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Guest Editorial: Thoughts on the Turkish Legal Market

Guest Editorial: Thoughts on the Turkish Legal Market

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The past couple of years have been particularly challenging for Turkey’s M&A market owing to the domestic and global political climate and the weakened state of the Turkish economy. According to Deloitte’s annual M&A review published earlier this year, the M&A market in 2016 witnessed a total deal volume of USD 7.7 billion through 248 deals, resulting in the lowest deal volume since 2009. 

In comparison to previous years, and in the absence of “mega deals,” middle market transactions dominated the volume of transactions in 2016. While slightly weaker than before, investors from the Euro zone and North America were still responsible for half of the deal value, and interestingly, the year saw investments from South Korea and Japan at their highest level ever.

An update published by the Economy Ministry this November painted a similar picture for 2017, showing that foreign investment in Turkey experienced a decrease during the first nine months of the year, dropping 19% to USD 7.34 billion (from USD 9.04 billion during the same period in 2016).

However, the Turkish legal market continues to strengthen in terms of capacity and efficiency. Recruitment remains robust and there is plenty of room for growth. In fact, a recent issue of this magazine reported that Turkey is one of the least saturated markets in the CEE region in terms of the number of lawyers compared to national GDP. The three largest firms in Turkey employ around 70 to 90 lawyers each, while the average size of Turkish firms, which is in the early teens, remains relatively low. 

During the past decade the Turkish legal market also experienced the beginnings of formal cooperation between a Turkish and foreign law firms. Many of these law firms have positioned themselves as only carrying out transactional or banking and finance work. In my opinion, that may be the way to go elsewhere, but in Turkey it is more difficult when you look at the amount of work on offer. Many Turkish firms tend to take the “full service firm” approach, as we do. This continues to be the best approach, given the decreased levels of foreign investment.

Turkish law firms are also becoming smarter and more competitive. Firms are adopting international best practices in terms of information and data security standards, business development practices, and eBilling, and are continuing to guarantee to international clients that Turkey is as business savvy and efficient a legal market as our European neighbors and US colleagues. 

Growth in the technology, media, and telecommunications sectors is also evident. Nearly half of the total deals in 2016 focused on the Internet and mobile services, technology, and energy sectors, and those Turkish law firms with strengths in these sectors have experienced considerable growth in the past couple of years.

To sum up, while the environment presents some challenges, and the transactional side is slightly less explosive, Turkey is receiving increased interest from Eastern markets, European and North American investors remain sizable foreign investors, and the Turkish legal market continues to be decidedly buoyant. The recently-announced 11.1% growth of the Turkish economy in the last quarter also gives us hope that perhaps it is not too late for Turkey to be a part of the global optimistic trends of 2018 as far as economic performance issues are concerned.

By Gonenc Gurkaynak, Managing Partner, ELIG, Attorneys-at-Law

This Article was originally published in Issue 4.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.