The Southern European market has been largely dictated by the recent inflow of foreign investment to the region, as the real estate, renewable energy, and corporate spheres profited extensively throughout 2023. The Euro Elite’s Southern Europe contingent comprises firms from the highly competitive Israeli and Greek markets. While Israel is technically not in Europe, it has been included in the Euro Elite analysis for some years. However, the country’s war against Hamas has sent shockwaves through its $431bn economy, affecting many thousands of businesses and plunging many industries into crisis – making any assessment of the legal market inappropriate at present.

At the close of 2023, Greece’s economic growth continued to outstrip that of other European nations, with the country experiencing a sector boom in the real estate and construction industries. George Bersis, managing partner of POTAMITISVEKRIS, partly attributes the progress down to ‘the reforms of the current pro-business government kicking in’ alongside ‘foreign direct investment’. Blackstone Real Estate Partners Europe is championing this investment drive, as evidenced by its purchase of five high-end hotel resorts for €178m.

Since the Greek government passed the 2023 arbitration law a year ago, the legal sector has experienced a major boom in ADR proceedings, with global corporations increasingly deeming Greece to be an attractive seat for cross-border, multiparty arbitrations. The International Court of Arbitration continually finds itself at the forefront of arbitrary claims – most notably Prenecon’s case against the German wind turbine company Enercon. Considering this, Alexandros Kosmopoulos, managing partner of AKL Law Firm, expects further ‘reforms that will expedite the resolution of disputes’, expanding Greece’s influence as a station for commercial settlements.

Mirroring the trends witnessed in 2022, renewable projects remain a consistent source of activity for the Greek legal profession. Bernitsas Law Firm’s managing partner Panayotis Bernitsas cites the team’s role in ‘advising [clients] extensively on energy capture and storage’ initiatives, underlining the impact of the EU’s approval of €30bn for climate investments in Greece made in 2021. Foreign investors – recognising the favourable weather patterns afforded to the country – have sought to capitalise on the rise in wind, solar, and photovoltaic ventures. This is best evidenced by the European Investment Bank’s commitment of €400m to support new investment for Mytilineos Energy, which will accelerate renewable energy production across Greece and other EU states.

Increased activity in the M&A and corporate sectors has been fuelled by the influx of foreign capital. The EY Attractiveness Survey Greece 2023 showcased growth in the country’s private equity industry, with Kosmopoulos postulating that ‘2024 could be marked by activity in the M&A and capital markets areas’. Due to this, a somewhat overlooked development comes from within the legal corporate field. Major consultancy firms and international law firms are increasingly investing in their Greek legal divisions – explaining the heightened competition in the market – as new players enter the fray. This could inevitably cultivate a tussle for talent among Greek law firms, notes Bersis, particularly with the demand for skilled corporate practitioners growing.

Across Bulgaria, commercial and corporate investments have continued to prosper, particularly in the renewable energy, technology, and construction sectors, including on transactions and regulatory mandates.

Some practitioners have noted a gradual shift in client base, including Anna Rizova, managing partner of Wolf Theiss Bulgaria, who notes a ‘cautious international market’ while ‘local companies exhibited growth’ in transactions and expansion in the Bulgarian market, where national venture capital funds have been active in supporting local start-ups and large-scale transactions with international financial support decreased.

‘2024 could be marked by activity in the M&A and capital markets areas.’ Alexandros Kosmopoulos, AKL

Inbound investments from international players in Croatia have continued to increase since 2020, particularly in the real estate and tourism sectors, with local and international firms noting an increase in large construction and energy project management and financing. Generally, firms have experienced continued growth in transactional work within the IT and production industries. Lea Mužić, of Schoenherr in cooperation with Croatian lawyers, predicts that next year will be ‘very dynamic,’ with plans for the Croatian government to announce a market premium tender on renewable electricity production. However, legislative and practical obstacles to renewable energy projects remain a concern due to the country’s extensive regulatory restrictions. Recession continues to concern firms in the jurisdiction following Covid-19, with many noting an increase in restructuring and bankruptcy work.

The overwhelming view surrounding developments in 2024 is one of optimism. Further growth is expected in the corporate arena – likely facilitating further investment in renewable initiatives and real estate ventures. A further expected trend concerns rapid advancements in the technology sphere across the region, with law firms in Greece and Croatia being frequently called upon to act in high-profile transactions, alongside advising on complex initiatives. LB

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Greece remains buoyant, despite the global pressures affecting jurisdictions worldwide. Major transnational corporations and huge global players are beginning to adjust their investment strategies and are viewing Greece as a major opportunity for inbound investment. Panagiotis Drakopoulos, managing partner of Drakopoulos Law, remarks: ‘It has been somewhat surprising that a lot of foreign investors (particularly non-EU) see Greece as a gateway not only to just the region, but to Europe itself.’

