Category: Uncategorized

The Deal:

On May 22, 2015, the CEE Legal Matters website reported that CMS and CHSH Cerha Hempel Spiegelfeld Hlawati had advised on EUR 300 million in financing received by a consortium of companies belonging to the Immofinanz Group from Bank Austria and pbb Deutsche Pfandbriefbank, to refinance an Austrian real estate portfolio consisting of 38 properties with a gross leasable area of approximately 218,000 square meters. The transaction, which closed on May 12, 2015, was described by CHSH as “one of the biggest real estate financing transactions in Austria in recent years.”

The Players

• Thomas Zivny, Partner, Cerha Hempel Spiegelfeld Hlawati (CHSH): External Counsel to the Immofinanz Group
• Gunther Hanslik, Partner, CMS Austria (External Counsel to Bank Austria and pbb Deutsche Pfandbriefbank)

Gunther Hanslik (CMS): We have been working for Bank Austria Real Estate on a regular basis for more than ten years now. I was contacted by Christian Forch, who was heading the project on the side of Bank Austria. I only had contact with PBB after our quote was accepted by the banks. Although we had not worked for PBB before, I knew that there were contacts to PBB by our colleagues of CMS Germany, which may have helped in winning the mandate.

Thomas Zivny (CHSH): We do work for Immofinanz Group on a regular basis, and even though there is no panel of law firms we get invited to pitch for capital markets or banking work on a regular basis. You would have to ask Immofinanz why they selected us, but presumably key components were team availability, track record, our long-lasting relationship with Immofinanz, and competitive pricing.

Gunther Hanslik (CMS): We were required to quote for providing advice, documentation, etc., on all aspects of the transaction. So, we advised the banks on the structure – since it was a portfolio transaction, and given the strict financial assistance/capital maintenance regime in Austria this was not trivial – we prepared drafts of all finance documents and negotiated them, supported signing and closing, and did the registration of the mortgage.

Thomas Zivny (CHSH): We advised Immofinanz on all Austrian law related aspects of the transaction, including documentary work and the entire security registration procedure.

Gunther Hanslik (CMS): Anna Konopka and Andreas Goller – both Senior Associates in our Transactions group – were responsible for the preparation of all documents, support in redrafting, preparation of signing, CP check, and so on. Partner Johannes Hysek, Senior Associate Martin Trapichler, and Associate Martin Schweinberger were responsible for property due diligence, supporting in all real estate related matters, filings, etc. I had overall responsibility for the transaction.

Thomas Zivny (CHSH): The team was led by me, a Partner in the Banking & Finance Department of CHSH. Oliver Volkel (Senior Associate, Banking & Finance Department) and Johannes Buchinger (Senior Associate, Banking & Finance Department) were involved in the loan and security documentation as well as the refinancing aspects. Matthias Nodl from our Real Estate Practice Group was involved in all real estate related aspects.

Gunther Hanslik (CMS): Portfolio transactions of this size (taking into account the amount of the loan and the number of properties (close to 40) and borrowers (12)) are not that common. Therefore, the first task was to help both banks to evaluate the economic value of cross guarantees/cross collateral in Austria in different scenarios. Further, we needed to come up with documentation both banks felt comfortable with. Then, the results of the property due diligence added to the complexity, because it turned out that we had different “transaction speeds” for different types of properties. Collecting and checking conditions precedent was a challenge of its own, given the many properties involved.

Weekly update calls always involved more than 15 people. The project lasted about three months from kick-off to financial close.

Thomas Zivny (CHSH): Negotiations with the banks were as complex as they are these days and involved several personal meetings.

Gunther Hanslik (CMS): This is probably more appropriate for the banks to say. I just can say that from our point of view the working relationship was very trustful, open, and direct. This did not come as a surprise as regards long-standing client Bank Austria, but it was also a close working relationship with Sandra Hofmann, legal counsel at PBB. Given the feedback which we got, it was a positive transaction for everybody on our side.

Thomas Zivny (CHSH): We have advised Immofinanz on several capital market and banking-related transactions since 2012. The working relationship is, therefore, very close and we appreciate being able to work with them on a regular basis.

Gunther Hanslik (CMS): Very professional and friendly. I have known Thomas Zivny for quite some time, but I believe it was the first transaction where we acted as lenders’ counsel and they acted as borrower’s counsel. The last drafting sessions were entrusted by the parties to be held as “lawyers only” sessions, where the outcome was sent to the parties thereafter, subject to further comments. In my view this shows that the lawyers managed to act as “deal facilitators,” without making things more complicated than necessary. I believe it fair to say that we both share trust and respect for the other.

Thomas Zivny (CHSH): Very good. We have worked with Gunther Hanslik on several occasions throughout the years and highly appreciate his problem-solving approach.

Gunther Hanslik (CMS): I am not aware of similar portfolio deals of such volume. After all, the transaction comprised around 40 individual properties, large and small, where the view is that the commercial conditions for the borrower in the aggregate were more favorable than on an individual level. Also, the portfolio transaction saved time and costs, when compared to a refinancing of each project individually.

This Article was originally published in Issue 2.4. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Ferdinand Trauttenberg has been the Head of Legal at .A.S.A. Abfall Service since November 2014. Prior to joining .A.S.A. Abfall he was Head of Legal – M&A at Raiffeisen Centrobank between May 2012 and December 2014, and Head of Legal and Compliance at Raiffeisen Investment for almost a year and a half. Earlier experience included working as the General Counsel of Welser Profile.

