Staying afloat: Russian law firms and the EU sanctions
Sanctions imposed by the EU after Crimea’s annexation have caused upheaval in the Russian market, but law firms remain optimistic.
Q: What has been the impact on your firm’s business of the sanctions imposed against Russia by the EU in response to the Ukraine crisis?
Sergey Pepeliaev, managing partner, Pepeliaev Group: Initially, many investors got scared and froze their investment projects, which for us meant that our M&A practice saw some of its projects suspended. The measures that the Russian government has undertaken in relation to the economy (letting the rate of the national currency drop, establishing favourable conditions for business, and making improvements in corporate legislation) have contributed to making Russia more attractive for investment.
Today, we see that a new investment stage is under way, with new projects being initiated that involve acquisitions of business and real estate. We are optimistic about the prospects of legal business in the second half of 2015.
Q: Do you think that the current situation will lead to more clients choosing Russian firms over international firms for their business in the jurisdiction?
Pepeliaev: Yes, many law firms specialise in investment projects and, therefore, are facing certain difficulties in overcoming present turbulent times. The business of Russian law firms, meanwhile, is more diversified and, as a result, they are more financially stable. As opposed to international law firms, Russian law firms did not see large-scale redundancies. Therefore, our national firms are better prepared for new projects.
Q: What practice areas are busiest right now for the firm and what sort of work are you seeing coming through?
Pepeliaev: The make-up of the instructions we receive has changed of late, with antitrust, employment, bankruptcy and IP projects dominating. Our life sciences and telecoms groups and the offshore projects and PSA group have also demonstrated significant development recently. Thanks to a state support programme, the number of Far East projects has also been growing. We have been active in expanding the work we do with China, Korea and India.
In February, we made an official announcement about launching a bankruptcy and anti-crisis protection practice. The current economic realities are forcing businesses to adapt to the new conditions. With bankruptcy and corporate restructuring booming, we have approached the market with new offers to meet the demand at this time. For instance, we are offering a completely new ‘bankruptcy compliance’ service. We treat bankruptcy as a tool enabling businesses to make a fresh start. Our objective is to provide the much-needed legal support that will help the client to navigate through its troubles and to make the most effective use of all the options the law affords.
Q: What is your outlook for the rest of 2015?
Pepeliaev: It is difficult to make any projections for 2015 in today’s economic environment, but we feel that we are quite stable and that our prospects are, therefore, positive. We are ready for a new wave of investment activity in the second half of 2015.
Naturally, we are cautious and reconsidering budgets in terms of non-essential items, given that in this climate our clients do not welcome any flashiness. As earlier, we witness the trends when clients are trying to restrict the scope of services by fixed budgets and to set fixed exchange rates for the Russian rouble.