According to Ilko Stoyanov, Partner at Schoenherr in Bulgaria, although his country has a very small legal market, which means that it is difficult to identify trends and to forecast the future, non-performing loans, the GDPR, and the rapid growth of artificial intelligence are topics that will definitely keep lawyers wired throughout 2018.
“Even though in Bulgaria the trends of the legal market are changing from year to year,” he says, “I can identify at least two or three important things that kept the industry busy last year, and probably will still be relevant in 2018. First, there are these non-performing loans -- the so-called NPLs -- which are quite a hot topic across all of Europe. Banks are looking to sell their NPL portfolios to companies that are specialized in collecting these loans. Their goal is to free their capacity, because their entire business relies on extending credit to clients rather than dealing with defaulting clients, which involves large resources from the banks, and usually there are companies, like the buyers of these NPLs, who are more specialized in dealing with default loans.” Stoyanov notes that NPL transactions boomed in Europe after the financial crisis, as they have around the world, and Bulgaria experienced its largest NPL transactions in 2016 and 2017, both in secured and unsecured portfolios. “I believe that these transactions will continue in Bulgaria in 2018 as well,” he adds.
The other hot topic that Stoyanov mentions involves the GDPR. “Data protection is a thing that everybody is talking about,” he says. “All the large companies need to reorganize themselves and their IT systems in order to comply with the new rules on how they collect and process personal data.” He reports that a lot of Bulgarian law firms have already started preparing to advise in relation to personal data. “Our office is on the opinion that the related expectations of law firms will be greater than the demand from clients. Although clients are looking for legal counseling and IT advice regarding the GDPR, I think that IT advice will be in a higher demand,” says Stoyanov.
Turning to the topic of how artificial intelligence might change the legal industry, Stoyanov believes that robots and machines will be able to take over an increasing amount of legal work in upcoming years. “The rapid rise of artificial intelligence surely will affect the legal market. Although our firm has not yet seen the consequences of this phenomenon, or how automation really works in the legal field, everybody talks about the possible consequences. It is already happening in the US and in the UK, so at some point it will happen in Bulgaria as well. People are concerned that AI will take legal jobs. We can’t tell for sure when or in which areas, but it might happen — for example with legal due diligence. A firm would not be obliged to hire 20 lawyers anymore for the legal analyses of a country, for it can be done by a machine in a much shorter time.” Computers are unlikely to take over all work from lawyers, he says. “Analyzing documents is probably easier but it would take some time for machines to learn to draft contracts or deal with negotiations. But it might come sooner rather than later and we must adapt. What we do as lawyers is probably not unique despite how we feel about it.”
When asked what’s keeping his firm busy at the moment, Stoyanov says that they are dealing mostly with cases related to real estate, energy, NPL, M&A transactions, and foreign investments. “I have to mention that investments coming from the outside were a bit down since the financial crisis — five years ago, for example, we advised more Bulgarian clients then foreigners. But today this interest is growing, with foreigners mainly making greenfield investments. The majority is coming to Bulgaria to create new plants or manufacturing facilities, and this is clearly a source of enthusiasm for us.”