The country is strategically located geographically, economically, and politically, and is highly attractive to growing numbers of investors that view Greece as a potential hub for their operations. Drakopoulos attributes the shift in part to political factors, noting that ‘the current political climate is very friendly to foreign investment; Greece is in a growth mode.’ Elected in 2019, the Mitsotakis government is self-proclaimed to be avowedly pro-investment and has passed key investment legislation.

Investment uptick

Despite lingering issues, the growth of the domestic market is demonstrably strong.

2021 saw GDP growth reach 8.3%, a strong recovery from the Covid-19 pandemic, while FDI soared by 90.2% from 2020 figures, amounting to more than €5.3bn. The most recent EY Europe Attractiveness survey found that the percentage of companies planning to enter, invest or expand their presence in Greece reached 37% – up from 34% last year and 28% in 2020. Elsewhere in the report, which is derived from data obtained from the European Investment Monitor, it says Greece welcomed 30 FDI projects throughout the year, which is the country’s second-best performance since 2000. The sustained uptick in inbound investment and increased M&A activity has crystallised across several key industries – particularly those where Greece has retained a historical advantage.

‘Greece has become a focal point for green energy, renewable, and liquefied natural gas initiatives.’
Panayotis Bernitsas, Bernitsas Law

Perhaps mostly saliently, following the wake of the Ukraine conflict’s effect on international fuel supplies, the energy sector has experienced a hive of activity across both renewable and conventional energy sources. Panayotis Bernitsas, the managing partner of Bernitsas Law, says ‘Greece has become a focal point for green energy, renewable, and liquefied natural gas initiatives’.

Italian energy provider, Italgas, acquired 100% of Greek state-owned gas distribution company DEPA in one of the most significant privatisation transactions in Greek history. The deal is thought to be worth more than €733m and closed in September 2022. Elsewhere, under advisory services provided by Bernitsas Law to Gastrade, the Alexandroupolis FSRU floating liquefied natural gas terminal officially commenced operations after securing financing in 2022. This development is expected to ease pressures regarding gas availability, enhance energy security, and hold strategic significance for both Greece and the entire south-eastern Europe region at large. The project is one of five major terminals either under construction or planned around the Greek mainland: two within Alexandroupolis in the north, one in central Greece in the region of Volos, and two located near the municipality of Athens. By some estimates, the projects are projected to double the country’s ability to store liquefied natural gas.

Greece has further witnessed sustained growth in the green and renewable energy sector. Dimitris Zepos, managing partner of Zepos & Yannopoulos observes: ‘The market has changed strategically as major players are deciding to heavily invest in renewables. There is major appetite from foreign players for the renewables market, and we see an ongoing hunt for such projects by western European companies specialised in renewables.’

‘A lot of major players, both international and domestic, in the sector see opportunities to develop hotels to try and create units that will attract very high-net-worth individuals. This is both on the islands and on the mainland.’ Cleomenis Yannikas, Dryllerakis & Associates

In November 2022, energy and environment minister Kostas Skrekas announced plans for Greece’s total investment in green energy to eclipse €35bn by 2030, with aims to see renewables constitute an 80% market share by the same date. Current trends are positive in that respect; in January 2023 RWE and PPC announced a total investment of €180m for five photovoltaic projects in western Macedonia. Moreover, in a historic event, the nation was powered entirely by renewable energy for five hours in October 2022, reflecting a rise in demand for renewables to 47.1% of the market within the first ten months of the year.

Elsewhere, the tourism and real estate sectors have enjoyed sustained growth through 2022. Over 27.8 million tourists visited Greece in 2022, with travel receipts eclipsing €17.6bn. Firms report that they attribute the growth to a confluence of factors, not least the perception of Greece as a friendly country, with good security and a high standard of living. Bernitsas draws attention to the impact of the above factors on the digital and gig economies, reporting that ‘Greece tends to be viewed as a “safe haven” for digital nomads’, while ‘Athens has become a pole of attraction for tourism – B&Bs, various hotels and accommodations are doing well as a result. Small boutique hotels are growing in the larger Athens area.’

The tourism industry further captures real estate and property. Senior partner Cleomenis Yannikas at Dryllerakis & Associates states of the change: ‘A lot of major players, both international and domestic, in the sector see opportunities to develop hotels to try and create units that will attract very high-net-worth individuals. This is both on the islands and on the mainland.’

