Category: Issue 11.4

In the dynamic Central and Eastern European legal sector, the trend of law firms merging and consolidating has become increasingly prominent. This trend is driven by a quest for synergies, expanding the client base, achieving cost savings, and gaining a competitive edge in the war for talent.

When Weil Gotshal Manges decided to shutter all three of its offices in CEE, which had been growing organically for years, and we opted to become independent, I never would have believed that we would soon thereafter merge with another law firm, especially given that most examples of law firm mergers more often prove to be recipes for disaster rather than success stories. After becoming independent, we made a strategic decision to transform our firm from a transactional house into a full-service firm. After two years of organic growth, we opted to push the boundaries and take a significant leap forward by merging with a firm that was an established leader in practices in which we had not previously engaged. Was it a necessity? Building such practices from scratch was certainly possible, but given the current, quite mature state of the legal market in CEE, such an endeavor would have taken years and significantly delayed the achievement of our goals.

Law firms in CEE are increasingly pursuing growth strategies that drive them to merge – seeking to combine strengths to better compete, and ultimately to increase the relatively low fee levels across CEE (at least when compared to most Western European countries, not to mention the UK and the US). Our case illustrates a strategic pivot from a transactional house to a full-service firm, achieved not through slow, organic growth, but by way of a bold and unprecedented merger. Such moves underscore a significant trend: in the fiercely competitive legal market, building a comprehensive service portfolio from scratch is both time-consuming and risky in comparison to merging with an existing firm, which can result in the merging firms complementing one another and enhancing their overall capabilities.

This consolidation trend is not uniform across CEE. While markets like the Baltics have seen legal service firms consolidate significantly – quite soon after the fall of communism, firms like Sorainen, Cobalt, Ellex, and TGS Baltic grew considerably. However, the Polish market, similarly to a number of other CEE markets, lags behind, highlighting the uneven pace of consolidation across the region. That said, even in the Baltics, the trend continues with the recent Walless and Fort merger serving as a perfect example. In parallel, regional law firms such as Wolf Theiss, Schoenherr, and Kinstellar continue to expand their operations throughout the region by opening new offices and hiring large lateral teams from local competitors.

From the perspective of a corporate M&A lawyer, mergers are an appealing path for growth. However, when viewed through the lens of a Managing Partner, the perspective shifts slightly. Growth for its own sake, without enhancing profitability, is unwise. Mergers allow firms to expand into new practice areas and regions with reduced risk and increased efficiency. This is particularly relevant given the current economic conditions, which are marked by rising costs and competitive fee arrangements, both of which disproportionately affect smaller firms unless they are able to find specific niches in which they can operate as top-choice firms for clients.

All that said, mergers are not without challenges. Integration can be complex, disruptive, and laborious. Cultural clashes and operational difficulties often arise, especially when leadership roles are dominated by Partners from one of the merging firms. Furthermore, while some firms may choose organic growth, this path presents its own set of challenges, notably in connection with recruiting and retaining talent.

Despite these challenges, the competitive nature of the legal market and the continuous need for technological advancement through substantial investments in AI and other technologies make mergers an attractive, if not necessary, strategy for law firms.

While the consolidation of the CEE legal market may have elements of trendiness, it is largely driven by the essential need of law firms to remain viable in an increasingly competitive and complex environment. The strategy of merging to mitigate risks and enhance service offerings is not just fashionable – it is a necessary adaptation to the evolving demands of the legal services industry. As the sector continues to navigate through economic and operational challenges, this trend toward consolidation is likely to persist (and may even intensify further) and shape the future of legal services in CEE.

By Pawel Zdort, Managing Partner, Rymarz Zdort Maruta

This article was originally published in Issue 11.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

ACI Partners Managing Partner Igor Odobescu, Nagy es Trocsanyi Founding Partner Peter Nagy, Kinstellar Partner Radovan Grbovic, Law Office Vujacic Partner Sasa Vujacic, and Tuca Zbarcea & Asociatii Partner Robert Rosu discuss recent litigation trends across CEE, driven by the impact of economic shifts and regulatory changes in their jurisdictions.

Steady Increase

“In the Serbian jurisdiction, there has been a slight uptick in litigation, which we interpret as a short-term increase,” states Grbovic, shedding light on the immediate effects of economic challenges. He elaborates that the increase is primarily due to “recent economic uncertainties, making it more challenging for market participants to meet their obligations.” During such times, he notes, “contract breaches become more frequent, leading to a rise in litigation.”

Parallel trends are observable in Hungary, where Nagy comments on the fiscal conservatism prompted by the economy. “Government and companies alike will have to do the best they can with last few years’ meager economy.” This austere environment, he suggests, cultivates “a penny saved is a penny earned” attitude that significantly heightens litigious behavior, particularly in “tax and construction disputes.”

Rosu’s observations on Romania align, with the Tuca Zbarcea Partner noting a steady increase in litigation related to public administration. “At least based on our activity levels which have grown steadily over the last 12 months,” he adds, pointing out the uptick in disputes over “public procurement and administrative litigation,” especially concerning tax litigation and building permits.

However, Grbovic proposes that the current rise might not continue. “While there was a slight increase in litigation, it is likely that a contrasting trend could develop over the long term. Economic uncertainties may lead to fewer transactions among businesses and individuals. This decrease in economic activity naturally results in fewer disputes and, consequently, less litigation,” he says.

And in Moldova, Odobescu argues that “the number of litigations will remain constant in the following years, with no considerable changes.” This expectation is underscored by a new legal framework that adjusts court fees, which he believes will “raise the litigation costs to initiate proceedings on pecuniary claims, where significant amounts are involved.” However, alongside a decrease in commercial litigations, he does anticipate a slight increase in administrative ones.

“During the last three years, we have observed an increase in administrative litigations, where private entities challenge administrative acts issued by public authorities,” Odobescu explains. This shift is partly due to more stringent regulations and the public’s greater willingness to challenge administrative decisions.