F.T.: After graduating from law school in Salzburg, I started my career with DLA Piper. After a couple of months I pursued my desire to work in an industrial company (I wanted to be close to production) and spent about five years in the automotive industry. I spent some time working for a steel profiling business, during which time I also passed my MBA and after which I joined the Raiffeisen Group, where I worked primarily on the M&A side but ended up returning to my original “love” of working for an industrial company. I just think you cannot beat the feeling of actually seeing the end product towards which you are advising internal clients.

F.T.: Indeed, I only worked briefly for DLA Piper and after a very short time I moved out of the private practice world. I have remained on this side since – and never looked back – because I found it to be far more challenging to be a part of the full production cycle of a company rather than acting as a pure advisor.

F.T.: For me, the interaction with all the different departments and different people made the real difference. You need to be able to interact with both, with management at all levels as well as all the different functions of the company, which means you need to cover a very broad base of drivers, and I always enjoyed and found it challenging to have to merge both the legal side and the business/commercial side of things. 

I see this even in my approach in managing the legal function. When we hire someone in-house, it is important for me that any lawyer we bring on has a certain commercial/industrial knowledge and affinity, whereas in the cases where I retain external counsel, I tend to look a lot more for some form of specialization. It is true that, in today’s legal world, any lawyer from a law firm expecting a mandate needs to know the industry he/she is pitching, but specialized knowledge is still key. 

F.T.: I think it influenced my approach and sharpened my knowledge and personality to handle the daily business. As a lawyer I was trained to focus on detecting and mitigating risks, but with an MBA and the strategic exposure it offers, you get a broad understanding of what is needed in a company – meaning you can understand the different needs and the broader context of the other functions, and it makes you a bit more solutions-focused rather than only seeing things from a legal perspective. I think the latter in particular is critical since, in a daily business setting, it’s not just about the risks incurred but possible solutions to issues faced. I think it is important to understand the bigger picture, and an MBA offers that insight. 

F.T.: Within the group we’ve used both solutions. In some ways, that is related to the history of the company. In others it is linked to specifics on the ground. 

For example, in Bulgaria, we acquired the company approximately seven years ago and decided to keep the counsel both out of a desire to keep the existing expertise and because it made sense from a budgeting perspective. In Serbia, the specific legal framework, related to providing services to individual households, pushed us into needing an in-house lawyer simply because of the regular workload. The Czech Republic counsel was one we hired after my joining. The rationale in that case stemmed from the fact that when I first joined the company, one of my initial duties was to analyze the external legal costs in each country. The Czech Republic (which is the biggest operation in our group) seemed to have rather high costs. At the same time, we figured out that a lot of expenses were used for basic general and corporate legal work (such as contracts or other standard corporate procedures), so we decided we could cover all these internally. Of course, there is a cost incurred in hiring an employee as well but aside from lowering costs overall, the flexibility of having a dedicated in-house counsel was also weighed.

F.T.: In Poland and Slovakia for example we found that the legal work executed by external firms ended up being very efficient from a cost side. We use a mixture of global and local law firms and lawyers and they also use a lot of templates for corporate work in place, which kept costs below the needed threshold for us. At the same time, the feeling that we have reliable external counsel that know us and our needs well was also factored in when opting to continue to rely on external counsel only. There was also a logistical factor. Slovakia is not far from Vienna, meaning I can easily coordinate lawyers there.

F.T.: As I mentioned, it is a cost factor of course to even have someone on the payroll but, if you take a lot of external work, it balances out. 

Another distinction is that, if you hire an in-house counsel, you will likely not hire a specialist – rather a generalist who will be able to handle most small matters that pop up. This offers great flexibility within the company not just in terms of addressing issues as they arise but also because it offers a “sparring partner” for management which makes their lives a lot easier in terms of pushing the business forward while mitigating risks. 

Of course, that’s a double-edged sword, since the lack of specialization does mean that you still depend on external advisors on specific/more complex issues. 

F.T.: It is indeed difficult at times and there are situations (especially in more complex or higher risk projects) where we work with more than one firm and thus have two opinions if needed. There are plenty of situations however where we only work with one firm, but I think it comes down to building relationships of trust and relying on your selected counsel – otherwise, why select them to work with?

F.T.: For bigger projects, yes, definitely. For smaller/less important ones it is of course less important. 

F.T.: For me it is important, besides writing e-mails and asking for reports, to use the phone. It’s rather irregular – once or even a couple of times a week – but I do need to talk with my team live.

Face-to-face time is also critical, and I make sure I go to every country to meet the people and discuss how to coordinate best, how to structure our communications. 

As I mentioned, this is fairly unstructured – we don’t have a “formal call set up every Friday” type of approach, but I do think that personal touch is needed to be able to liaise well on an ongoing basis – not just when issues come up.

F.T.: Similar to what I described earlier, a business approach is critical but I think it will always comes down to experience and technical knowledge. If they come from private practice, I will be on the lookout as to whether he or she has specialized, and has experience in, fields that are relevant to our industry. 

F.T.: When it comes down to an interview it really is more of a matter of having a free discussion and talk about various scenarios and situations and see how the candidate approaches different situations by taking into consideration not only legal aspects. A free-flowing talk also allows me to get to know them and assess the critical aspect of their communication skills and the overall chemistry – which is always subjective of course. 