2022 also saw significant opportunity in emerging industries and sectors, chiefly the booming digital economy. Bernitsas, addressing the digital economy boom, suggests the ‘financial sector will see increased activity: fintech, digital economy, cryptocurrency – despite the current negative trends with crypto.’ JP Morgan acquired a 49% stake in Athens-based fintech company and the first Greek unicorn start-up, Viva Wallet. The deal for the ‘cloud-based neobank’ was ratified by Greek regulatory authorities in September 2022 and is worth over $1bn.

Deals such as these plainly represent the appetite from investors for such technologies, and this presents a unique opportunity for firms that position themselves well within the space to handle complex questions of law. Bernitsas suggests ‘a lot of things [in cryptocurrency, blockchain technology and AI] have not been regulated so far, so I would expect that the regulators intervene. Currently, everyone has tried to profit as quickly as possible since there is no specific legislation. It has been up to lawyers to attempt to fill the gap using contract law.

As a result, there is a lot of manoeuvring to be done here!’ The region is famous for highly-trained tech professionals and engineers, and Zepos believes there is yet an untapped well of highly-skilled talent in the space, believing that there are ‘many more start-ups involving Greek individuals that are yet to flourish.’

Looking ahead

Looking forward to the remainder of 2023, Drakopoulos comments that ‘foreign investments may be put on hold a little bit, in anticipation of the elections – to see if things will change or not. We have not seen a slow down so far as the appetite is still there. In theory, we should see a slowdown during the election period.’ Greek elections are currently predicted to be held this Spring, though this is subject to change.

Prime minister Kyriakos Mitsotakis told local newspaper Proto Thema in January 2023 that he had yet to make up his mind, stating ‘from April and onwards, the elections can be held at any time.’

Working practices for the large Greek firms have seen change over the years, as have the unique challenges that all Greek firms face within the marketplace. Bernitsas posits recruitment as a chief consideration: ‘The search for talent is more acute than it would be in other jurisdictions. In the Greek market, it is rare to recruit someone mature or who is an expert in a certain field. We focus on training. Our approach is to find brilliant people, educate them internally and promote them internally.’

Elsewhere, firms are reporting a change in the types of services they are tasked with providing. ‘The kind of transactions we see are changing, as well as what clients are looking for. Clients are becoming increasingly demanding. They want you to be a commercial partner, as well as legal. They ask for strategic help, and advice on what they can do to better place themselves in the market.’

Indeed, it seems the biggest issue facing firms currently is talented lawyers exploring opportunities in other jurisdictions. Zepos remarks: ‘We face a similar issue here in Greece, created and exacerbated by the fact that many qualified professionals have left to work abroad, mostly in places like London and Brussels. This puts a strain on the Greek legal market. It has grown, which contributes to the strain.’

Emphasis is placed on recruitment as a result and is a core issue for Drakopoulos, who speaks of the importance of ‘moving away from the traditional model, to try to be as efficient as possible and keep younger people motivated. We try to speak their language as well – everything is more inclusive now.’ The emphasis on youth and talent is evident in the working practices of the firm; Drakopoulos goes on to underline the significance of ‘empowering and putting younger people in front. Quite often the economy and our clients are comprised of younger entrepreneurs – so we find this can be very helpful!’

‘We invest in people. We are in a people profession. You have to gain trust in one another. We work hard, love what we do and deliver results as a result.’ Theodore Pistiolis, Andersen Legal

Greece’s relative strength lies in its deep pool of professional talent. Theodore Pistiolis, a managing partner at Andersen Legal in Greece, underlines this by saying: ‘We invest in people. We are in a people profession. You have to gain trust in one another. We work hard, love what we do and deliver results as a result.’

Zepos echoes the sentiment, emphasising that ‘one can only excel if the people providing the service are top notch from every point of view.’

Over the past few years, the Greek legal market has demonstrated a resilience and buoyancy in the face of global factors that belies its relatively small size. Fortunes appear to remain strong for a pro-investment and pro-growth Greece that has proven it can compete in the international arena. Cautious optimism is the prevailing attitude among firms who have weathered the storm and positioned themselves advantageously to cope with the demands of shifting trends and emerging sectors. LB

alex.walsh@legal500.com

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Euro Elite’s Southern Europe contingent comprises firms from the highly competitive Israeli and Greek markets, all of which have been required to weather a substantial storm after several years of heightened activity.

Israel has long been known for its enterprising market of tech and life science start-ups, and recent years have seen the industry riding high with premium valuations and US public listings. That has changed in the last 12 months, as inert public markets and global economic conditions saw the well of capital begin to run dry.