In contrast, Serbia sees a diverse litigation range. “The uptick in litigation primarily manifests in contract disputes and securities, sectors notably sensitive to economic shifts,” says Grbovic. Moreover, he highlights an “increase in the construction sector, as there have been substantial investments in infrastructure projects within the past few years, as well as an increase in the number of construction-related companies and entrepreneurs in Serbia.”

Montenegro’s Vujacic echoes this complexity. “Commercial disputes are one area where litigation has significantly increased, especially when it comes to contracts, debt collection, and company transactions. Furthermore, as Montenegro updates its legal system to meet EU requirements, there is an increasing focus on intellectual property rights protection,” he says. Vujacic also mentions the labor law disputes inflamed by recent legislative changes, marking a significant rise in cases filed by employees over compensation claims.

Catalysts for Increased Litigation

The increase in litigation across these countries is multifaceted. Grbovic identifies economic downturns as a primary catalyst, with “a decline in income, deterioration of debt-paying ability, layoffs, and restructuring” leading the charge in Serbia. This is compounded by the sectoral spikes in construction disputes due to “more litigation, especially among clients, contractors, and subcontractors, primarily over contract disagreements and project delays.”

Nagy highlights the proactive fiscal policies in Hungary as a litigious trigger. “Year after year, the government eagerly goes after maximizing its revenues, and new taxes and tax collection methods pop up,” which stirs significant resistance from affected parties. Looking at construction specifically, Nagy says that “the complexity of the construction business and its sometimes confusing documentation makes it an easy target for money-saving practices.”

Odobescu points to the EU accession and regulatory reforms in Moldova as additional drivers. “As an official candidate for EU membership, Moldova is committed to aligning its legal framework with the EU legislation.” This alignment often leads to litigation, especially as “the new rules imply significant penalties for non-compliance, and not all businesses will manage to adapt to the new legal framework,” he predicts.

In Romania, Rosu elaborates on the public procurement disputes driven by the extensive infrastructure projects. For example, the country has undertaken to develop a motorway network and other construction projects with European and national funds. “Many procurement procedures are being contested by the bidders,” leading to a growing number of legal disputes. Moreover, “another factor driving the uptick in litigations is linked to the difficulties of some companies in paying their current debts, which seems to be a consequence of the broader economic environment that had worsened after the COVID-19 pandemic and the Ukraine war,” he adds.

Courts (Try To) Adapt

As the number of cases climbs, courts across CEE are adapting their operational strategies. Nagy points out that, in Hungary, the “courts are having less appetite for details and are rather trying to cut corners when possible,” a pragmatic shift that, while streamlining processes, challenges litigants to present more concise and robust arguments. He goes on to add that an attempt to “organize administrative courts has failed” and that the “court procedure in administrative cases has been re-codified, making litigants’ lives sometimes miserable. New judges appear in administrative departments of courts who are somewhat slow in adapting.”

Grbovic laments the slow pace of digitalization in Serbian courts, which hampers their capacity to handle the increased caseload efficiently. “The courts are struggling to adapt to an increased number of litigation cases, especially in delivering timely decisions and scheduling trials.”

On the other hand, Odobescu highlights the successes in Moldova, where an integrated file management program “covers all the court procedural activities including registration, distribution, and file transfer. The distribution of cases is according to certain criteria, such as the nature of the case (civil cases, administrative, insolvency, etc.) and the complexity of a case,” he explains. “We believe that this allows for an equitable distribution of the workload among judges. Moreover, the Moldovan judiciary system is currently undergoing a reorganizational reform, purposed to merge the courts of appeal and increase the number of judges in the courts of first instance to face the increasing number of cases,” he reports.

“The most important measures were to delay scheduling the first court hearings after the filing of the court disputes and to increase the number of judges,” Rosu chimes in for Romania. He believes that the “upward trend in the number of disputes” is a consequence of “a reduced number of judges compared to the workload of the courts.”

Similarly, Vujacic reports that, in Montenegro, the courts are not at full capacity due to an insufficient number of judges. “This problem affects the capacity and effectiveness of Montenegro’s courts,” he says. “To improve the courts’ efficiency, the Ministry of Justice and the Judicial Council proposed amendments to the current Law on Judges and the Judicial Council,” which could “quickly fill the sufficient number of judges,” he concludes.

This article was originally published in Issue 11.4 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 partner departures are inherent to the workings of any law firm, and likely demand clear strategies for navigating, this time around we asked: What are the three most important items on your checklist when a Partner leaves your firm?

Kostadin Sirleshtov, Managing Partner, CMS Sofia: CMS Sofia very seldom sees partners leave. Some of them just relocate to other locations but remain with the firm.

When a partner leaves to join another law firm or to go in-house, we need to make sure that: (a) there is a proper exit interview – we need to ensure that there is sufficient feedback collected for such departures to never happen in the future; (b) there is no capability gap – we prefer having seniors from within the existing team stepping up and being promoted as partners, but if this is not an option – we start considering lateral hires; (c) clients are briefed accordingly – we are here for the clients and therefore we need to make sure that clients are not affected and there is no gap in our service delivery.

Milos Mitic, Managing Partner, JPM & Partners: Partner leaving the firm is always stressful and raises several questions to be discussed internally. Fortunately, in all my 30+ years of experience, I had just a few situations of that kind, and all of them were sorted out professionally.

However, on those rare occasions that such a thing happens the single most important item on our checklist is to try to find out what are the reason/s for such a career move. It’s up to us to make sure that work-life balance is in place and that everyday workload and accompanying burdens and tensions are not affecting the overall quality of one’s life.  Whatever the response is it helps us immensely to adjust and better prepare for some future occasion.

Ilir Daci, Managing Partner, Optima Legal & Financial: The departure of a Partner is a shock wave that resonates in every corner of a law firm, whatever its size. While it disrupts the practice for at least a few days, months, and sometimes years depending on the firm’s size and flexibility, it signals the presence of erosive factors that if left unchecked and untreated can become paralyzing to the practice for a very long time. 