F.T.: We do work with several local firms on an ongoing basis. Since in some countries we do not operate in the capital we are therefore not in the position to have the legal support of international law firms. However I do find that, in most situations, local counsels are more than capable of providing excellent advice. The one thing that I do make sure happens is a personal meeting with all we will be working with on an ongoing basis.

The other aspect I am keen in seeing from the lawyers I will work with – and this is applicable in all instances, not just where we do not have in-house counsel – is an ability to provide a quick “hands-on” approach in terms of offering answers. I like the ability of simply calling up a lawyer, run them through the issue at hand, and get a broad quick answer. Of course, for complex projects that is not expected, but I do prefer quick advice where possible over a full brief of hundreds of lines hours later.

This Article was originally published in Issue 2.4. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Identifying the specific moment that a series of individual circumstances becomes a “trend” is as elusive as it is tempting. But while there may be disagreement about whether or not the recent proliferation of new split-off law firms in the Austrian market is a change in the market itself or simply reflects coincidental timing by the highly-regarded senior lawyers who founded them, one thing is clear: Companies searching for high quality legal advice in Austria have more options than ever before. We decided to speak to several of the new market participants to learn more about their strategies, plans, and operations.

Liebscher Dispute Management

Christoph Liebscher spent some 17 years with Wolf Theiss in Vienna, almost all of them as the head of the firm’s Arbitration practice. Liebscher hired and trained his eventual successor at Wolf Theiss, Florian Haugeneder, and last year he decided that it was time to step aside. “I felt for some years that my main responsibility from a business point of view was to make myself redundant,” he says. “I’m dead serious – I wanted to continue to work in arbitration (primarily as an arbitrator) and I was not willing to hang over my young colleague like a shadow and try to artificially stay involved to meet the budgeting process. So we came very quickly to the very simple agreement that by the middle of last year, by June, that was it.”

He hung out his shingle last summer, and under the banner of Liebscher Dispute Management he focuses primarily on his role as Arbitrator, while devoting about 10-20% of his time to counseling select clients. He says, “I don’t go around and ask people to give me counsel work. If people think I can be useful as a counsel I try to jump on board and be part of the crew. But I’m not walking the streets asking people to think of me as a counsel. I’m happy if they think of me as an Arbitrator.”

Liebscher also assists with trainings and skill development of young lawyers, a challenge he enjoys. He focuses, naturally, on dispute-focused trainings, but insists he’s available “really for any situation where a client asks me to analyze legal risks in a preliminary stage.” He says, “I may do several seminars next year … it’s something I really like.”

With Liebscher wearing different hats, Liebscher Dispute Management is, essentially, a one-man show. “My goal was not to set up an arbitration or disputes boutique,” he says. “It’s really just me. Of course I have 2-3 assistants, but in terms of qualified legal work, it’s not a boutique. It’s me.” And when he’s asked whether he has any plans to add people down the road, he laughs. “No indeed. I am absolutely fine. I think my set-up is good. I tell my former colleagues, I am no longer a competitor.”

Liebscher rejects the suggestion that the recent split-offs in Austria indicates a change in the market, noting, “I wouldn’t say that – I think it’s a coincidence.” Instead, he says that for ADR lawyers in particular splitting off from full-service law firms can be almost necessary, where commercial considerations can limit their options, especially in firms with large geographic footprints in smaller markets. In such firms, Liebscher claims, “it’s easy to accumulate a substantial number of clients with potential for development, but which block you, if you go into disputes,” whereas, he notes, “they don’t block you if you stay in advisory or structuring.”

Clarifying his point, Liebscher explains that the major conflict for arbitrators therefore is not with existing clients, but rather with colleagues who hope to develop clients down the road. Liebscher says, “they say, ‘no, don’t take this case in the chemical industry, because we’re trying to expand in that,’ or ‘don’t take this client in this other industry, because we want to focus on that.’”

Now away from that obstacle and working independently, Liebscher is content. “This is what I had hoped it would develop into. I couldn’t wish for better, really.”

Zeiler Partners

Just as Christoph Liebscher was leaving the Arbitration practice he had long led at Wolf Theiss, Gerold Zeiler left the arbitration practice he had long led at Schoenherr, and like Liebscher’s, Zeiler’s eponymous venture opened in June 2014.

Unlike the one-person show that is Liebscher Dispute Management, however, Zeiler Partners is among the largest of the new players on the Austrian market, with five equity Partners – Lisa Beisteiner, Martin Huger, Hans Georg Laimer, and Alfred Siwy, in addition to Zeiler himself – an Of Counsel in Christoph Schreuer, and six Associates. Zeiler also says he expects to add another Partner at the end of the year, but is reticent about the addition, revealing only that it’s a “Viennese arbitration lawyer.”

Beyond that, however, Zeiler predicts no significant growth in the near future, saying, “there is no need to grow further. Excellent arbitration practitioners are always welcome, but growth for growth’s sake is not a strategy for us.” When asked whether his firm expects to add new practice areas, Zeiler re-emphasizes the point. “Nobody here is interested in being a full service firm.” He laughs. “I was at a full service firm for 25 years, [so] I’ve done that. Now I’m doing something else.”

