Interview with: Are the “Heavyweight” Firms Welcome? Legal Market Trends for 2020–2021

As we take stock of the legal market’s performance over the past year and assess its prospects for 2020–2021, there are two pieces of news to share—one positive and one not so optimistic. Where would you like to start?

The total revenue of the leading players in the legal market, including the “Barristers” Law Firm (according to the annual legal practice survey “Top 50 Law Firms of Ukraine”), shows that last year the market returned to 2010 levels, with growth of more than 20% compared to 2018, amounting to approximately 6.5 billion UAH or $240 million.

However, there is a downside for Ukrainian lawyers. These figures apply only to the “heavyweight” players in the market. As for small and medium-sized firms, their profits have become negligible, forcing many of them to join forces and pool their resources in search of major cases and clients.

It is safe to say that the merger of law firms in 2019 became the main trend paving the way for their prosperity in 2020–2021. So far, major mergers have occurred only in the capital markets; nevertheless, lawyers also predict mergers among regional market participants—namely in Odesa, Lviv, Dnipro, and Kharkiv—in 2020–2021.

When it comes to breaking down the total revenue of leading law firms by the practice areas in which they worked last year, the most profitable areas for lawyers remain dispute resolution, corporate law, and tax law—areas in which conflicts of interest are inevitable. In percentage terms, these practices account for half of all the revenue earned by leading law firms over the past year. It follows that in 2019–2020, Ukrainian lawyers earned one out of every four hryvnias by representing their clients in court.

Spring 2020 began with many lawyers having to adapt to the restrictions imposed due to the quarantine in order to stay afloat. For example, they had to address issues related to conducting business remotely, the consideration of which had been suspended due to the pandemic. Additionally, some cases were heard without the parties being present, which affected attorneys’ fees. This has prompted lawyers to make greater use of the Internet and various online platforms. For example, they are using webinars—where clients are advised on specialized issues during closed-door sessions (as an alternative to in-person consultations)— many lawyers use the media and social networks to obtain information about legislative changes and are creating their own channels on the Telegram social network.

The development of practices related to the inevitable pressure from law enforcement and tax authorities on Ukrainian businesses generates stable profits. Last year, large law firms earned more than 300 million hryvnia, although such firms previously did not take on such criminal cases and referred them to traditional law firms. In search of new markets, law firms have actively sought to engage in non-traditional practice areas, not limiting themselves to representation in criminal proceedings alone.

This year will also see the growth of boutique firms specializing in their core areas of practice. Nevertheless, only boutiques with leading practices—such as litigation, tax, or criminal defense—will stand firm and confident. But even they will actively develop their related practices, which will ensure the closest possible collaboration with clients and minimize the outsourcing of their clients’ cases to the market. In particular, litigation firms will strengthen their expertise in the agricultural, pharmaceutical, and banking sectors.

A rather interesting trend of the past year has been the redistribution of lawyers’ interests across various sectors of the Ukrainian economy.

For example, despite the devastation in Donbas and the suspension of many projects in the east of the country, the legal sector has begun to focus more on western projects related to alternative energy sources. As we observe changes in the economy, we see a mirror image of these shifts. For example, the massive downsizing of Ukraine’s banking sector is leading to a huge number of credit disputes in the courts, and the adoption of the Bankruptcy Code will create more work for lawyers handling debt-related matters this year.

Consequently, we can draw one optimistic conclusion for 2020–2021: lawyers will have a lot of work ahead of them. However, only the most qualified members of our profession will be able to secure a solid client portfolio.