The first and most important item is to understand as deeply as possible the root cause of departure. The traditional structure of the classic law firm places the Partner at the helm of the firm-client trust relationship. Whether departure is linked to internal disagreements, work discontent, toxic environment, competitive interests, or other imminent factors, the departing Partner has the best reasons, while the firm is susceptible to and usual upcoming reputational risks and brain drain.

The second important item is to take adequate measures to smoothen the transition so that client business is affected the least possible. While keeping the firm afloat is necessary, keeping the client well-served is imperative.

The third important item is to learn the lesson and take precautionary measures to level up motivation and enhance effective communication within the team and with the public.

Timur Bondaryev, Managing Partner, Arzinger: A lot depends on the reasons the partner is leaving the firm: good/bad leave, performance/health issues, etc. In any case, it’s very important to ensure that the leave is not too damaging for the firm and therefore, in my opinion, there are the following main points to be looked at (a) all financial issues, such as profit distribution, should be properly and correctly solved/settled and both parties are fine with the end-of-the-game financial settlement; (b) it’s important to ensure proper corporate memory i.e., handover of the clients/matters/practice for the firm and the clients do not “feel” the transition and the practice is run more or less in the same way as before. So, there should be a very clear succession plan, which is very thoroughly elaborated and discussed to ensure, that all works well. The succession plan should, by the way, also have a proper communication plan, to ensure, that there is full transparency and clarity as regards the situation, successors, reasons for departure, etc. Both, internal and external stakeholders should receive a very clear and aligned picture of the situation; (c) it’s always good to remain on good terms with the leaving partner as long as it’s possible – at the end of the day, the ex-partner will be if not always, at least for some time associated with the firm and can be a good or bad ambassador of the firm’s brand. Further, post-exit cooperation is not excluded and therefore it’s good to keep the proper relationship in case the services/support of the leaving partner will be required.

Pal Jalsovszky, Managing Partner, Jalsovszky: It did happen to us, unfortunately, so I can share my views based on past experience. First, it is essential to communicate to our colleagues that nothing extraordinary happened. Changes occur at each organization, this is the normal course of life. A special focus needs to be put on those colleagues who worked directly with the partner as they are potential targets for solicitation. The next step is to call each key client whom the partner worked with. Again, these clients may be on the target list of the departing partner. Showing the continuity of the seamless service that the client is accustomed to is crucial. The most tiring part of the job is to re-manage the work of the group led by the partner. You should find a new leader of the group – luckily from internal sources. Tasks and authorities will need to be redelegated, and processes potentially reviewed.

Christoph Mager, Country Managing Partner, DLA Piper Austria: In my view, the top three issues to consider when a partner of a law firm exits are as follows: (a) transition plan:  agreement should be reached with a departing partner as quickly as possible as to whether or which clients will continue to be advised by him or her. Ultimately, this is a decision to be made by the client; however, coordination in advance facilitates informing and preparing clients. In any case, a coordinated approach makes sense and underlines the professional appearance of the law firm; (b) diligent handover: it should be determined who will continue to manage existing cases internally so that a timely handover is guaranteed. This ensures that no information is lost and the continuation of the mandate proceeds without disruption. This documentation relates not only to the direct legal advice but also to the agreement of commercial terms (e.g., hourly rates). Whenever a partner is leaving, the firm is left with outstanding claims and it is important to agree on how to deal with it; and (c) team update: the departure of a partner is also relevant for individual team members as it may affect team structure, individual business plans, and training paths, therefore an ongoing continuation of team development should be carefully planned.

In summary, a partner exit is always a challenge. However, the points mentioned above make it possible to implement key issues efficiently for the benefit of both the clients and the internal organization.

This article was originally published in Issue 11.4 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. In the dynamic landscape of modern businesses, where adaptability and innovation are paramount, this time around we asked GCs: What is the one critical skill that you’re investing time and energy in to develop within your team, and why?

Nada Matusikova, Co-Head of Legal, RWS Group: It’s quite hard to name just one skill that I consider as critical. But I would probably choose thoroughness. How to build this skill? Don’t make assumptions, verify the data inputs. Normal people have the tendency to get tired after reading one page of legal text. But we lawyers know that the devil is in the details and the most unfavorable provisions will be probably in the middle of the small print. Don’t look for the shortcuts. We need to be sure there is logic in the entire legal document or in a transaction. All angles must be explored, all options elaborated, and all views considered. Be thorough and you are invincible.

Eva Kovacic, General Counsel, Belupo: With over 25 years of experience working for a law firm and in a corporate law department, I value and invest very much in successful habits within my team.

In the team’s responsiveness to clients, I think they as corporate in-house counsels must provide value at every opportunity. There are no wasted meetings or calls. They always contribute, question, provoke thinking, share, or advise on alternative approaches, after they diagnose a mutual way forward with a client, to achieve the target. 

Therefore, I’d highlight the “how can I help you to get to ‘yes’ (your deal, contract, other)” approach. In their responsiveness to clients, I encourage curiosity, courage, and confidence.

In their responsiveness within the team, I encourage respect and thinking less as a lawyer and more as a musketeer with the “one for all and all for one” approach. My energy is focused on mentoring as a two-way process where all the team members grow and gain creative thinking skills and inclusion. The linear or exponential development of each team member as a leader is a reward to every mentor.

Daniel Szeszler, Group Legal Director, Magyar Telekom: The single most important skill that we at Magyar Telekom Legal are focusing on is AI literacy. In the past several years, we significantly developed the Legal team’s digital capabilities. Now we seek to enable and empower ourselves to make real use of AI-based tools that we all have at our fingertips already; and to get prepared for a possible imminent breakthrough when AI tools may become game changers in our everyday work. We are running courses and workshops to familiarize ourselves with key concepts such as LLM and Generative AI; to better understand the basic mechanisms underlying AI; and to explore the applications and tools that are becoming increasingly useful and can in fact make a real difference in our work and private lives. This journey also helps in boosting another core ability that we all need more than ever: adaptivity.