Zeiler also refers to the conflict of interest challenges Arbitration experts face in a large and multi-jurisdictional firm as a reason for splitting off. In addition, his decision to create his own firm reflected a simple desire to make his own way. “I wanted to try something else in life,” he says. “Schoenherr is an excellent firm, of course. But after having spent the most part of my life there, I thought, ‘well, if there is an occasion to do something else, then it’s now.’”

Zeiler believes the time is particularly felicitous for single-practice split-offs in Austria. “There is certainly a trend in acceptance on the client’s side of specializing firms,” he says. “It’s now much easier to get big mandates and good clients … as long as you are specialized. A few years ago that would have been pretty difficult, because everybody went either to Wolf Theiss, Freshfields, Binder, or Schoenherr. But that changed. Don’t ask me why.”

And Zeiler is convinced the move away from a full-service model only benefits his clients. “What we are doing now,” Zeiler says, “that didn’t change very much from the way we worked at Schoenherr. We were the same team there, we were very specialized, we were one specialized group in a full-service firm, now we are one specialized group outside of a full-service firm. Now that means fewer conflicts of interest, less organization, definitely lower overheads. Otherwise it’s completely the same.”

And, Zeiler reports, the first year of Zeiler Partners has “absolutely” been a success. “Much more than we expected, frankly.”

Geistwert

Of course, it’s not only Austrian Arbitrators who conclude that their best options lie outside the full service firm model. The five IP/IT specialists who started the Geistwert firm – Constantin Kletzer (from Fiebinger Polak Leon), Max Mosing (from Gassauer Fleissner), Alexander Schnider (from Baker & McKenzie), and Juliane Messner and Rainer Schultes (both from Taylor Wessing) – believe the same. 

The five Partners had long known one another as peers, colleagues, and friends, and Kletzer says that, “we all knew this is the right thing to do, right now, and in Austria this is exactly what the clients want. It is basically the right thing to have: an experienced IP boutique with an exchange of experiences, an exchange of networks, and supplying the clients with the best IP service possible.” 

And, sure enough, the Geistwert Partners discovered that the market was ready and waiting for a highly skilled IP/IT boutique. “The creation of the Geistwert brand was a big deal in the Austrian market,” Constantin Kletzer explains. “We launched in August/September last year, and by October we had new potential clients contacting us. Not asking for Mr. Kletzer or for Mr. Schnider, but asking for Geistwert. Which is what we wanted to achieve.”

Schnider believes that bigger firms tend to treat IP/IT and some other practices as supplementary rather than core practices. “What we saw in other firms was that IP and IT didn’t get the attention it really deserved. I mean, many of the largest Austrian law firms are mostly driven by M&A, transactions, project and finance, or banking law … that is their main business. So everything else, including IP and IT, seems more or less to be an add-on. So you have the situation where IP/IT guys regularly don’t have the say in the firm. So what we thought is, if we joined forces and put our individual business cases and our individual international networks together, we can multiply the effects of establishing this firm – an IP/IT boutique in Austria – and what we have seen is that many clients actually were looking forward to something like us. They were happy that we entered the market in that formation.”

Schnider believes that the importance of IP practices is bound to grow. “In times like these, IP becomes more and more the most valuable asset for companies. That of course applies for software companies, but also to engineering companies and other patent-holders.” This coincides, Schnider believes, with a truly significant change in the legal services market overall: “What we see – and this is more or less a Pan-European development – is that big companies, multinational companies, are tending to move from full-size law firms to boutiques, true for each sector, for each field of law. So what once was, ‘let’s go to one firm and they do it all,’ has become ‘we go to these four firms, which are the best in their fields in the market, and we can choose with whom we work,’ and that is a development that is good for us, of course.”

And the Geistwert Partners maintain that they’ve discovered that a network of modern boutiques can make cross-selling as easy as it is within a full-service law firm. Schnider says, “What we saw is that in the past years, many boutiques were founded, many spin-offs from major law firms were founded, so what happened then is that all these boutiques – Labor Law boutiques, Public Procurement law boutiques, and boutiques like that – they established their own network. So essentially what happened in Vienna is that a boutique network can act like a full-service network.” 

Indeed, Schnider says, it may function even better. “Although the full service law firms have many strengths, we’re confident in the model we’re pursuing. Because we specialize in one particular area and have no colleagues in other practices, we do not feel the kind of pressure to refer clients to colleagues that may sometimes arise in multi-practice firms. As a result, our model – we believe – actually provides clients with greater choice, and, ultimately, more effective service.”

Geistwert operates with no associates, and only one paralegal. According to Alexander Schnider, “we wanted to have a very lean cost structure. We strongly believe that IT and IP work – at least the high level work – can only be done with a lot of experience.” According to Schnider, their model eliminates the multiple reviews of work product necessitated by the “pyramid-like structures” of full service firms, and thus “keeps work and costs low for everybody.”

Although the firm plans to add one associate and one paralegal soon to offer clients “low rates for commodity work or lower-tier litigation,” otherwise there are no plans to expand. Kletzer says, “I think the strategy we have so far is keep the costs down, and keep the work with the partners, which keeps the quality high. Which, especially with the litigation work we do, the IP contracting and licensing work we do, is of utmost importance. This is valued so much by clients – that here they know we’re experienced partners. We are not seeking to grow.” 

The Geistwert website announces that, “we can claim, quite immodestly, to be the best of the best.” The lawyers at the firm are, needless to say, highly confident of their prospects.

