When I was asked to write this editorial by CEE Legal Matters I started to wonder how I could describe the current situation in Central and Eastern Europe. The first half of the year will definitely remain marked by the global COVID-19 pandemic. However, this editorial will not be focused on the pandemic, on measures taken (or not taken) by the governments in the region, or on what the consequences will be. Instead, I will try to provide an overview of the market, specifically as it relates to our business in this part of the world – and how I expect it to develop in the years to come.
Central (more) and Eastern (less) Europe can be described as a well-functioning and conservative place to provide legal services. Since the fall of the Berlin Wall, more and more of the Western way of doing legal business has penetrated into the eastern part of Europe – even to the Balkan region. As a result, changes in legislation have been implemented, and the way we present, provide, and execute our services has transformed. It is fair to say that the legal business is a follower, not a leader. Mostly our profession reflects and changes according to the needs of the other sectors – the needs of our clients. Very rarely do we, as lawyers, succeed in leading industries and shaping them according to our vision, instead of the other way around. That is why even we, members of a profession known for having big egos, have to admit that we follow the trends and the needs of the others.
We reflect the market. And I think CEE’s markets are fairly conservative. Business in Central and Eastern Europe is not as aggressive as it is in our Western neighbors (even those on the other side of the Atlantic). Our part of the world is more focused on well-known sectors, such as real estate, energy, and general M&A (I call them “Green Sector” deals – well-known practices with established traditions). In recent years there have been a large number of projects in the banking, insurance, and TMT sectors (I call these “Yellow Sector” deals – we already have some relevant practice and can qualify them as regular deals). Then we get to the “Red Sector” deals – rarely on the market, with no established tradition in Central and especially in Eastern Europe. This category encompasses sectors such as sports law, medical projects, competition, corporate governance, and the FinTech industry. Of course, we have some success stories in these sectors, but compared to Western Europe, Asia, and North America, these are only isolated cases, not everyday projects.
I strongly believe that in the next few years these Red Sector deals will increase their market share and we must be well-prepared in advance. Even in the light of COVID-19, we as lawyers have had to deal with daily questions that required some medical law expertise, such as cases concerning procedures for approval of new drugs, exports or imports of medical equipment, and travel bans and immigration problems, all of which have arisen frequently over the last two months. I remember a similar story with the boom of cryptocurrencies in 2017. Suddenly, for two quarters, Bitcoin, Ethereum, and other digital currencies became an important part of the financial market, in Central and Eastern Europe as everywhere else. I recall that we even had a client who received payments in cryptocurrency as part of a normal transactional deal.
It seems we like to be conservative, and for now that seems to be working pretty well, but the world around us will not allow it. Lawyers must reflect the market – and the market is getting more and more global and dynamic. The Black Swan effect occurs suddenly, and we have to act fast in order to secure our place on the train. I strongly believe that it is inevitable that virtual reality, data protection, and even AI regulations will determine the projects we work on in the future and the way we present, provide, and execute our services. Digitalization of our profession is starting, and we regularly provide services to clients we have never seen in person. The Internet of Things is on its way, and the legal business in Central and Eastern Europe is not changing as fast as we want – and as it should However, as I said – we are simply followers, and probably we must wait a little longer, so we can follow properly.
By Victor Gugushev, Partner, Gugushev & Partners
This Article was originally published in Issue 7.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