Mate Lapis, Head of Legal, Cherrisk: In our organization, one of our core values is the “can-do attitude.” Building upon this ethos, we have identified two critical skills for investment within our team: communication proficiency coupled with adaptive capability. Over the past years, we’ve sharpened our negotiation skills while still holding onto our role as gatekeepers of legality, however, we have augmented this traditional function by equipping our legal team with the skills to become enablers of innovation.

Our approach revolves around focusing on solutions, rather than simply sticking to legal boundaries. We actively seek ways to support our internal or external client’s goals within those boundaries. This requires clear communication with our partners about their needs and the ability to adapt seamlessly or persuade others to adapt their needs and ideas.

This emphasis on communication and adaptability not only promotes an innovative culture but also strengthens our position as a hub for innovation. By empowering our team with these skills, we enable them to navigate challenges and find solutions they might not have thought possible before. As we continue to evolve, our commitment to nurturing these critical skills remains, driving us forward to the ethos of proactive problem-solving.

This article was originally published in Issue 11.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Since the early 1990s, following the fall of the Iron Curtain, international law firms have established and expanded their presence in the Czech Republic, creating a dynamic legal market alongside burgeoning local firms. Deloitte Legal Czech Republic Managing Partner Martin Bohuslav and CMS Prague and Bratislava Partner Helen Rodwell explore the strategic entries, exits, and endurance of these firms amidst evolving market conditions and economic challenges in the region.

Checking In and Checking Out

“International law firms have maintained a significant presence in the Czech Republic since the early 1990s following the fall of the Iron Curtain in 1989,” Bohuslav says. “Major Western firms established branches in Prague, quickly developing them into full-fledged offices serving both private clients and the Czech government. Concurrently, a boom in the Czech legal sector saw the rise of domestic law firms, marking over three decades of coexistence and competition between international and local players.”

Resonating this, Rodwell adds that, “in the early 1990s, the CEE region witnessed a surge of big international law firms eyeing capitalism as a lucrative opportunity.” However, “the landscape has shifted since then,” she says, with many international players retreating, favoring local partners for deal work. “Take Linklaters, for example, adopting a ‘break-away firm’ strategy with Kinstellar in 2008 after exiting the Czech Republic,” Rodwell says.

Rodwell adds that these are not standalone cases. “Freshfields Bruckhaus Deringer, Dewey & LeBoeuf, and Hogan & Hartson departed earlier due to fee pressures and fierce competition,” she notes. Moreover, Rodwell says that “Hogan Lovells and Norton Rose Fulbright followed suit in 2014, citing market challenges. Despite exits, the Czech Republic retains firms like us, Allen & Overy, and Clifford Chance, alongside DLA Piper, Dentons, and White & Case. The legal market in the country employs 11,498 individuals, with businesses expanding their workforce, indicating resilience amid economic headwinds.”

Indeed, Bohuslav agrees, adding that domestic firms have strengthened their position in the past 15 years, “attracting leading partners from departing international firms and adopting corporate cultures formed by their global experience.”  Noerr’s exit, according to him, is the latest development of this kind.

Compared to other CEE countries, the presence of international law firms in the Czech Republic is still relatively robust, according to Bohuslav. “While countries like Poland and Hungary may have larger legal markets due to their population size and economic strength, the Czech Republic offers stability, a favorable business environment, and a strategic geographical location, attracting international firms. In contrast, some CEE countries may face challenges such as political instability, regulatory uncertainties, or smaller markets, leading international firms to prioritize the Czech Republic over other locations in the region,” he posits.

Rodwell agrees, assessing that while “Poland has the highest number of competitors/international law firms of the CEE jurisdictions,” in comparison to neighboring CEE countries, “the presence of international law firms in the Czech Republic remains robust. While certain firms have withdrawn over the years, the country still hosts a diverse array of global players.” Rodwell feels that this stable presence “underscores the Czech Republic’s attractiveness as a legal market within the region, despite fluctuations observed elsewhere.”

The Stickiness Factor

Continuing, Bohuslav shares that he feels one of the principal reasons for this attractiveness is the country’s “well-established industrial base, thriving technology sector, and (not-so-great but still good) foreign investment inflows.” Furthermore, the economic stability makes it “an attractive destination for multinational corporations, which in turn sustains demand for legal services.” Additionally, he feels that considerations such as “regulatory environment, and connectivity to global markets also influence firms’ decisions to stay or leave.”

Moreover, Bohuslav says that “the size of the Czech market, while smaller compared to some other countries in the region like Poland in terms of population and GDP, still offers lucrative opportunities for international law firms.” Consequently, the legal market “reflects a dynamic interplay between international and domestic firms, characterized by competition, collaboration, and evolving client preferences. While international firms bring global expertise and resources, Czech firms and lawyers offer local insight and personalized service, ensuring a diverse and competitive landscape benefiting clients and legal professionals alike,” he says, contrasting the two.

“Despite the recent economic contraction, the legal services industry has shown resilience with a modest annual growth of 1.5% between 2019-2024, reflecting a steady demand for legal expertise,” Rodwell chimes in. “Incentives for international law firms to stay in the Czech Republic may stem from the post-pandemic landscape, where logistical demands and labor requirements have surged. The country’s strategic and central location for logistic centers, coupled with abundant and affordable labor, presents opportunities for deal-making and expansion,” she explains. Moreover, she feels that the country’s established legal infrastructure may incentivize international firms to “maintain their presence despite market fluctuations.”

“The strategies of law firms vary, influencing decisions on whether firms will remain represented directly, through international networks, or cooperating law firms,” Bohuslav says. “Some firms prefer a centralized approach and function as branches of global entities, while others opt for a slightly decentralized collaboration that allows a degree of autonomy to individual branches. Or an independent cooperating law firm could be an option as well,” he explains.

“The implications for multinational law firms maintaining offices in the Czech Republic are twofold,” Rodwell notes. “On one hand, the thriving legal market in neighboring Poland poses a competitive challenge, potentially shifting the focus toward establishing hubs in Poland over other CEE countries,” she says. “This could lead to consolidation and a re-evaluation of office locations. However, the positive post-pandemic economic outlook in the Czech Republic presents opportunities, especially with the expansion of logistics, construction, digital industry investment, and tourism. Multinational firms need to weigh these factors carefully, balancing the competitive landscape with the growth potential and strategic advantages offered by maintaining a presence in the Czech Republic,” she explains.