Starlinger Mayer

Starlinger Mayer was founded in March, 2015, by established energy expert Thomas Starlinger and competition specialist Christian Mayer – both of whom split off from Fiebinger Polak Leon – along with Contract Partners Valentina Spatz and Moritz Am Ende. 

Mirroring the lean structure of the other split-offs, the firm has only one associate. Christian Mayer explains that “the partner contact is very important for clients, and we’re doing to a certain extent quite sophisticated stuff that is difficult to do with inexperienced associates.”

Still, despite being committed to maintaining a small workforce, Starlinger and Mayer resist the term boutique. Mayer says, “I think it’s difficult to call yourself a boutique these days, because at the end of the day you’re doing as much as you can. What distinguishes us from the full-service law firms is that we focus on what believe we can do best and know what we don’t want to do, or are not qualified to do. This is the concept of our firm, because this is what we’ve learned from our times with other law firms … we want to avoid overheads. We want to advise as experts and we always want to give the client the expert experience they might not find in a firm that does everything.”

When asked why they decided the time was right to leave Fiebinger Polak Leon and start their own office, Mayer said, “You know, Thomas and I worked together on many cases, even when we were at Fiebinger, and we realized that the way we worked together is quite fine. There is no jealousy … we just want to do good work as a team, and we don’t care whose client it is, we just want to do the work, and at the end of the day we want the client to be happy, and this is something you don’t always find at other firms in Austria, where everybody has their clients, and they safeguard their clients.”

Mayer says it’s still a bit too early to calculate the specific financial terms of their success, but he smiles when describing other elements of it. “In terms of business it has been amazing, and way more than we expected. We were able to maintain most of our long-standing clients, and we got many new clients, and the reaction was so positive. And we received great support from our clients who said this is a great idea, and it’s good that you did it, and when we can work together we will, so that gave us momentum that we didn’t expect.”

Unlike some of the other new firms on the Austrian market, Starlinger Mayer plans to grow over time. According to Starlinger, “the vision is sort of controlled growth. We do want to be bigger. We do want to add certain fields to our firm. We do want to widen the transactions business for our firm. We don’t want to expand our activities at any price, so we don’t hire randomly, but when we see an opportunity we try to take it. I don’t want to have 20 partners in 5 years, but if we have 5 partners in five years I’ll be happy.”

This Article was originally published in Issue 2.4. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

The Serbian Act on Foreign Currency Transactions (the “Serbian Act”), coupled with restrictive interpretations and practices of the National Bank of Serbia, makes assignment of receivables with an international element a tough job.

Namely, the mentioned Act allows only the transfer of receivables arising from cross-border trade of goods and services and cross-border loan transactions. The National Bank of Serbia adopted a general position stipulating that anything which is not explicitly provided for by the Serbian Act shall be considered prohibited. Generally, the assignment of local receivables to non-residents is still not recognized by the Serbian Act while the assignment of cross-border receivables either to a resident, or non-resident is possible.

The debtor’s consent, unless this has been explicitly agreed to, is not necessary. However, the reporting requirements of the National Bank of Serbia stipulate that a debtor must be informed about the assignment and the statement demonstrating his awareness is likely to be requested in the registration procedure before the National Bank of Serbia. Additionally, any transfer of a cross-border loan receivable must be reported by a resident debtor to the National Bank of Serbia within 10 days of the conclusion of the respective assignment agreement. The reporting requirements are so strict that even assignments between two residents have to be reported to the National Bank of Serbia.

On the other hand, the Montenegrin Act on Foreign Current and Capital Operations (the “Montenegrin Act”) provides that performance of current and capital transactions and transfers of assets to Montenegro from abroad and vice versa, is generally free unless otherwise determined by the Montenegrin Act. The Montenegrin Act does not explicitly regulate the assignment of receivables. Having that in mind, the assignment of receivables is free and is regulated by the Montenegrin Contracts and Torts Act.

The common practice of the Central Bank of Montenegro is that residents performing cross-border assignment of loan receivables have to submit the assignment agreement to the Central Bank of Montenegro for review. On the other hand, two non-residents assigning a local receivable are under no obligation to obtain the opinion of the Central Bank. Therefore, the more liberal approach of Montenegrin law and its Central Bank makes cross-border assignment transactions much easier.

By Milan Samardžic, Partner and Vanja Vujnovic, Associate, SOG / Samardzic, Oreski & Grbovic

Due to Austria’s political stability and security and its well-functioning legal system, Austrian law and Austrian courts are often the jurisdiction of choice for pan-Eastern European transactions. Given the economic prospects of Eastern European countries, it is assumed that the region will be seeing strong growth in M&A activity. Even though the current crisis in Ukraine and Russia and political trends in Hungary (such as high taxes and coercive measures) are having a negative impact on Austrian companies’ profitability in terms of investments or business activities in Eastern Europe, growth prospects in the CEE region are nevertheless very promising. This is bound to be advantageous to Austrian law firms, given their gateway function eastwards.

When it comes to Corporate and M&A, we know that in 2013/2014 the legal business stagnated, but it is doing better in 2015, with high-value M&A transactions taking place. Some studies predict a veritable boom in M&A in the second half of 2015. Binder Groesswang had a fantastic first half of 2015 and is working to full capacity, particularly in strategic M&A and corporate restructurings. 

