On 1 October 2018, the largest merger in the history of the Ukrainian legal services industry was completed. Operating under the brand Asters, the new firm created by this record merger is the largest in Ukraine with 27 partners and 140 lawyers. Asters Co-Managing Partner Serhii Sviriba spoke to Business Ukraine magazine about significance of this merger and shared his opinion on the key development trends in today’s Ukrainian legal services market.
Which factors defined the development of the Ukrainian legal services market overthe past year?
In terms of work, the trends we saw in 2018 were definitely set by state and state-owned companies. Criminal law practice, litigation, arbitration, tax disputes, and all regulatory areas are currently on the rise. We are witnessing the gradual return of transaction and project-related work in the energy, construction and project financing spheres, including work with the involvement of institutional investors. This is helping to revive the market. If we speak in broad terms about the current situation in the market and its development, then the market is determined by tightening competition along with the need to follow legislative and global trends, in particular when it comes to approaches used in shaping legal products and by alternative pricing including dumping. A separate issue that is encouraging market participants to unite and adopt a pronounced stand is the lawyer’s identification with the client. The market is still not completely transparent, although there are some improvements.
People – the most important force that moves any business forward – are also changing within the legal profession. We are seeing the emergence of a new generation of Ukrainian lawyers who are no longer tempted by partner preferences, as was often the case before. A healthy work-life balance and the ability to work from anywhere in the world are the key trending choices in today’s Ukrainian market that more “old-fashioned” lawyers will have to respect.
What do you think is behind the currentlaw firm merger drive?
Instead of law firms splitting up, we are now seeing a market trend towards consolidation. There is one simple reason for this development – today’s clients need an all-powerful counsel who can simultaneously handle criminal, taxation, land and arbitration matters if necessary. One lawyer cannot reasonably be a Jack of all trades. In my opinion, only a full-service firm can offer a team of professionals working together to provide the necessary range. A merger is a trick of sorts, as it is becoming increasingly difficult to win clients. Firms choose to merge and strengthen their practices rather than growing them from scratch.
Have you already achieved synergy followingyour merger?
I expect we will have tangible results within the next year or two. The most important thing at this stage is to fine tune the internal processes within the newly enlarged law firm. It is safe to say that our merger has already triggered the growth of our geographic presence. We already have an office in Washington D.C. and in November 2018 we opened an office in Brussels. We also have plans for further future expansion in Europe.
The merger was a move to strengthen Asters’ competitive edge in the Ukrainian legal services market. Our primary task is to create new capacity, redesign the existing mechanisms to increase internal efficiency, and upgrade the firm’s marketing strategy and communication streams.
What legal products are currently in greatest demand in Ukraine?
While in-house counsels are occupied with routine activities, legal associates are being tasked with handling global projects and finding fast solutions to urgent problems or unconventional approaches to work. So-called “trouble-shooting” and “deal-making” will always be of value and in high demand. A lawyer is seen as a business consultant who helps businesses adopt strategic decisions and build strength. I believe that within five years, successful legal firms will be a symbiosis of lawyers, managers, IT specialists and analysts. Although legal tech is currently much debated and scrutinized throughout the industry, it is still too early to describe it as one of the most in-demand products. Nevertheless, I think legal tech is the next big thing that will change the legal profession dramatically.
To what extend are law firms ready to modify their product lines?
We live in a unique time of change and have to be ready for anything. It is important to promptly determine the demand for a particular product and gain a sense of the client’s need for that product. You need to keep an ear to the ground, communicate with businesses, and be ready to cut the dead weight of inefficient products. Something that seemed like a brilliant idea yesterday might be totally irrelevant today.
We can confidently say that all legal services market players will face serious changes in the coming years. Developers have already created software that can read and correctly interpret intricate texts written in “legal language”. AI learns with each new document it processes, identifies repetitions and errors, prepares reports on all terms of contract, and greatly reduces the need for a human lawyer. Thanks to technologies such as big data, online justice, improved legislation analysis and the collection of data for court proceedings, justice will be made more accessible and the cost of legal services will have to be reconsidered. New technologies will transform the legal profession. A recent study entitled “The Future of the Legal Profession” published in the UK predicts the rise of Legal IT in the future, and points out that because of total market globalization, competition will become even more serious as specialists from developing economies such as China or India increasingly appear on the global stage. Very soon, we will see a marketplace where clients pay not only for professionalism but also for customized and tailor-made services specific to their needs.
Are we seeing the emergence of a marketwhere lawyers adapt to the needs of clients or do law firms themselves also initiate the promotion of new legal services?
One needs to keep in mind that the client is not always aware of a problem and may not be in a position to clearly identify the legal product they require. In practical terms, the client may have no idea what exactly he or she actually needs. For instance, only a few years ago, most companies knew next to nothing about anti-corruption compliance, FCPA, and its implications. Those lawyers who could see the prospects in this area successfully convinced their clients of the importance of compliance and were able to gain valuable experience. They are now reaping the benefits of this foresight.
In addition, the Ukrainian legal market is abundant with professionals, so the ability of a law firm to have an edge will play a key role in helping law firms to gain a competitive advantage. One must be able to stand out among an increasing number of legal service providers. Clients, even those who are well-versed in the market, are finding it increasingly difficult to decide who to turn to for help, even while observing all the basic rules of the game such as quality, cost, and time. It will be difficult for firms to emerge from this challenging period without a sound marketing strategy. Asters has done very well in this regard. I can safely say that our marketing department is the strongest in Ukraine at present.
How would you describe a typical Ukrainian legal services client in 2018?
Clients are becoming more and more demanding as we improve the quality of the services we provide, coordinate project management methods, and gain a better understanding of the specifics of each client’s business. We are able to reduce the time needed for coordination and overcome the reluctance of partners to share client details. Clients expect their requests to be acted upon immediately and without days off. They also expect consultants to be technically savvy and equipped with all modern technologies ranging from a CRM system containing all client-related information to all modern communication channels. We apply a very conscientious and tailored approach to each client because it is only this deep knowledge and constant contact with the client that make them feel unique and lead them to see their legal adviser as a close colleague.
Luckily, our recent merger has enabled us to significantly expand our expertise and secure unique projects. Clients are no longer interested in lengthy legal opinions. Instead, they increasingly want to see clean-cut, brief, easily applicable and industry-specific solutions. Now is the time for lawyers to be proactive. They must seek to prevent client risk and thus become more appealing and reliable while earning themselves customer loyalty.
What is your forecast for the developmentof the Ukrainian legal services market in 2019?
We operate in a jurisdiction where projecting the future is often a thankless task. Personally, I think the trend towards market consolidation will increase. In general, participants in the Ukrainian legal services market can make quite optimistic plans for 2019. Virtually all areas of litigation practice offer huge opportunities, from ordinary recovery of accounts payable or underpaid taxes and settlement of disputes arising from commercial contracts or labor agreements, to extremely complicated corporate disputes, separation of business between partners, and divorce proceedings between wealthy spouses. I therefore expect to see strong growth in the alternative dispute resolution practice that we have heavily invested in through our partner Oleksii Reznikov.
I also expect to see growth in bankruptcy and debt-restructuring services. However, the forthcoming active political season of presidential and parliamentary elections in spring and autumn 2019 will produce traditional levels of additional pressure on prospective transactions and projects, leaving many investors with little choice but to wait for better days.