Much More to Come

Taking aim at the road ahead, Bohuslav shares that “large clients require the resources of large law firms to address complex legal needs. Currently, clients highly prioritize services related to the transformation of their businesses in a changing world. This includes support and stabilization of business in relation to the state, such as tax and financial administration, audits, and disputes.” Moreover, he reports that “development and restructuring of businesses, including acquisitions, sales, real estate, and corporate portfolio structure, as well as private services such as succession planning, are in high demand.”

Having all of this in mind, Bohuslav believes that a reality emerges in which the Czech Republic continues to represent an “attractive environment for the international law firms to stay connected to the Czech market, or the CEE market as such. However, the form of presence depends on the law firm’s strategy.”

For Rodwell, based on the country’s market outlook, “several trends emerge that are likely to impact the legal sector: the construction industry is expected to rebound, significant funds are being allocated to support the digital transition in the Czech Republic, the tourism industry is growing, and we expect an expansion of EV charging infrastructure.” She feels that lawyers specializing in construction, technology, tourism, and energy law are “likely to see heightened activity as they advise clients on regulatory compliance, contracts, transactions, and dispute resolution in these evolving sectors.”

This article was originally published in Issue 11.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Siemens General Counsel for the Czech Republic and Slovakia Richard Bacek talks about his transition from law firms to in-house and ongoing challenges including navigating new legislation, such as cybersecurity regulations.

CEELM: Tell us about your career path leading to your current role as general counsel for the Czech Republic and Slovakia at Siemens.

Bacek: I’ve been with Siemens for 15 years, joining in 2009. Previously, I spent 15 years as an attorney at various law firms, focusing on corporate M&A, public procurement, and competition law. Now, as the General Counsel, I manage legal matters for Siemens in the Czech Republic and Slovakia.

CEELM: What were the biggest adjustments in transitioning from a law firm to the private sector?

Bacek: The biggest challenge involved understanding Siemens’ business operations in greater detail than needed by a law firm, where external clients were the primary focus. Here, I needed to grasp the intricacies of internal processes.

My motivation comes from Siemens’ positive work environment, where employees are valued and integrated into the business, directly contributing to its success. Seeing the results of our legal work empowering colleagues and leading to positive outcomes is highly motivating.

Last, but not least, one of the most significant changes was achieving a better work-life balance.

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

Bacek: The Siemens in-house legal team across the Czech Republic and Slovakia comprises roughly 10 people. Each member has specific responsibilities aligned with particular business units and companies.

CEELM: How do you decide when to outsource legal work?

Bacek: We primarily rely on our in-house team. We outsource only when specialized expertise is needed that we lack internally, or when tasks offer minimal added value for our lawyers. Examples of outsourced tasks include debt collection, routine filings, and insolvency proceedings. We may also outsource for specific cases requiring unique expertise not readily available within the team or that wouldn’t be beneficial for them to learn due to limited future use.

CEELM: What criteria do you use when selecting external counsel?

Bacek: We have a panel of law firms reviewed and selected every four years according to company policy. We choose from these pre-vetted firms based on their specific expertise in the relevant area. Expertise is the primary criterion – we need firms that can assist us without needing to learn the subject matter on our dime. Price is a secondary factor considered only when multiple firms offer similar expertise.

CEELM: What has kept you and your team busy lately, and what’s on the horizon? What potential issues do you see impacting your workload the most?

Bacek: Our core function is supporting the business through contract and claim management, a collaborative effort by our legal team. We also address new legal issues implemented nationally or within the organization. Contract and claim management form the bedrock of our work.

Over the past year in the Czech Republic and Slovakia, the implementation of the whistleblowing act and new cybersecurity regulations have been key areas of focus, along with maintaining strong relationships with our business units. As a B2B company, our work differs from the retail sector. Our focus is on specific business units within client companies.

Looking ahead, we anticipate new regulations in cybersecurity and artificial intelligence impacting our workload. Additionally, we’ll need to adapt to developments in digitalization and technological advancements.

CEELM: What are the main challenges you foresee for general counsels in Czechia and Slovakia?

Bacek: Consistent monitoring and implementation of the new legislation will be an ongoing challenge, particularly for multinational companies compared to local firms. While we benefit from cross-border collaboration within Siemens, EU-based legislation often undergoes significant variation during implementation in individual countries. This necessitates local legal reviews and adaptations even for seemingly straightforward EU regulations.

Economic conditions will also play a role. During economic downturns, claim management becomes more critical. Conversely, a thriving economy reduces the need for claim management and debt recovery efforts. Ideally, with customers paying on time, our involvement is minimized.

Contract and claim management are ongoing processes, not one-time actions. Additionally, potential new legislation regarding ESG is on the horizon, though the timing and specifics remain unclear. This will be a topic of discussion within Siemens and the broader legal community.

This article was originally published in Issue 11.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

EOS Matrix Bosnia and Herzegovina Executive Director for Legal Affairs Mirza Kahvedzic discusses his career path leading up to his current role, how his legal team operates, and current challenges faced due to slow court proceedings.

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

Kahvedzic: After completing my internship at Section II for Organised Crime, Economic Crime and Corruption of the Court of Bosnia and Herzegovina in 2017, I continued my professional career at EOS Matrix, where I work to this day. I can say that at EOS I had the opportunity to professionally advance step by step – progressing from a Legal Associate to Head of the Legal Department, to my current role of Executive Director for Legal Affairs.

After 2020, our company expanded its scope of interest, and we started acquiring portfolios of secured receivables and real estate, which resulted in creating another business line – and I stepped into the role of Head of Legal Secured Receivables Department. After some time, I was appointed Procurator of the company, and after that, I settled in the position of Executive Director for Legal Affairs. In the meantime, I passed the bar exam, as well as the attorney’s exam, completing my formal legal education.