Indeed, Austria has been seeing a wave of corporate restructurings, few of which, however, involve expansion; rather, there has been considerable economic shrinkage across the business landscape. This is due to three developments in Austria’s economy: The first of these is the economic stagnation recorded over the past three years. Figures show that real GDP growth in the first quarter of 2015 was a pitiful 0.1% over the previous quarter. Second, there has been a proliferation of new regulatory provisions, not only in the banking and insurance sector, but also in the field of consumer protection. The third development is the increasingly strict application of liability law, particularly as regards breaches of trust. In consequence, managers have become so fearful that they hesitate to make decisions without recourse to expert opinions – or at all – which in turn has slowed down business dynamics, to the detriment of Austria as a business location. All this has led to many of the aforementioned corporate restructurings. Restructurings, especially if they involve mergers, can be complex and conflict-laden, requiring long-term, process-related legal advice in order to achieve harmonious new structures, retain staff, motivate mutual cooperation, and create synergies that will bring future success.

Noteworthy further is the tremendous significance of family-owned businesses in Austria, many of which have strong business ties to Eastern Europe. According to the Austrian Chamber of Commerce, more than 90% of all businesses in Austria are family businesses. Many of them have grown into international market leaders, such as Swarovski and Doppelmayr. In the past, the owners of such leading enterprises usually engaged local or smaller law firms. Now, having become international market leaders, they require professional legal advice on the ownership level in the fields of – for example – restructuring and succession planning, a clear market trend that Binder Groesswang has taken account of by forming a highly specialized practice group dealing with family businesses. Recently, we published the first legal study on Austria’s largest family enterprises, analyzing the ownership structure and governance of family businesses. 

The Austrian legal market has been impacted by a number of legislative efforts that are expected to revive Austria’s economy, which is currently expected to grow at a rate of about 1% in 2015. Most prominently, the Austria government has introduced a new tax bill, which will decrease the overall personal income tax burden and thus should stimulate consumption. In addition, in an effort to further alternative financing, a new crowdfunding law was implemented in July of 2015, from which small and medium-sized enterprises are expected to benefit. Let us all hope that these efforts will be successful and that the economy will gain strength and momentum as a result.

By Thomas Schirmer, Managing Partner, Binder Groesswang

This Article was originally published in Issue 2.4. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Russia’s Liniya Prava Law Firm has executed a cooperation agreement with England’s Edwin Coe Law Firm to, in the words of Liniya Prava, “provide qualified legal advice on projects where English law is to be applied. “Edwin Coe’s Russia and CIS Practice is headed by Partner Nick Neocleous, who specializes in cross-border dispute resolution.

According to Liniya Prava, Edwin Coe’s 150+ lawyers “include experienced Russian speaking advisors having a deep understanding of legal and economic realities of Post-Soviet states.”

The firm claims that the combination will increase the range of services offered by both firms and result in lower prices, among other benefits.

“The old adage of the more things change, the more they remain the same still holds some truth,” said law firm consultant Paramjit Mahli in a 2008 article for Law Practice Today. “Public perceptions still have a strong hold in society. Visibility and credibility still go a long way in cementing business relationships and deals. The credibility associated with getting cited in press or seen as an expert is very hard to buy in advertising dollars.” Mahli’s analysis remains on point today, despite the many changes to the media landscape in the intervening 7 years.

In fact, law firm Public Relations representatives are critical (though often silent and hidden) ambassadors for law firms, providing a bridge between the lawyers they work for and the publications that report on those lawyers’ achievements.

Accordingly, we reached out to several highly experienced PR representatives in CEE to learn more about PR practices for law firms in the region, and to understand better the challenges they face and strategies they employ to succeed in this critical role. 

The Initial Hurdles

Based on input from various PR professionals in the industry – both in-house (i.e., within a law firm) and as external consultants – it appears that, even before particular strategies can be created and employed, PR representatives must clear two fundamental hurdles, which can be called: (1) Firm Commitment, and (2) Bar Limitations. Both relate to the relative immaturity of many CEE markets.

The issue of Firm Commitment relates to the need for firms to understand and support PR efforts in the first place. Because law firms are inevitably and necessarily structured around the wishes and demands of the partners – who generally both own and manage their firms – successful PR requires partners enlightened to the value of PR and committed to the concept. One Marketing Manager, whose partners demanded she remain anonymous, noted that “the priority for business development and marketing must come from a senior level within a law firm.” She reports that “this commitment to business development and marketing has not always been the case.”

Jan Posvar, the Business Development Manager for Schoenherr in Prague, says essentially the same thing: “PR with law firms is very often driven by an ‘illuminated’ partner who is aware of the power of PR.”

The challenge, often, is that not all Partners in CEE have yet reached the level of marketing savvy that their counterparts in the UK and US have. Posvar says: “I guess the only difference is the size and maturity of the markets. Anglo-Saxon countries are in respect to the legal market more mature, knowing more different tools and having a more positive approach toward public relations (just because they know communication tools better).” Thus, he notes, “CEE countries are still learning about PR and what it means in a very fast changing global environment.” 

Mate Bende, now an external consultant as Founder of Pro/Lawyer Consulting, echoes Posvar’s assessment. “The legal market is 5-8 years behind the UK or US markets in terms of law firm management, which includes PR and communications,” Bende says. “The good practices and the business-like approach in a wider scale started here 5-6 years ago (following softened bar regulations). The way of doing legal business is clear; CEE just has to catch up a bit.” 

