2020-2021 legal market trends in Ukraine

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Oleksii Shevchuk
Barristers Law Firm, Kiev
shevchuk@barristers.org.ua

In summarising the work of the legal market over the past year and assessing prospects for its development in months ahead, there are two news stories: one good, and the other not very optimistic. Let’s start with the good news.

According to the annual legal practice study '50 Leading Law Firms of Ukraine’, the total income of the legal market’s leading participants, including the Barristers Law Firm, showed that, last year the market returned to 2010 levels, namely growth was up by over 20 per cent compared to 2018. This amounts to roughly UAH 6.5bn (approximately USD 230m).

There news, however, has more ominous implications for Ukrainian lawyers. The increased amounts mentioned apply only to the ‘heavyweight' market players. With regard to medium and small entities, profits became meagre, forcing many of them to merge and consolidate their work in pursuit of large cases and clients.

It is safe to say that in 2019, law firm mergers became the main trend, pointing to prosperity in 2020-2021. Larger mergers have, so far, only taken place in the Kiev. Nevertheless, lawyers predict mergers of regional market participants, namely in Odesa, Lviv, Dnipro and Kharkiv during 2020-2021.

Talking of dividing the total income of the leading law firms into specialisations, it has been calculated that last year, the most profitable fields for lawyers continue to be dispute resolution practices, corporate and tax law (ie, areas with an inevitable conflict of interest). In percentage terms, these practices make up half of all money earnt by leading law firms last year. It follows that in 2019-2020 Ukraine’s lawyers earnt each fourth UAH representing their clients’ interests in court.

The Covid-19 pandemic

Only three months into 2020 saw many lawyers having to adapt quickly to Covid-19 quarantine restrictions simply to stay afloat. There were issues relating to working remotely and having to make quick decisions about which work to put on hold during this part of the pandemic. And, the types of legal work which now took place without the physical presence of parties influenced lawyers’ legal fees. The pandemic also prompted lawyers to make greater use of the internet and different online networks. For instance, using the format of webinars in which clients are advised about narrow-profile questions, as an alternative to personal consultations. Many lawyers make use of the mass media and social networks to receive information on innovations in law. They also practice creating their own channels in the social network Telegram, and subscribing to this network provides regular updates on relevant information.

The development of practices associated with the pressures of law enforcement and fiscal authorities on Ukrainian business reaps stable profits. Last year, large legal firms earnt more than UAH 300m, although such companies had not previously taken on criminal cases and used to outsource them to the conventional bar. In their search for new markets, law firms have actively tried to engage in non-traditional practices, not limited to representing them only in criminal proceedings.

Boutique firms strong in their own specialties will also need to develop this year. Nevertheless, only boutiques with top-drawer practices, such as judicial, tax or criminal, will be on a sure footing in these difficult times. But even they will feel the need to develop their associated practices, providing the closest possible work with clients, thereby hoping to minimise the transfer of their clients’ cases to outsourcing. Litigation firms in particular will strengthen their expertise in the agricultural, pharmaceutical and banking sectors.

A repositioning of lawyers’ concern about various sectors of Ukraine’s economy has been quite an interesting trend over the past year. For instance, despite war in the Donbas, and the freezing of many projects in the east of Ukraine, the legal business began to devote more attention to Western projects for alternative energy supply. Observing changes in the economy, we see its mirror reflection, for example, the massive reduction in Ukraine’s banking gives rise to a huge number of credit disputes in court, and the adoption of the Bankruptcy Code, which will create work for lawyers dealing with debt issues.

Consequently, although I point to an optimistic conclusion to 2020-2021 with much work for lawyers to undertake. Nevertheless, only the most qualified members of our profession will be able to develop a worthy client portfolio.

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