At the same time, I hold the position of Procurator in Creditable Opportunities BA, a company founded as a joint venture by our owner – the Hamburg-based EOS Group and the International Finance Corporation, a member of the World Bank Group, which also specializes in the sale and purchase of non-performing loans and acquisition and sale of the real estate. This type of highly successful cooperation with the IFC in Bosnia and Herzegovina is something I am particularly proud of.

CEELM: What was the biggest difference when transitioning to the private sector and what were the biggest challenges for you?

Kahvedzic: Moving to the private sector, particularly at a company like EOS Matrix, which is part of the EOS Group with over 6,000 employees, offered extensive opportunities for personal and professional development. I’m referring to the opportunity to actively participate in the decision-making process and make a real impact on the business, our clients, and society in general.

The biggest challenges for me were certainly reflected in the efforts to justify the trust and responsibility given to me, in terms of making important decisions and taking responsibility for them as well as for organizing the successful functioning of various departments.

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

Kahvedzic: EOS Matrix in Bosnia and Herzegovina has a total of 80 employees, and our leadership position in the market of debt collection, purchase, and sale of real estate, is largely due to the merits of our internal lawyers.

When I joined EOS Matrix, there were but three lawyers, and now there are 18. Seven are assigned to the Legal Secured Receivables department – which deals with corporate NPL claims secured by mortgages, and pledges and handles our real estate portfolio. Eight are part of the Legal Unsecured Receivables department – which deals with the collection of NPL portfolios – i.e., debts toward natural persons. Lastly, three are part of the Compliance and General Legal Affairs department, which also includes six colleagues from administrative affairs. As was already the case for all of these years, the expansion of our business activities is something that will naturally follow the further expansion of our in-house legal teams.

CEELM: How do you decide if you are outsourcing a project or using internal/in-house resources?

Kahvedzic: Looking at the structure of our cases – we have thousands of active court proceedings – our in-house lawyers handle most of those. We take a custom approach in relation to certain cases with greater exposure, and based on this we decide whether to outsource a certain case or group of cases to one of the more than ten law firms we cooperate with in Bosnia and Herzegovina.

Criteria such as geographic location, specific know-how in relation to certain legal situations, and determining the work priorities of our internal team lawyers, all guide us when deciding on whether to externalize. For us, it is really important to establish cooperation with highly respected lawyers who are experts in the field of enforcement, litigation, and insolvency proceedings, and possess the specific knowledge needed to handle complicated transactions of acquisitions of new portfolios and ultimately to provide effective solutions for legal workout and court collection of receivables.

CEELM: What has been keeping you and your in-house team busy over the last 12 months? What about the upcoming 12 months? What are you keeping on your radar that you think will impact your workload the most?

Kahvedzic: A stable investment cycle which included the purchase of dozens of NPL portfolios owned by commercial banks seated in Bosnia and Herzegovina, as well as real estate portfolios intended for further sale on the market, is something that kept us quite busy in the previous year – last year we invested approximately EUR 35 million into the market. Observing the trends, this cycle will certainly continue in the current business year. Financially, the company is on a strong track with a positive earnings figure of more than EUR 5 million EBT.

However, every portfolio acquisition entitles our efforts to continue with great results in the collection of the claims and sale of real estate, and that is a challenge. Looking at the results so far, the quality of our employees, as well as the enormous support from our group, I am confident that we will achieve excellent results in the months and years that follow.

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

Kahvedzic: For a relatively small market like Bosnia and Herzegovina, there are certainly many challenges. One of those involves finding quality personnel and this is something we are actively working on as a company, not only in terms of recruiting and offering a benefits system for our employees but also in terms of our collective efforts to ensure that top talent stays in our company for the long haul.

Challenges are reflected in our efforts to overcome obstacles that we most often encounter in the court system – combating and arguing against uneven judicial practice courts and trying to use different work-out methods and legal instruments to speed up court proceedings and get them in line with the time tracks prescribed by the law. The slow pace of court proceedings can be frustrating – we actively engage with the system and use all legal remedies to overcome this issue (i.e., stronger “grip” on the court, reaching out to court presidents, appealing to the Constitutional Court of Bosnia and Herzegovina, etc.) in order to advocate for faster resolutions and ensure our cases are handled efficiently.

Finally, the challenges of modern times require constant monitoring of trends in the field of process digitization and development of IT, and this is for sure something we are constantly trying to follow and implement in our processes. To that end, we have a dedicated team constantly evaluating and integrating new solutions to improve our processes and efficiency.

This article was originally published in Issue 11.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

An in-depth look at Tomas Sequens of Kocian Solc Balastik covering his career path, education, and top projects as a lawyer as well as a few insights about him as a manager at work and as a person outside the office.

Career:

• Kocian Solc Balastik; Partner; 2022-present
• Kocian Solc Balastik; Counsel; 2017-2022
• Kocian Solc Balastik; Associate; 2003-2017
• Kocian Solc Balastik; Junior Laywer; 1999-2003

Education:

• Charles University in Prague, Faculty of Law; JUDr.; 2002
• Charles University in Prague, Faculty of Law; Mgr.; 1999
• Charles University in Prague, Faculty of Natural Science; Mgr; 1996

Favorites:

• Out-of-office activity: Architecture
• Quote: “We wanted the best, but it turned out like always” – Viktor Chernomyrdin
• Book: Ordinary Life (Obycejny Zivot) by Karel Capek
• Movie: The Matrix I

Top 5 Projects:

• Advising Smart Energies Group on the construction of a first-class Czech hydrogen project;
• Offering long-term legal advice to the REMA Group on the operation of collective end-of-life product management (EPR) systems;
• Advising Green Gas DPB on the operation of a system for the extraction and distribution of mining gas and its use in cogeneration power plants, including legal aid in pricing and operational aspects of the operation of a gas leak detection system;
• Offering long-term advice to Lovochemie, including advice on the redevelopment and operation of its energy source and the development of a number of chemical processing units;
• Advising Asental Land on the cleaning and redevelopment of its land affected by coal mining.