Mike Rimon, a corporate partner at Meitar, describes the extent of the slowdown: ‘2022 was quite different from 2021. We were very busy, even if not at the level of 2021. Equity investments in companies in Israel went down from nearly $27bn to approximately $16bn. There were hardly any IPOs of Israeli companies on Wall Street, compared to 21 in 2021. The first quarter, and the second quarter to a lesser extent, were busy, piggybacking on the end of 2021. Then in Q3, and more so in Q4, you started feeling the slowdown more significantly. Even those companies that are well funded with good technology have been cutting their costs and many of them have fired employees.’

The fall in investment has led to an increase in M&A transactions, as domestic companies look to consolidate, and opportunistic buyers exploit lower valuations. A striking example was the $4.4bn union of gaming developers Unity and app creator ironSource. Herzog Fox & Neeman advised Unity, while Meitar represented ironSource.

A less fertile market may also be the reason for the recent movement towards consolidation among law firms. Yigal Arnon and Tadmor Levy announced their union in 2022, to become the country’s third-largest firm. 2023 has already seen Goldfarb Seligman and Gross & Co unveil their tie-up. When that merger is finalised, Israel will have a new largest law firm.

Nevertheless, there are reasons for optimism. The Abraham Accords, which came into effect in 2020, established diplomatic relations between Israel, UAE and Bahrain, and brought expectations of floods of inbound investment from the wealthy neighbouring states. There has been movement in that direction, such as a joint Israel-UAE R&D fund to support Israeli and Emirati tech companies, but there is a feeling that the full benefit of the agreement is yet to be felt.

‘Governments do not cancel projects because there’s a downturn in the economy.’
Mark Phillips, Herzog Fox & Neeman

‘Everyone was very optimistic, expecting that there would suddenly [be] huge amounts of investment. I never thought that would happen straight away because people have to take their time to become familiar with it, find the right opportunities, dip a toe in the water. Over the next couple of years, I think we will see some more interesting things coming up. Developing business relationships in new countries is a marathon, not a sprint,’ says Herzog Fox & Neeman head of project finance, Mark Phillips.

Equally, some areas of the market have continued to prosper. Phillips explains how a slowing economy has not hindered infrastructure investment: ‘Israel is lagging a long way behind where it should be in terms of public transport. Having said that, in the last year, we’ve had three tenders for light rail, two in Tel Aviv, one in Jerusalem. There’s another one going ahead now for light rail in the north of Israel, between Haifa and Nazareth. And then, at some point in the future, there may or may not be a metro project, which is an enormous undertaking.

‘Governments do not cancel projects because there’s a downturn in the economy. In fact, they sometimes see them as a way of helping get out of downturns. Where the downturn does have an impact is interest rates. As interest rates go up, the projects become more expensive.’

Despite recent turbulence, many remain confident that the current period is an aberration, rather than a new normal. Rimon concludes: ‘I am carefully optimistic. If you look back historically, the slowdowns typically did not last more than 12 to 18 months. Now, we’ve been in this slowdown for six to nine months, which means that, if the future will be similar to the past, then we should start feeling that the slowdown is over in the second half of 2023.’

Despite global pressures, the Greek economy maintained its steady 5.9% growth in the first nine months of 2022. The market continues to rebound strongly from the after-effects of the Covid-19 pandemic. Private equity funds are increasingly exploring investment opportunities in Greece and see the country as a potential hub by which to access the entire region.

Tourism and real estate have seen a demonstrable post-pandemic boom. Demand for properties has soared; 2022 saw prices increase 40% against pre-pandemic levels as the global travel industry recovers. The large-scale Hellinikon project continues to be touted by firms as transformative for the region – said to be worth €8bn in total, with high demand for the residential and office space making it appealing to high-end investors.

Following the impact of the conflict in Ukraine on the global fuel supply, the energy sector has seen a flurry of activity across both renewable and traditional sources. ‘Greece is a pole of attraction for green energy, renewable, and liquefied natural gas projects,’ explains Panayotis Bernitsas – managing partner of Bernitsas Law – regarding the current dynamism in the market. Italian energy company, Italgas, acquired 100% of the shares of Greek state-owned gas distribution operator, DEPA Infrastructure, in a significant privatisation deal worth €733m.

