuals. However, today, the company has a workforce of over 3,500 people spread across various continents. Being part of this remarkable growth has been a great experience.

CEELM: What were the initial impressions and experiences you encountered when transitioning to in-house legal work?

Pifar: Transitioning to the in-house world was a positive experience from the outset. I entered into an international exposure phase, engaging not only with local and regional matters but also interacting with colleagues across the globe, from Asia to Latin America. The ability to have conversations with colleagues worldwide within a single day was a pleasant surprise. Sure, handling multiple jurisdictions brought its challenges, but it was also part of the beauty of the job.

Additionally, one common element of in-house work is related to our ability to see and address problems from the very beginning and provides the opportunity to influence solutions more directly compared to external counsel.

CEELM: How large is your in-house team currently and how is it structured?

Pifar: Infobip’s in-house legal team is a global one – it comprises over 40 members strategically positioned on all continents. Our operational headquarters are in the UK and Croatia, with the latter serving as a centralized hub. Colleagues are stationed in North America, Asia Pacific, and other regions, each with a dedicated team supporting the respective business units. Acting as orchestrators, we collect local feedback and provide support to regional legal teams.

CEELM: What has kept your in-house team busy in the past year, and what are the priorities for the next year? What factors do you believe will have the most significant impact on your workload in the near future?

Pifar: The last 12 months have been marked by the exciting integration of AI into our daily operations – a major development with far-reaching impacts.

As a technology company, we’ve not only incorporated AI into our solutions but are also collaborating with AI engineering teams to customize tools for in-house legal teams. AI has the potential to significantly streamline our work, enabling faster and more optimized contract reviews and knowledge base management. Looking ahead, I believe AI will remain a focal point, with the team actively working on defining KPIs for the legal department, anticipating it to be a major driver in the coming period.

CEELM: How do you decide if you are outsourcing a project or using internal/in-house resources, and what factors play a role when it comes to choosing an external counsel?

Pifar: Our decision to outsource a project versus utilizing internal resources is dependent on several factors. In instances where we lack a presence in a specific market or specific in-house knowledge, outsourcing becomes an obvious viable option.

Referrals play a crucial role in our decision-making, alongside considerations of pricing and the flexibility offered by law firms regarding their pricing models. Nowadays, there are plenty of law firms with great expertise, but we prioritize relationships and the ability of external counsel to adapt to our specific needs and requirements.

CEELM: What do you foresee to be the main challenges for GCs in Croatia in the near/mid future?

Pifar: In the relatively small Croatian market, attracting top talent within the legal industry presents a unique set of challenges. Offering compelling work, competitive salaries, and fostering a positive work environment are essential aspects. Striking a balance between work-life considerations, particularly for younger professionals, and maintaining a collaborative environment are ongoing priorities. Being competitive in the market, both in terms of the work we offer and the collaborative global network we engage with, remains our strength.

Other than that, I believe that a new set of challenges for GCs globally and regionally is related to adapting to the changing landscape of legal technology, particularly how AI is reshaping the legal field. It has been an exciting but demanding aspect of our work. Looking ahead, AI remains a cornerstone of our strategy – the legal team is currently focused on defining KPIs for the legal department. This forward-looking approach positions us to leverage AI not only to assist our customers but also to enhance the capabilities of our in-house legal team.

The mix of law and technology also brings up worries about keeping data safe and private. Using AI means we’ve got to be extra careful with data, sorting through complicated rules and making sure we play by the standards. In a nutshell, the changing legal scene needs GCs to adapt and be flexible. Remaining aware of technological advancements, fostering a supportive work environment, and adeptly addressing complexities related to data are all crucial for the legal profession toward a resilient future.

This article was originally published in Issue 10.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Marked by the turbulence of war, Ukraine’s legal sector has adjusted to the new circumstances but potential future talent challenges loom on the horizon.

(Back to) Office Life

“In the first few months of the invasion, most of us worked remotely from various cities around Ukraine and abroad,” says Avellum Managing Partner Mykola Stetsenko.

Almost two years later, the return to the office is gradual. “Currently nearly 35% of staff regularly work from the office, while, in general, we use the hybrid model,” Integrites Managing Partner Oleksiy Feliv reports, adding that “around 80% of the colleagues are permanently located in Kyiv.” Meanwhile, Kinstellar Kyiv Managing Partner Olena Kuchynska highlights that generally, the firm has introduced a remote work model. “Only secretaries are asked to work from the office because of the nature of their work,” Kuchynska says, adding that these days “more and more colleagues are coming back to the office.”

The Human Connection Drive

The primary motivation behind returning to work is ensuring human connections, as highlighted by Kuchynska: “We are quite busy these days and people jointly work on various projects. This is the best way to keep the spirit up and build the team.” 

“To maintain the team spirit, we arrange regular staff meetings and team building activities,” Feliv adds. “Practices and administrative departments get on their separate team meetings on a weekly basis. We also involve our people in a hybrid series of lectures on mental wellbeing and corporate charity projects.”