CEELM: What would you say was the most challenging project you ever worked on and why?

Sequens: Without any doubt, I consider the most challenging project to be the current HyFlex Alpha hydrogen project of Smart Energies Group. The aim of the project, which will be located on the site of the Triangle Strategic Industrial Zone near the Czech city of Zatec, is to build a flexible renewable hydrogen and low-emission hydrogen production zone with a capacity of approximately 30 megawatts. Another pillar of the project is the simultaneous supply of heat to commercial properties located within the Triangle industrial zone and the provision of power balance/ancillary energy services. The HyFlex project is scheduled to be completed and operational by the end of 2027. The project is quite exceptional in its size, the intersection of energy, chemistry, and law, and the absolute emphasis on sustainability principles.

CEELM: And what has been your main takeaway from it so far?

Sequens: The HyFlex Alfa project is extraordinary in its multidisciplinary nature requiring the cooperation of a number of professionals from different fields: chemists, planners, energy engineers, financial investors, and legal and transactional advisors. The importance of the project goes beyond the borders of the Czech Republic and is fully transnational – just like the efforts to mitigate the impact of the climate crisis on human civilization. Behind such a project are many individuals, with their everyday worries and joys but those must never be allowed to take priority over or affect the life of the project itself.

CEELM: What is one thing clients likely don’t know about you?

Sequens: If I had talent and could draw, I’d be an architect. However, I was not given such an aptitude and that is why I am an attorney specializing in environmental and energy law.

CEELM: Name one mentor who played a big role in your career and how they impacted you.

Sequens: I started studying at my first alma mater, the Faculty of Science at Charles University, in 1990, immediately after the Velvet Revolution. At the very first lecture, we were welcomed by Professor Cihalik, the father of Czech environmental sciences. His opening words went something along the lines of: “You have a whole life ahead of you, free and democratic. Whatever you do, try not to spoil it.” In the end, only 15 of the original 30 of us finished our studies, but we all remember Professor Cihalik to this day.

CEELM: Name one mentee you are particularly proud of.

Sequens: Since 2005, I have been working on a number of environmental cases with my colleague Petra Mirovska, with whom we have created a quite unique environmental litigation team. I have successfully educated my colleague in environmental sciences and have learned many litigation tactics from her. We have provided countless precisely tailored legal advice to our clients since 2005, and our clients appreciate our passion and keen insight into the nooks and crannies of their businesses. While referencing Trinity, one of the main characters of the successful Matrix series, we often tell our clients: “Give us a few hours and we’ll definitely learn to fly your helicopter.”

CEELM: What is the one piece of advice you’d give yourself fresh out of law school?

Sequens: Grey is the theory and green is the tree of life. Don’t be disturbed by that.

This article was originally published in Issue 11.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

An in-depth look at Branko Maric of Maric & Co covering his career path, education, and top projects as a lawyer as well as a few insights about him as a manager at work and as a person outside the office.

Career:

• Maric & Co; Senior Partner; 2024-present
• Maric & Co; Managing Partner; 1971-2023

Education:

• University of Sarajevo, Faculty of Law; Graduate Jurist (dipl.iur.); 1970
• University of Belgrade, Faculty of Law; LLM; 1975

Favorites:

• Out-of-office activity: Skiing, hiking through forests, and mushroom picking
• Quote: Rolling stones gather no moss
• Book: Crime and Punishment by Fyodor Dostoyevsky
• Movie: Pulp Fiction

Top 5 Projects:

• Advising on local aspects of the Agrokor/Fortenova restructuring;
• Advising state electrical company Elektroprivreda BiH Sarajevo on the EUR 700 million loan from the Chinese investment bank CEXIM in relation to the construction of the Blok 7 thermal power plant;
• Advising Porsche on an asset deal with ASA and its market entry into Bosnia and Herzegovina;
• Advising on the reorganization process involving the separation of production, transfer, and distribution of electric energy and water management of the consortium led by IPA Energy Consulting, involving the transformation of the entire energy sector in BiH, as a result of which the initial operations of the ISO (Independent System Operator for the Transmission System in BiH) and Transco (Electric Energy Transmission Company of BiH) were established;
• Advising Turkish Airlines on setting up a joint venture with the Government of FBH and establishing a BH national airline.

CEELM: What would you say was the most challenging project you ever worked on and why?

Maric: Maric & Co operates in one of the most challenging jurisdictions in the world. Simply put, there is no other country as small with such a complicated legal and political system as Bosnia and Herzegovina. Just imagine a country of 3 million people where regulations are made at the state level, at the level of political entities, and at the level of cantons, without a state-level Supreme Court, thus resulting in quite inconsistent judicial practice. This undoubtedly poses a huge problem in everyday business, carrying significant risks, but also offering the opportunity to make a difference compared to other lawyers attempting to practice in Bosnia and Herzegovina.

This was best demonstrated in one of the largest deals we have recently been involved in: the restructuring process of the Croatian conglomerate Agrokor, which had a highly developed business in Bosnia and Herzegovina. We were not involved in this process from the beginning, and as a first step upon getting a mandate, we received a pre-prepared restructuring plan to provide comments on. To the great surprise of the client, the only comment was “the plan is entirely unfeasible.” It was crafted based on the opinion of another relatively renowned law firm which, simply by reading the law, concluded that the conversion of claims into equity was possible. While such an opinion could be formed by solely reading the law, the problem lies in the fact that the court tasked with deciding on this matter interprets the law in a completely different manner, and a restructuring based on the opposite stance simply could not be executed.

When asked about the biggest deals we’ve worked on, I must say I never engage in their ranking. For me, the biggest deal is always the one I’m currently working on; all others fade, remembered only by what was perhaps new or specific to them. Currently, my largest deal is representing the EBRD in financing the construction of the largest photovoltaic power plant in Bosnia and Herzegovina. It involves not only financing, the arrangement of relations with other creditors, and the creation or control of financial documents but also comprehensive instructions to the borrower on how to resolve land ownership issues for construction, obtain all permits, and regulate relations with the equipment supplier in order to secure valid collateral. This is now the biggest deal, but tomorrow it will be financing the construction of a highway in the Republic of Srpska (a political entity within Bosnia and Herzegovina) by a Chinese investor, a deal we just secured.

