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Guest Editorial: Churchill to Ceaucescu and Beyond

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This March marks the 70th anniversary of Sir Winston Churchill’s famous speech at a college in Fulton, Missouri, USA, when he uttered the memorable phrase: “From Stettin in the Baltic to Trieste in the Adriatic, an iron curtain has descended across the continent.”

As I look back over a career in private law practice spanning 30 years, it is fascinating to see how far we have come. So much has changed, yet so much remains the same. I think the French have a phrase for it!

As we enjoy “Deutschland ‘83” on our TV screens, I recall those dark days when colleagues used to travel “behind the Curtain” to visit clients (namely state-owned shipping companies) in Romania, Bulgaria, and elsewhere within the Soviet sphere.

My own first excursions to CEE were in the early 1990s to work on the early state-owned company sales and privatizations. Early clients were a colonel and a major from the air force of one particular country. We used to meet at an air force base just outside the capital, they in their uniforms resplendent with braid and in wide-brimmed hats, and me in my “City suit.” We were worlds apart, yet striving for a common goal – a better and safer world for them and their country.

Some deals were quick and straightforward, but others were long and complex, with delays being bureaucratic, political, or even worse in nature. On one occasion, after six years working on an electricity privatization, we were all set to sign the deal with the Italian buyer when the Government pulled the deal, leaving us, their advisors, bemused and forlorn in the grand state room of the Parliament building where the signing was due to take place with all the attendant pomp and circumstance. Hearing this news, the buyer’s CEO did not even disembark from his corporate jet and never returned for the eventual (lower key) signing one year later. Governments had fallen, Ministers had resigned or had been replaced, and lesser mortals had been arrested or detained “for their own safety.” But we got the deal done! Such was the ultimate overwhelming inertia of the process and the progress towards the overall goal of raising GDP and becoming “EU member state ready.”

Another memorable deal a decade or so earlier exposed the early enthusiasm (tinged with inexperience) of CEE governments to embrace Western companies, consultants, and cash. It also taught me a valuable lesson (as an observer – not a victim or perpetrator!) about the dangers of “deal PR” as the driving force. The deal was another State sale – this time of a bank. Although almost ready to sign, it had not been finalized when the high profile PR signing was convened. Local press, TV, ambassadors, and other dignitaries had gathered. All were keenly awaiting the signing of this landmark deal. What to do?! Obviously the sensible option would have been to postpone the PR conference. But no, some officious apparatchik fearing for his or her job pushed on. In the end a blank sheet of paper was ceremoniously signed. Face was saved, but the only problem was that, with the deal having been announced at the “virtual” signing without actually having been finished, the State was severely handicapped in its further negotiations!

So aside from these “pantomime” moments at deal signings, what can I offer from my career of CEE deals?

Corruption is still with us, but to a much lesser degree. Aside from recent events in Moldova, other states seem very keen to clean house. The U.S. Foreign Corrupt Practices Act and the UK Bribery Act are now well known and various local agencies are also doing their bit.

Big Law v. Local Champions

Whilst several major UK/US law firms have entered the region in the last two decades, more recently there has been a gradual retrenchment of networks as the foreign law firms struggle to compete with lower cost-based local firms. Ironically the partners of these local firms were often the beneficiaries of early training with the Western firms. Some law firm models (e.g., Swiss Vereins) can cope with this, whilst others cannot. The post 2007/8 economic slow down probably exacerbated this trend. There are country to country variations. Economics and geo-politics (as in Ukraine, for instance) also play a part.

As Big Law firms retreat, local networks across the CEE region have gained ground, seeking to benefit from the economies of scale, knowledge transfer, and branding power which Big Law firms previously enjoyed, filling the vacuum, usually at lower charge out rates.

As Churchill said elsewhere in his so-called “Iron Curtain” speech:

“Turkey and Persia are both profoundly alarmed and disturbed at the claims which are being made upon them and the pressure being exerted by the Moscow Government.”

Today, time will tell how Turkey reacts to Russian aggression on its border with Syria whilst the recent thaw with Iran presents a new market ripe for development after thirty-five years of sanctions. Another “Iron Curtain” has been removed.

I have yet to visit Stettin in the Baltic but I was lucky enough to visit Trieste in the Adriatic. We were conducting due diligence for the sale of a fleet of Ro/Ro [Roll on/Roll off] ships. The Iron Curtain was gone and replaced by a “floating carpet” full of Eastern promise. The Ottomans were coming.

Editor’s Note: In a first for this feature, the author changed jobs between the time he wrote the editorial and the magazine’s publication date. Simon Cox was a Partner at McGuire Woods London in January 2016, but he has now moved in-house as the General Counsel and Director, the Head of Legal and Compliance at ThomasLloyd Group Limited. We wish him the best in his new role.

By Simon Cox, Partner, McGuire Woods, now General Counsel and Director, ThomasLloyd Group Limited.

This Article was originally published in Issue 3.1. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

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