Cover Story (#10 October 2014)

Sharpen the Vision

Since the Ukrainian legal market is a mirror of the declining economy, lawyers have to retain austerity, at the same time responding to the problems of clients and reviewing their own business strategies. On the eve of the 10th anniversary of Lavrynovych & Partners, one of the most dynamic Ukrainian law firms, we discussed the situation on the market, the sharpen vision of the marketplace, lessons and opportunities on the ground with Maksym Lavrynovych, the firms founding partner.

UJBL: What influenced your decision to open your own business? What is the secret of your success?

Maksym Lavrynovych: Not only do knowledge and good rates lead to success. Success comes with good experience and support from peers. We were also fortunate to succeed with the help of friendly companies. Its no secret that we came from Ernst & Young, or, to be more accurate, from Arthur Andersen.

Personally, I met a former teacher, Vasyl Kisil, and asked him if it was worth doing it? Investment of personal funds is always associated with certain risks. Vasil promised to support me and explained the basic principles of having ones own practice. Similarly, I got some valuable guidance from Sergii Koziakov, who taught a course on legal business when I attended the University.

In addition, Marco Gron, CEO at Ernst & Young, who, I think, is a guru in the field of business management and from whom I learned tolerance and communication with clients, was very positive about us starting our own business.

I feel it was an honor to get support from these people.

We decided to launch our business in 2004. That was a period of rapid growth of the Ukrainian economy followed by numerous foreign investors coming to the country. At that time, Sarbanes-Oxley Act turned to be beneficial for us, since it prohibits audit companies to deal with legal business. For that reason, some lawyers started their independent practices, like we did, and many others moved to the Ukrainian office of DLA Piper, and we are currently good friends. Of course, clients want to have all the information about their lawyer: who works with him, whom he served, what is his experience. For that purpose, they open Chambers or other listings, choose 5-10 companies, visit their websites and look at who their clients are. And it is so cool when they find out that a client you have is someone they know from childhood, going together to the same McDonalds, or buying gas at the same Exxon Mobil gas station. And if they still work together, it ensures confidence in respect of the quality of their legal advisors. Moreover, every major international company has compliance procedures when looking for a legal counsel. The presence of serious clients in a portfolio is half the success for a newbie. Along with money, such clients can provide their name and reputation.

As businesses continued to address Ernst & Young with legal issues, from time to time, they were given our companys name. Thus, we gained some well-known multinational companies and global brands from the previous job. Some of them had met our lawyers before, when they worked on previous projects. Apart from that, our colleagues from other law firms recommended us when, for various reasons, they were not able to provide their services.

UJBL: How would you describe the place of Lavrynovych & Partners in the market of legal services? Whom do you consider your competitors? What makes your company different from other market participants?

M. L.: If you open the publication Top 50 Law Firms of Ukraine, you can see that the law firm Lavryno- vych & Partners is among the top 10 businesses. So, obviously, the top 10 law firms are our competitors. However, offices of international law firms often work with somewhat different clients.

First of all, serious foreign clients look if international law firms are present in the country and tend to work with them. International companies are often committed to working with the same law firm in all countries. Given that such clients know how to count money, after their adaptation in Ukraine they start looking for lawyers with local experience, who know the market from inside and yet who fit by their format and standards of work. The law firm Lavrynovych & Partners is a typical example of a Ukrainian company, which has a completely understandable template for foreigners.

We have brought together the format in which my partner, Iryna Marushko, and I, grew as professionals at Arthur Andersen. Our team has successfully created and modeled the same company structure. Even though Arthur Andersen ceased to exist, its spirit lives in our law firm. This includes everything recruitment procedures, format of letters and memos, rules of communication with clients, invoicing, pricing, discounts, etc. Therefore, our operation is quite structured and based on the written procedures.

UJBL:Your law firm often works as a part of consortiums of international firms as an adviser on Ukrainian law. How would you comment on cooperation with leading international players?

M. L.: When foreign lawyers begin to work with you, a Ukrainian firm can relax a bit and work more on jurisprudence than on marketing. There were eight foreign major international law firms, who were our clients or outsourced their work to us. This is the best indicator for clients, as they can be assured that they can rely on us. We continue to cooperate with the majority of our colleagues, including international law firms with offices in Ukraine.

Among all partners, I would like to point out White & Case. Together with this company, we work on the countrys largest international financing projects.

UJBL:Is it possible that international law firms could decide to open their own offices (of course, when stability is restored in the country) and, thus, they would not outsource work to you any more?

M. L.: Absolutely not. The companies that worked with us before and opened their offices here still continue to give us the work where they believe we are the best. In particular, foreign representative offices in Ukraine outsource to us litigation and arbitration projects as well as antitrust issues.

Frankly speaking, sometimes there are situations when it is better for them to hire us as they want to keep the client. After all, there are projects where clients simply would not buy services at the prices the international law firms charge.

UJBL:Arent they afraid that you would take over their clients?

M. L.: Not at all. Reputation is the main thing for us. If you make a mistake once while working with colleagues you will lose your reputation forever. It took quite a long time for me and my colleagues to develop a name and reputation, to fill my name and the name of the law firm with positive sense and meaning.