CEELM: And what was your main takeaway from the Agrokor matter?

Maric: The lesson from this story is very clear. In order to provide reliable advice, it is essential to have a sufficient number of specialized lawyers who not only understand the regulations and consistent judicial practice but also the differing views of individual courts. Conducting practice with just one or two lawyers, possibly supported by a lawyer from the parent company abroad, simply poses a risk to the client because you never know when you might slip up. Therefore, I consider the concept developed in the SEE Legal group, of which we are a member for Bosnia and Herzegovina, to be exceptional. This group consists of one leading firm from each country in the Balkan region, eliminating the need to venture into practicing law in another country. Instead, you can rely on a law firm that fully understands the legislation, judicial practice, and relevant state bodies.

CEELM: Name one mentor who played a big role in your career and how they impacted you.

Maric: I have never had a mentor in the true sense of the word. I was the top student in my class and the first in my class to graduate from college, but I never attended lectures or had consultations with any of the professors. When I started working as a lawyer, I gathered knowledge from my father (who was also a lawyer) and his colleague because nobody offered me that knowledge; I only obtained it to the extent that I sought it. Perhaps this is a harder way to acquire knowledge, but it has one advantage: it develops critical thinking. You don’t adopt others’ opinions and templates for solving problems; instead, you deeply analyze them and find your own solutions. Nowadays, obtaining templates for any kind of document is not a problem, and applying them may be sufficient in some cases, but eventually, everything comes to fruition. For example, I once worked on a simple sale of shares in a BiH company while my local colleague worked for a larger foreign company. They even had standard template objections to the draft contract submitted by the seller and standard objections submitted by the buyer. Since that colleague wasn’t quite clear on what those standard objections meant, in the official negotiations, he presented the seller’s standard objections instead of the buyer’s, so I had no choice but to say, “Colleague, you are absolutely right; I accept all objections.”

CEELM: What is the one piece of advice you’d give yourself fresh out of law school?

Maric: My advice to all beginners would be to think and think outside the box. If you use a template, think about what each provision means and what its purpose is, even if they are sometimes drafted by the greatest legal minds, and consider whether a better solution can be found.

This article was originally published in Issue 11.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Almost two years ago, I discussed in an article published in CEE Legal Matters the presence of “green” bonds and financings in Croatia. The thesis put forward in that article was focused on the necessity of companies and financial service providers to be more “green” in terms of the products they offer on the Croatian (capital) markets and goals on sustainability which should be accomplished.

Today, it can be seen that sustainability requirements are more and more present not only in traditional finance transactions but in the Croatian capital markets as well.

The finance documents include sustainability-linked loan principles as standards for traditional lending activities while the ICMA international standards on sustainability-linked bonds (SLBs) are incorporated as terms and conditions for the issuance of the SLBs on the Croatian market. Both of those sustainability principles have a similar goal ¬– improving the borrower’s/issuer’s position in terms of sustainability requirements. 

However, the question which arises is: are SLBs the right fit to accomplish real environmental, social, and sustainability goals?

Promising Sustainability?

SLBs are debt securities whose aim is to get finance through the capital markets for certain sustainability-related targets or meet specific sustainability performance goals. The ICMA defines them as “any type of bond instrument for which the financial and/or structural characteristics can vary depending on whether the issuer achieves predefined Sustainability/ESG objectives.” They are used both by the public and private sectors (both of which are seen on the Croatian capital markets) and are a great fit for companies having difficulties in reaching specific environmental and sustainability goals.

Unlike green bonds (also known as use of proceeds bonds), where the proceeds of the bonds should be used for specific environmental or social projects or targets, the proceeds of SLBs are not ring-fenced to sustainable green projects. There are no “firm commitments” on the issuer side to reach certain targets, which makes those bonds only targets-based bonds.

The issuers of SLBs do not commit to using any amount of the proceeds for specific projects or business activities that meet environmental, social and management, or sustainability criteria nor business restrictions in that sense. Thus, it is right to state that SLBs are rather flexible in terms of targets and are aimed at accomplishing certain environmental or social outcomes/targets which are measured/defined by key performance indicators (KPIs). The KPIs are checked by independent and external verifications by experts.

If the targets put forward by the KPIs are not met, the issuers will pay a penalty (coupon penalty), which makes those bonds attractive to investors since they will get monetary compensation in the “event of default” under SLBs.

The flexible character of SLBs in terms of reaching sustainability targets in a certain period defined under the SLB’s terms and conditions and the possibility to use the bond proceeds for even general corporate purposes make SLBs attractive to issuers who can easily access capital markets finance.

This advantage can prove to be a disadvantage with SLBs being more vulnerable to accusations of having a greenwashing character. 

Sustainability of Higher Goals – What Does the Future Hold for SLBs?

The EU proposal for the Corporate Sustainability Due Diligence Directive, if enacted at the EU level, shows that sustainability will go beyond the climate level and it will tackle not only the environment but also human rights.

The legislative framework on ESG compliance (currently in place and the ones which have to be  implemented at a national level/enacted on the EU level) together with the fact that under the Croatian National Development Strategy, 37% of funds through investments and reforms must be directed to the green transition and the fight against climate change until 2030 put forward new challenges on the issuer and subscribers accessing capital markets.

Those factors will definitely impact the issuers’ choice of bonds available to access the capital markets (social, green, sustainable), the success of their subscription by investors who might be hungry for investments that are compliant with “real” ESG requirements, and the way of directing operations toward sustainability, reducing carbon dioxide, and increasing the share of electricity from renewable sources.

The SLB market has huge potential to grow in the future as a source of financing certain general sustainable goals of companies at least in a transitional phase. However, the real goals and projects financed through green, sustainable, social bonds will take us closer to a more sustainable world. 

By Martina Kalamiza, Partner, Lovric Novokmet & Partners

This article was originally published in Issue 11.4 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.