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Guest Editorial: Lawyering in Bulgaria Throughout The Years

Guest Editorial: Lawyering in Bulgaria Throughout The Years

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Before the democratic changes of 1990 lawyers worked independently but under the supervision of the Minister of Justice. Remunerations were limited, leading to an administrative distribution of work. Lawyers were mainly involved in family and inheritance law, sale-purchase of housing, and cooperative relations.

Industrial enterprises, banks, energy, radio, television, telephone companies, and others were exclusively state property. Foreign exchange was also in hands of the state enterprises. Only appointed legal advisors participated within the economic relations, but not lawyers (attorneys-at-law). Disputes were reviewed by state arbitration, influenced by ministries, instead of the courts.

These limitations notwithstanding, the Contracts and Obligations Act, adopted in 1950 and still in effect to this day with some minor amendments, entirely resembles the German Civil Code. It, along with the admission of personal (private) property and small industrial enterprises under the guise of cooperative societies, led to relatively well-developed contractual relations within the predominantly authoritarian socio-economic order. This helped lawyers adapt easily to the new conditions when the market opened up. Furthermore, good communication with lawyers at commercial companies abroad meant that Bulgarian lawyers had the opportunity to become familiar with the rules of free market relations and the rule of law. And it should be noted that, even before the changes in regime, an opportunity was created for citizens to incorporate their own firms and private business was stimulated.

With the new Constitution of 1991, the division of powers was established, along with the free economic initiative and a newfound focus on the defense of personal rights and freedoms. All these lead to a massive wave of firm registrations, which tremendously increased the engagement of lawyers, as well as court disputes. Lawyers worked freely and began to manage their own business, without the state interaction.

Property illegally seized during socialism was restituted, with the restitution proceedings strongly activating the search for legal advice and representation. With the privatization of the economy, whereby as early as 2004 57% of the state assets were privatized, an almost entirely private banking system, and the need to serve hundreds of thousands of new companies, the work of lawyers increased significantly. Subsequently, as of 2020, approximately 70% of former state assets are now in the possession of private persons.

The introduction of transparent concession conditions, public procurements, the Commercial Act, the electronic commercial register, and the register of special pledges further increased the sheer amount of lawyering work. In particular, The Commercial Act established different types of companies, including limited liability companies and joint-stock companies, defined all types of deals well-known in other countries, and covered insolvency proceedings. It paved the way for free, unimpeded, and fast company creation, based on free economic initiative, with some lawyers organizing their activity through the legal forms stipulated in the Commercial Act (LLC or JSC).

In 2007 the Legal Profession Act envisaged the incorporation of law firms for the first time. By virtue of this law, lawyers from the EU were also allowed to provide legal assistance in Bulgaria. Still, western law firms entered Bulgaria relatively late, which allowed for the successful incorporation and work of Bulgarian law firms with the most experienced lawyers, who successfully cooperate with some of the largest western law firms.

A drive to harmonize with EU law saw the adoption of several pieces of legislation affecting the private sector – from energy and banking regulations to customs regimes, environmental and data protection regulations, and measures against money laundering and financial terrorism – all of which were an additional impetus to lawyering in Bulgaria. In 2015-2016 a judicial reform was undertaken, securing the main parameters of the full independence of the judiciary from the prosecution offices and other authorities. Of course, the reform should continue even if amendments to the Constitution of the Republic Bulgaria would appear necessary for it.

The existence of an electronic commercial register and an electronic connection between public procurements and special pledges, the ability to perform administrative services online, and the anticipated e-Government will, to a considerable degree, free lawyers from uncharacteristic activities, giving them the opportunity to direct all efforts towards an even more comprehensive defense of their clients.

By Vladimir Penkov, Chairman and Senior Partner, Penkov, Markov & Partners

This Article was originally published in Issue 8.6 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.