Bende’s reference to bar regulations leads directly into the second institutional hurdle facing law firm PR representatives in CEE: the conservative nature of many Bar associations in the region. Bende notes that “in some countries it is still forbidden for law firms to advertise or communicate their deals, prices, or clients in any way,” which he refers to as “a very archaic approach.” 

One law firm representative (who prefers to remain anonymous) explains that in many CEE jurisdictions the legal profession is “granted” by the Constitution, and the industry is seen “as a vehicle of or a mechanism within the system, used for proper functioning and operations.” As a result, he explains, “profit, fame, self-promotion should come second to that value,” adding jokingly: “We’re all traditional and important like that!”

Beyond the Hurdles – the Day-to-Day Realities

Of course, even in the absence of problematic bar regulations and with at least nominal firm commitment to marketing, law firm PR representatives face many additional challenges.

The Lights Are On, But Nobody’s Home

The most common mistake many firms in the region make, according to Bende, is for the Partners to attempt to handle PR themselves, and “not having a PR responsible [representative] at all.” And a warm body is not enough. Bende adds that, sometimes, even if a firm has a marketing or PR manager (or an outside consultant), “a lot of times they work on an ad-hoc basis without mid-/long-term communications strategy. That is a good step if they know that they have to communicate, but they still have to figure out the reason.”

Jack-of-All-Trades, Master of None

“As a result of the size of law firm offices in CEE, the responsibility for PR or media relations, general marketing, and business development often rests with one and the same person. Many of us are therefore a ‘jack-of-all-trades’,” explains Erik Werkman, Head of Business Development and Marketing, Prague, at CMS. He adds: “The skill sets required for these slightly different tasks are quite similar, so it makes more than just economic sense to combine these roles into one po-sition.” 

This is not necessarily a good thing. Posvar, who agrees that “most law firms do not see the basic difference between marketing / PR / business development,” says that many partners “mix up these disciplines, strategies, and tools,” and says that the inevitable result of such confusion is the development of “expectations [that] are just not realistic.” (He claims that, “most lawyers expect that one single [marketing/PR/BD] action … will ideally lead to a new open case”).

Another common mistake is simply not to understand fully what good PR can mean. Posvar explains, “PR is perceived just as media relations. All other PR instruments are often totally forgotten, mostly in the line of partner/personal profiling and branding.” 

This is perhaps inevitable, according to Werkman: “PR often has a very direct – and often flattering – result. A partner gives a quote one day and the next morning it appears in the newspaper alongside a nice picture. Other marketing or BD activities might require much more time to come to a tangible result.”

Forgetting Your Ace in the Hole

To a significant extent, of course, lawyers are themselves the best source of good PR. Still, not all lawyers in the region recognize the need. The aforementioned anonymous Marketing Manager believes that in CEE, “there is often insufficient understanding of the importance of [good PR] by lawyers and it is seen as not something that is required of them.” In fact, she says, lawyers are key to a firm’s PR success, as “they maintain regular contact with existing clients and have the potential to gain new clients on a frequent basis. A firm’s lawyers are its ambassadors.” 

Maybe so, Werkman says, but he points out that lawyers have other and more pressing concerns than BD and public relations. “PR is an important part of the marketing mix, but the time that a lawyer has to spend on non-fee-earning work is limited,” he says. “Law firms have to make sure that they do not give in to the temptation of the quick win and spend too much time and effort (both from fee earners and marketing support staff) on PR, in favor of activities that could develop actual fee income.”

Don’t Say It, Show It

“No, the fifteenth edition of your blackletter law book is really not that interesting and perhaps not as ‘sophisticated’ as you describe it in your press release,” is a message Georg Baldauf, Founder of GreenbergAdvisory, tries to instil in law firm PR representatives. While Baldauf’s point is to not exaggerate the importance of firm-produced material when talking to the press, his warning also hints at the value of producing – and promoting – genuinely interesting information. 

Baldauf believes that major international law firms, at least, are starting to get the message. “Global law firms are putting a lot of money into market research and studies (e.g., about economic development and regulation) which they can publish with aligned PR around the globe.” He describes the end result of these investments as “real news” and “of a certain value, especially when you cooperate with a trusted media brand.”

Beata Niemczuk, Marketing & Business Development Director at Dentons – Warsaw, explains that “nowadays a common trend is that corporate communications is built by using content marketing and thought leadership.” However, she warns, “not all market players know yet how to apply those methods, and they continue with the old ways of communications, telling clients and a wider public what they wish to say (often boring and irrelevant news) rather than what clients really need to know business-wise.” 

And Niemczuk makes the same point Werkman did earlier about the conflicting demands for lawyers’ time: “To create valuable content a PR agency or a marketer is not enough; you need the proactive involvement of a professional (a fee earner) and that becomes a challenge, knowing how busy lawyers can be.”

Getting in The Press: Facilitate the News Cycle, Don’t Try to Break It

Baldauf suggests PR representatives who believe their news is uniquely important may be mistaken. “Don’t think you can break the news cycle,” he says. “Neither with your issues nor with your timing. As you’re not a government or a stock-listed company, you will not succeed.” Journalists and editors have their own rules about how to value information, Baldauf says, which they divide roughly between importance and emotional appeal. As a result, he suggests, “keep this external view in mind and try to follow their issues, [adding] your law firm knowledge as a plus.”

