The Future is Now
In 2018, the Western Balkans had a population of approximately 21.5 million, an aggregate GDP of around EUR 230 billion, and an average growth rate of 3.8%. Although the countries of the Western Balkans share the same history, and to a large extent the same language, there is more variety when it comes to political configuration and economic wealth. Only two of the seven Western Balkan countries are EU members, with all others aspiring to membership (some are in the process of joining and some not yet candidates). Most of the Western Balkan countries depend heavily on foreign investments, offering cheap labor and various investment incentives as competitive advantages. For example, Serbia has been recently recognized as a global leader in attracting foreign direct investments in relation to the size of its economy. Some of the countries are champions of hospitality, and some focus on the agriculture and processing industries, while others invest heavily in mining and energy. All countries have shown resilience during the turbulent last couple of decades. Businesses in the Western Balkans trade intensively with each other, consolidating more and more across the region.
The challenges that the legal markets of the Western Balkans face are familiar around the globe. These days they revolve around demand pressure (with clients expecting more for less), supply pressure (an increased number of small and alternative legal providers), and technology pressure (the growth of commoditization and disruptive services). Furthermore, for the first time in history, four generations of lawyers are working together. We all have to be integrated, collaborate closely, work faster, and deal with more complexities than ever before. In addition, lawyers in the region face issues specific to each market as well, such as a general perception of high political risk, inefficient court systems, and corruption levels higher than elsewhere in Europe.
Commercial Legal Services Booming
Two and a half decades ago, when I started practicing law, commercial legal markets in the region were almost non-existent and most law practices were individual or family-owned. Today, there are many local, regional, and international law firms serving clients across the region. The commercial legal profession has bloomed in the past couple of decades, and firms are ready to face challenges, adapt, and embrace changes happening to the clients they serve. For example, Serbia is expected to export EUR 2 billion of information technology services in 2020, which creates a perfect opportunity for the expansion of the legal profession into the digital technology field.
Looking forward, the key question is how do we keep up in the Western Balkans. With the world becoming more and more global, there is a growing need to become “glocal.” Our clients expect a seamless combination of global expertise and local specifics. While mastering local know-how has never been a problem, having adequate industry-specific expertise does present an issue. It is difficult to gain this expertise working in small markets. One good way of addressing this could be to combine the experience of lawyers across the Western Balkans, working together and providing integrated assistance to the clients.
One thing which has not changed throughout time is that winning is paramount for our clients. In this context, risk-sharing is increasingly considered a key factor by clients for adequate motivation. The question is how to address this properly in an environment of political risk, inefficient courts, and perception of corruption. Solutions involving various shortcuts have been proposed. However, approaching the work with absolute integrity seems to be the best solution. The integrity test has to be applied to everything lawyers do. The firms in the region that value integrity, hard-work, and a commitment to the highest ethical principles will, over time, distinguish themselves from their competitors.
Furthermore, dedication becomes a crucial differentiating factor. Client expectations go beyond technical legal expertise, efficient project management, and a deep understanding of industry specifics. They want dedicated, trustful advisors who are not only responsive and knowledgeable but also care about their business. In other words, they want someone who cares, and not just a traditional lawyer.
To keep up in the years ahead, an integrated approach across the region could be a good solution, as well as applying consistently high ethical standards and stepping up from legal service to legal care. If we do this, all of us in the Western Balkans will be winning with integrity
By Dragan Karanovic, Founding Partner, Karanovic & Partners