In The Corner Office we ask Managing Partners across Central and Eastern Europe about their unique roles and responsibilities. The question this time: “What one ongoing pro bono initiative or project or charity/volunteering project that your firm is involved with has the most meaning for you personally, and why?”

It is no easy task this day and age to talk of “legal market trends.”

Over the course of our seven years, CEE Legal Matters has interviewed most of the British lawyers working on the ground in Central and Eastern Europe as part of our recurring “Expat on the Market” feature. We reached out to them recently and asked them to bring us up to speed on what they’re doing and/or share their thoughts on the ramifications of Brexit or the ongoing COVID-19 crisis.

Employers do not always consider the fiscal impact of granting various types of benefits to employees, which subsequently gives rise to disputes with the tax inspection bodies. This is due to the specific legislation in Romania regarding taxation of employee benefits in the form of benefits in kind, which leaves room for interpretation, consequently raising operational enforcement issues.

In The Corner Office we ask Managing Partners across Central and Eastern Europe about their unique roles and responsibilities. The question this time around: ”What is your single most favorite client matter in your career?”

According to its website, Budapest-based InvestCEE aims to “humanize technology” for lawyers and provides services to law firms and in-house counsel in Hungary, Romania, Croatia, Poland, and the Czech Republic.

According to the 2019 CEE By the Numbers issue of the CEE Legal Matters magazine, almost two third of all lawyers and almost half of all partners at ranked Romanian law firms are women. As Romania’s population, economy, and (therefore) legal market are much larger than its chief competitors in both categories, its achievements in this area are particularly significant. Romania’s most prominent female managing partners insist that, indeed, sexism, in the Romanian legal industry, is essentially a non-factor.

The Romanian labor market before the COVID-19 pandemic was very competitive. On the one hand, foreign companies closely monitored the opportunities of a developing market and local labor force, while on the other hand, the tradition of people traveling abroad in pursuit of happiness and the flood of young and bright minds out of the country had spread enough to make recruitment a difficult process and to significantly affect the labor market in general.

The decade that just ended brought significant changes to the banking landscape in Romania. The banks were pushed to restructure their loan portfolios, consumer litigations increased exponentially, the cost of business increased, and Fintech companies started (although timidly) to take a slice of the pie. Populist legislation was enacted to protect consumers years after banking services were contracted. And a wave of acquisitions forced by the increased costs led to changing rankings at the top of the banking sector.

The pandemic caused by the new coronavirus (SARS-CoV-2) has profoundly challenged all justice systems, including Romania’s. The country’s judicial bodies had to quickly assimilate and implement numerous special measures instituted as a result of the state of emergency, followed by the state of alert that was declared at a national level.

On June 18, 2020, the President of Romania promulgated a law amending the Labor Code, two years after the country adopted legislation increasing the sanctions for employers who do not comply with the legal requirements for overtime work. According to the new amendments, the fine for non-compliance in such cases is between EUR 310-620. The amended provisions entered into force on June 21st 2020.

Regardless whether you are a new start-up hoping to become the next “unicorn” or a renowned international corporation, Romania’s ever-changing business and legal environment will impose various issues and hurdles upon your organization’s compliance and ethics culture. From BP’s USD 20.8 billion fine for the Deepwater Horizon accident, to Volkswagen’s USD 14.7 billion fine for false diesel emissions, to Airbus’ USD 4 billion fine for bribery and corruption, keeping a company on the right side of the law and reducing employee malfeasance is always a challenge. 

The COVID-19 outbreak showed that technology lies at the backbone of our society and that the role of electronic communications services and networks in supporting our economic, educational, and social needs has increased exponentially.

The Romanian Government has recently brought important amendments to the energy regulatory framework by way of the new Government Emergency Ordinance no. 74/2020, effective May 19, 2020. According to the new regulations, new energy producing facilities, both renewable and conventional, commissioned after June 1, 2020, would be allowed to sell their output outside the current centralized energy market, at negotiated prices, with the observance of competitive rules. The amendment is intended as an exception to the general principle set out by Energy Law no. 123/2012 that transactions with electricity are carried out on the competitive market, in a transparent, public, centralized, and non-discriminatory manner.

M&A practitioners, fund managers and CEOs are living a 2020 that is rich in experiences. Of course, we all hoped this to be the best year since the 2008 crisis.

Something Needs to Be Done

A popular meme these days is “<<2020 is the year I am going to…>> 2020: <<Hahaha. No.>>”.

The Spring of 2020 was about to blossom when the world got trapped in a global shutdown as a result of the COVID-19 pandemic. The private sector tried to adapt by activating continuity plans. Working from home and interacting online with colleagues and customers has become the new paradigm for service businesses. In addition to a wide range of social distancing restrictions designed to contain the virus (including closing down or significantly limiting public access to many commercial, government, and leisure facilities), Romanian authorities have instituted various specific temporary relief measures, such as unemployment benefits; moratoria on consumer and corporate debt, business rent, and utilities expenses; state aid schemes representing loan and guarantee facilities for small and medium-size enterprises (SMEs); guarantees for mortgage loans; filing deferral for tax returns and rescheduling of income and property tax; and waivers of mandatory insolvency filing  and extension of certain stages in pending insolvency cases.