Stetsenko notes that a similar approach is supported by employees themselves: “We still believe that human interaction at work is important, and our people share this vision according to the results of polling our staff.”

From Bomb Shelters to Alternative Power Sources

Despite the slow return to normalcy, there is still a need to prepare for extraordinary situations. “We had to make sure that our office has a shelter in good condition (we have an underground garage), we arranged for alternative sources of power, we also made a plan for extraordinary situations,” Kuchynska points out.

Stetsenko reports that they actively transformed existing facilities into bomb shelters: “Our office center created a convenient shelter in the underground parking of our building.” Sayenko Kharenko Partner Vladimir Sayenko adds that the firm “opened a second office in a more secure location with a bomb shelter, and this office is equipped with a powerful generator and Starlink internet access.” Additionally, Feliv says that the firm has an agreement with a business center “which is a two-minute walk from the office to use their underground shelter during air raid alerts.”

The office itself has also been equipped with an electricity generator, according to Stetsenko, adding that “this by itself gives comfort to our people, especially in the winter months when the office is always warm and has electricity and water.”  Similarly, Arzinger Managing Partner Timur Bondaryev adds that “in response to blackouts, the office equipped a large conference room with inflated beds and food, enabling people from the suburbs to stay during electricity outages.” Still, Bondaryev believes that “despite the uncertainties, Kyiv, with its extensive protection measures, is considered a safe place to be.”

Headcount and Retention Challenges

In terms of headcount, everyone but one share that headcount within the firm has been decreased to an extent. “Integrites managed to retain the team and completely avoid war-related personnel cuts, so the number of our employees remained almost the same,” Feliv reports, adding that “only about 7% of the team, mostly administrative staff, and junior-level lawyers quit.” Similarly, Kuchynska and Sayenko say that their firms prioritized not making any redundancies.  “When the new phase of the war started in February 2022, our law firm decided to preserve the team and did not downsize,” Sayenko notes. According to him, some of the lawyers left due to army service, secondment opportunities, or “shifted their focus by concentrating on humanitarian support at Breathe Charity Fund.”

Redcliffe Partners Managing Partner Olexiy Soshenko reports that the firm’s “headcount has, since the beginning of the invasion, dropped by around 40%, but this is now reversing and we now have some 80% of the personnel compared with before the war.”

“Surprisingly,” Stetsenko says, in Avellum, the headcount “has grown a bit.” This, according to him, is explained by the annual internship programs both in 2022 and 2023. “So, while we lost some people who left Ukraine, we had a lot of junior people join us,” he notes.

Utilization Trends

Stetsenko and Soshenko highlight that in their firms, “the average utilization now is 65%.” It is not ideal, Soshenko says, “but tolerable given the circumstances. As to positive trends, we have seen a gradual increase in work volumes.”

“The local legal market remains depressed, as there are fewer transactions, clients have other priorities and try to save on legal fees,” Sayenko adds, noting that “some international work remains” and “lawyers saw opportunities and started providing services in the areas that became hot, such as the mobilization of employees.”

Bondaryev highlights that utilization rates vary depending on the practice. “Some practice areas, such as restructuring, disputes, arbitration, sanctions, and criminal law, are exceptionally busy, working 24-7 with minimal time for internal matters or pro bono work,” Bondaryev says. “However, uncertainties persist about the duration of this positive trend. Privatization and infrastructure projects, sponsored/funded by IFIs (IFC, EBRD, World Bank, etc.), have contributed to the workload.”

Kuchynska shares a slightly different viewpoint. “We are back to the pre-war utilization rates now,” she says, adding that apart from the client work, team members have been “quite active and busy with volunteering pro bono work.” Similarly, Feliv notes that in terms of pro bono work, there are “practice groups and individual practitioners who demonstrate impressive results – from 200 to 500 hours per year, advising Ukrainian military personnel, developing information products for Ukrainian refugees, and consulting charity funds and organizations.”

A War for Talent Post-War

One lingering struggle remains the brain drain in Ukraine. “The brain drain is already a significant problem,” Sayenko notes. “It is not easy to find good lawyers with international experience. When the market revives, we are likely to see a vigorous war for talent in the Ukrainian legal market.”

Bondaryev shares a similar view, adding that “the firm is grappling with the effects of a brain drain as many lawyers, particularly women, left the country at the onset of the war. The demand for English-speaking talented professionals all across the practice areas remains high.”

Kuchynska, on the other hand, notes that brain drain, while not as visible now, may become a problem in the future. That said, she notes they “see that people are considering coming back to Ukraine,” adding: “And we are not afraid to hire people who are based abroad now. We think this could be also our mission: this helps people to keep a connection with Ukraine and finally make the decision to come back.”

Eventually, Stetsenko believes, that “lawyers will be in huge demand after the war with the EU accession as a major factor for Ukraine in the next decade.”

This article was originally published in Issue 10.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.