In addition to this general rule, Baldauf suggests several specific best practices as to how messages can be conveyed to the press for firms with a story to tell: 

The first is to always “make sure you describe – in your very first sentence – why this is important for their readers.” He says that PR representatives should “discuss and explain the story first during a morning coffee with journalists,” as “[journalists] have usually not attended law school, so for them it‘s often not that easy to understand the connection.” 

Second, “what journalists want in general is clear: They want the truth and they want it now.” As a result, Bauldauf suggests always getting the message to journalists earlier rather than later: “Tomorrow is not an option. Especially when you are into daily news. The Rule of Thumb: Put your message out in the morning. Punchtime is during breakfast.”

Third, Bauldauf says that firms should take care not to distract from the message with unnecessary information or details. In Baldauf’s view, it is critical to discuss the “what, how, and when to disclose sensitive matters” in advance, and once done, a firm’s “internal structure should also not be reflected to the outside world. An international magazine does not want 16 different telephone numbers. One, working, is far enough.”

Finally, Bauldauf encourages firms’ PR representatives to position themselves as “a trusted partner for the journalists. Someone they can call, someone who is available and delivers.”

Conclusion

The PR representatives of law firms in CEE – both in-house and external consultants – have a challenging, important mission: To communicate their employers’ capabilities and successes to the market and to effectively brand their firms as credible, skilled, reliable, and efficient. As the legal markets in the region become ever more competitive, mature, and challenging, their work is more critical than ever. 

This Article was originally published in Issue 2.4. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Croatia’s Babic & Partners law firm has announced that Iva Basaric was promoted to Partner on October 1, 2015.

Basaric focuses on cross-border M&A deals, and represents clients from the pharmaceutical, energy, and leisure industries, among many others. She graduates from the Faculty of Law at the University of Zagreb in 2008, and earned an LL.M. from the University of San Francisco in the United States in 2009. She joined Babic & Partners as an Associate in 2008 immediately after graduating from law school, and has worked there since.

CMS has announced that the Regional Court of Warsaw has accepted the firm’s arguments and rejected the class action submitted by clients of AXA Zycie Towarzystwo Ubezpieczen S.A., ruling that the matter could not be the subject matter of a class action procedure.

According to CMS, “the court took the opinion that claims submitted by the group’s members, concerning surrender fees in unit-linked insurance policies, were not based on the same factual grounds. This is one of the conditions for enforcing claims in a class action procedure. In its verbal justification the court explained that not all members of the group could have a legal interest in challenging each amount of the surrender fee, as anticipated in the contracts with AXA, and therefore this element differentiated the factual grounds of the claim.”

Partner Malgorzata Surdek, who manages CMS’s Litigation Department, first warned that the Court’s ruling is not yet final and its written decision has not yet been published. “However,” she said, “as implied in the oral justification, it is important that the statement of claim in the class action procedure be appropriately constructed so that the factual grounds for the claim are uniform for all members of the group. The defendant may undertake effective defence at the stage of examining the admissibility of the class action procedure.”

The CMS team was led by Surdek herself, and it included Senior Associate Katarzyna Kucharczyk, Associate Karolina Szmit, and Advocate Trainees Filip Grycewicz and Mariusz Minkiewicz.

In August, Surdek discussed the variety of pending disputes in the financial sector in Poland in the Buzz section of the CEE Legal Matters Magazine. 

Cleary Gottlieb has promoted Russian Corporate/M&A lawyer Maxim Izvekov to Counsel, as the only CEE lawyer included in the 14 lawyers (7 to partner and 7 to counsel) promoted by Cleary in its global promotion round. Izvekov’s promotion, like the other 13, will become effective on January 1, 2016.

The new partners and counsel are resident in the firm’s Buenos Aires, London, Milan, Moscow, New York, Paris, and Washington offices, and their election will bring the firm’s total worldwide partners to 197 and counsel to 51.

Izvekov, who is resident in the firm’s Moscow office, focuses on international and domestic mergers and acquisitions, joint ventures, securities offerings, and antitrust. He advised Lafarge in the sale of its cement production units in the Urals region (reported on by CEE Legal Matters on April 9, 2014), advised Rosneft in its USD 55 billion acquisition of TNK-BP and in the subsequent tender offer (the largest in Russian history), and in the squeeze-out with regard to remaining minority shareholders. He also advised MegaFon in its USD 1.18 billion purchase of 100% of Scartel and Yota from Garsdale Investments (which made MegaFon the leading 4G LTE operator in Russia). 

Izvekov graduated from Lomonosov Moscow State University in 2003, and obtained an LL.M. from the London School of Economics and Political Science in 2005. He began his career in 2005 with one year at Lovells (now Hogan Lovells), and in 2006 moved to Cleary. 

“It is with great pleasure that I introduce our new global partners and counsel,” announced Mark Leddy, Cleary Gottlieb’s Managing Partner. “Our new class of partners and counsel reflects the internationalism that has always been at the core of our firm and underscores our commitment to all the regions and markets in which we operate. These exceptional lawyers are resident in our offices on four continents and, collectively, speak English, French, German, Hindi, Italian, Russian, Spanish, and Urdu. This diverse and dedicated group exemplifies Cleary Gottlieb’s commitment to delivering the highest-quality legal service to our clients around the world.”

Editorial Note: After this item was published Cleary contacted us to point out that in fact a second lawyer in the firm’s Moscow office had also been promoted — Mikhail Suvorov, who was made Partner. Suvorov’s promotion was subsequently reported here. We apologize for the error.