Looking back over the last 25 years, I’m struck by what an extraordinary period this has been.
My first exposure to the region was as an Associate working on some of the early syndicated loans as the Czech legal market began to open up and then following that up with work on various corporate transactions over the years as a Partner.
On a personal level, I’m thrilled that in addition to getting to work with other people and firms across the region I am still working with some of the same people at these firms. And that those firms from the early days have continued to do well despite everything that has been thrown at them in the meantime.
It has and continues to be something of a rollercoaster ride.
Some jurisdictions – like Poland, the Czech Republic, Romania, and Turkey – are beginning to emerge as comparatively safe and stable locations for investment, with particularly good prospects for those countries with growing populations and improving infrastructure. As we see things, Central and Eastern Europe offers attractive opportunities to both domestic and foreign investors.
However, the region still has the scope for political surprises (not that the UK doesn’t too, as we discovered this June!).
But the political situation continues to be difficult in certain jurisdictions, with dramatic events in recent years in both Ukraine and Turkey. And new governments in Poland and Hungary are driving changes which have proved controversial.
“Compliance” issues continue to be a concern, with significant challenges for clients and lawyers alike and the potential for significant liability if US or UK extra-territorial anti-corruption laws are breached.
Concerns also remain about the legal infrastructure, the independence and integrity of the judiciary, and the ability to bring valid claims in the courts of certain countries. This risks impacting on confidence in the jurisdictions concerned, both from a commercial point of view and also by indicating a lack of respect for the rule of law. The flip side is parties looking to have their cases heard elsewhere, such as in the English Commercial Court or arbitration in London.
From my perspective as a Partner at Slaughter and May, it has been interesting to see how the legal markets have developed in the CEE countries. I am full of admiration that some firms have grown in a few years to a size that it took our firm decades to achieve.
We have stuck with our strategy of looking to work with the best independent law firms in each jurisdiction wherever we can. Of course, our approach is client-led, and there will be occasions when the client has opted to make a different choice.
Some of our international competitors have followed a different route, opening across the region. As I see things, the results have been mixed. Some international firms have stuck with their strategy for the longer term and are well established; others have not been willing to take the financial pain of what can be relatively high costs in ferociously competitive markets.
Relative profitability has been a particular challenge, I think, for lock-step firms, given the different rewards available between jurisdictions. More positively, even where international firms have upped the stakes, these local firms have tended to continue adding to the numbers of independent firms and, in some cases, contributing further to the development of pan-regional firms.
And what about our plans for working in the region?
I hope that we can continue to raise our profile. I really enjoyed participating in the CEE Legal Matters GC Summit at the beginning of October along with Slaughter and May dispute resolution Partner Jonathan Clark and finance Partner Richard Jones.
It was a fantastic opportunity to connect with representatives of some of the leading Turkish law firms, meet members of the CEE in-house teams from major international clients like Diageo, Inchcape, Philips, and Shell, and meet representatives of a host of other leading Turkish, regional, and international groups.
I see us continuing to work with some of the best independent firms and supporting our clients in investing and working in the region. I would also like to see us develop our relationships with leading businesses as they look to expand outside the region, issue IPOs or raise debt on the London or Asian capital markets, or participate in arbitration or other proceedings in London or elsewhere.
By Jonathan Marks, Partner, Slaughter & May
This Article was originally published in Issue 3.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.