UJBL: Which projects do you consider as key and significant for you?

M. L.: I would not say something unusual when I emphasize that there was no specific transaction that I could point out. It so happened that from the firms early days we dealt with major projects, including McDonalds, which faced unlawful actions by a lessor, and well-known brands which were a threat to their losing trademarks in Ukraine.

And there were many projects of that kind. Even this year, though it seemed nothing big could happen.

UJBL: How do you evaluate the current situation on the legal market in Ukraine?

M. L.: By and large, the market fell in the first six months of the year. I think it will be worse than 2013. But the second half of 2014 will be successful. We have a lot of work already and new requests are coming. There is another problem, that of unpaid bills. In the first six months, payments were delayed in some instances. As of now, almost all invoices from this year and the previous year have been paid, and in contrast to the general trend in the country, we do not have the problem in terms of downsizing or reducing compensation. We go to work every day and know that there are interesting projects and new clients waiting for us.

UJBL: Ukraine faces a difficult economic situation. What kind of requests do you receive from your clients?

M. L.: In fact, since July all orders are similar to what we had in all previous years. In March through July, we were out of touch with the market and clients did not understand what was happening, and therefore, legal services were not the first priority. But currently clients are looking for other business opportunities, including corporate restructuring. Moreover, the current workload is exceeding that of September 2013.

UJBL: And what practices are most busy these days?

M. L.: First of all, there is a lot of orders related to tax issues. Secondly, several major international clients are in the process of restructuring this summer. Another current project is a corporate restructuring of a Ukrainian client, where we are engaged along with British lawyers. The situation is extremely difficult, as a part of the clients facilities is located in the mainland Ukraine, and the rest of it is lost both in Crimea and in the east.

UJBL: Did the situation in Crimea and in the east influence the needs of your clients?

M. L.: Indeed, we had a lot of requests related to Crimea. Our clients, who supplied goods or had their real estate, immediately faced problems with their providers and recipients. The main question at this point is how to act in the force majeure circumstances, since contracts are signed but performance is impossible. For example, when the money got to a recipient but it cannot be gotten. Or when goods are already located in the peninsula, but cannot be delivered. The same issues apply to distribution, owners of real estate, etc. Of course, clients that own recreational facilities on the seashore have difficulties as well.

Companies that used to work with sea ports also have problems. We helped them to transfer their operation to Odessa and Illichivsk. However, some goods deteriorated, some goods were not delivered at all, and terms of delivery were violated. And these are force majeure circumstances that are related to foreign suppliers.

Everything is more complicated in Eastern Ukraine. The property of clients is being robbed. For example, our client constructed a facility. It was hit by a shell. Whatever was left after the explosion was looted. Other clients face a situation when their goods are taken from warehouses to an unknown destination. And the goods are worth millions of Hryvnas. The situation is extremely difficult.

UJBL: Yours is one of the few Ukrainian law firms that has an office abroad in the United States. What prompted you to open an office in Chicago?

M. L.: It was 2008 when the market grew. I spent a lot of time in Chicago. The city has the largest Ukrainian Diaspora in the United States. People were so vividly interested in Ukrainian culture, and it inspired me. Apart from that, we had many clients from Ukraine, who wanted to expand their business abroad and sought to establish supplies from the United States to Ukraine. And then we found reliable partners in America. Our office in Chicago is managed by a former Ukrainian judge, who was the first judge who gave up the judges gown.

Currently, three lawyers work in the office and there is also an affiliated office.

UJBL: How busy is the American office? What clients do they serve?

M. L.: This year, the operation of the American office was concentrated mainly in the American market. Unfortunately, American clients did not go to Ukraine this year. Instead, we sent out clients to the US. Given the current situation, it is quite natural.

However, we are aware of potential investors, and they are aware of us. Their money works where there is profit. I believe there will become a time when we do not need to tell them, Do not worry, there is no shooting there.

UJBL: What is your international strategy?

M. L.: We value ties with Ukraine. We do not plan to open offices that would work independently in other countries, as some of our Ukrainian colleagues do. Neither do we intend to adopt the model of Baker & McKenzie and White & Case. We want to be among the best law firms in the country, where we know and understand the market.

UJBL: What are your next steps in developing the firm?

M. L.: First of all, it is cooperation with foreign companies. It is a good source of income in the legal field. We are pleased with such cooperation, because it also demonstrates the quality of our work and trust. And this cooperation enables the provision of the best service and to share clients.

Secondly, we continue to promote Ukraine as a nation with rule of law for our international clients both existing and potential ones. And this is only a part of what we do already, both for the firms development, and for the better image of the country and its investment attractiveness.

Lavrynovych & Partners

Key facts:

  • Year of establishment2004
  • Number of lawyers/partners35/5
  • Core practice areas
    • Banking & Finance
    • Capital Markets
    • Infrastructure
    • Corporate and M&A
    • Competition/Antitrust
    • Tax
    • Intellectual Property
    • Real Estate & Construction
    • Agribusiness
    • Dispute Resolution
    • International Trade
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