Other major projects include the official launch of the Alexandroupolis FSRU floating liquefied natural gas terminal, having closed financing in 2022 – Bernitsas Law provides ongoing advice to Gastrade on the project. There is optimism that the project will aid in alleviating concerns regarding gas supply, while increasing energy security and will be of strategic importance to both Greece and the entire SEE region. Greece also sees continued robust performance for green and renewable energy sources. For five hours in October 2022, the country ran entirely on renewable energy for the first time, following a climb in demand for renewable sources to 47% of the market in the first ten months of the year. LB

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As with many global sub-regions, southern and eastern Europe (SEE) is slowly emerging from a period of stark economic slowdown as a result of the Covid-19 pandemic, with regional economies affected in a variety of ways. This ranged from tourism-reliant nations such as Croatia and Greece that faced an unprecedented plunge during 2020, relying on EU relief and revived capital spending intervening to restore growth, to Romania, whose resource-rich economy suffered from a decline in industrial production, only to recover during Q3 2020 after foreign trade and investment – particularly from Germany – resumed in earnest.

Although granular policy details have differed, governments have intervened to prevent the spread of Covid-19, while also seeking to protect key economic sectors and also balancing consumer demands and differing political situations. A number of SEE countries faced elections during the pandemic, a situation that has broadly favoured incumbents. Both the Romanian and Bulgarian governments returned, albeit facing a significant loss of support and ongoing questions over their futures, while control of the Cypriot House of Representatives shifted to the conservative opposition.

Economic growth is expected to return to the region broadly, though central banks anticipate increased inflation, and in some areas have acted to hike interest rates, which may affect consumer demand and household spending. Similarly, anticipated tapering of fiscal support measures may see labour markets react more sluggishly than the wider economy – particularly capital markets, M&A, and natural resources transactions.

Naturally, the picture differs across jurisdictions, with legal practitioners across SEE reporting varying levels of optimism across a number of market sectors, and positive signs regarding transactional work has been reported. Law firms have sought to react to these trends and changes, further coloured in contrast to previous economic downturns by a need to look inwardly and change working practices in the light of the pandemic.

An analysis of five SEE jurisdictions, alongside that of nearby Ukraine, which is increasingly integrated with Europe, reveals the state of the region’s legal markets, economic outlooks, and expectations for a post-pandemic future.

Sector analysis

Bulgaria – M&A and energy boom

Croatia – ups and downs

Cyprus – work in progress

Greece – the long road back

Romania – bounceback

Ukraine – green shoots and uncertainty

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Having enjoyed steady economic growth following its accession to the European Union (EU) in 2013, Croatia saw an abrupt halt to its development in 2020. With a projected 10% drop in GDP, the depth of the economic trough appears similar to that of the 2008 financial crisis, though optimism remains that this downturn will be shorter as mitigatory factors, particularly Covid vaccines, begin to make themselves felt.

Aside from the global economic impact faced by most countries as a result of the pandemic, Croatia was perhaps most affected by the affect on the tourism sector, which naturally suffered considerably. However, continued progress on vaccinations and the creation of the EU’s Green Pass have bolstered expectations the sector will soon recover (although a similar pre-vaccine reopening of the tourist economy last summer led to a dramatic surge in infections).

While a relatively small jurisdiction, the Croatian legal market is large, with a high concentration of mid-sized firms, many of which are evolutions of family-run firms.

The nature of firm structures, and a desire among younger practitioners for advancement, has led to a growing trend of spin-off firms. Long-term corporate relationships are a key driver of demand for legal services in Croatia with firms generally providing a full-service, encompassing litigation and advisory work to clients.

Notable recent spinoffs include Law Office Žarkovic and Batarelo Dvojkovic Vuchetich Law Firm, which have both performed well in the market and are seen as increasingly viable alternatives to the more well-established, heavyweight full-service firms including Divjak Topić Bahtijarević & Krka, Žurić i Partneri and Šavoric & Partners.

Given the comparatively small size of the legal market and the relative paucity of high-profile, sophisticated deals, lawyers tend to be, broadly speaking, either transactional or litigation lawyers, and do not have the same level of specialisation of those in larger European markets.

‘Despite the lockdown it was the tenth year in a row that we grew both in revenues and in manpower. In difficult times, quality rises to the top.’ Mojmir Ostermann, Ostermann

Despite the downturn, there here has still been plenty of work in the market for firms. Damir Topić, senior partner at Divjak, Topić, Bahtijarević & Krka, notes: ‘The main drivers of activity were M&A deals in the IT sector, which became enormously popular and important during lockdown.’ Mojmir Ostermann of Ostermann & Partners cites employment and disputes as growth areas – ‘employment due to Covid; disputes for unrelated reasons’, and also identifies shareholder issues as a key reason for the growth in disputes. Ostermann also feels confident that well-hedged firms have not suffered unduly, pointing out that: ‘Despite the lockdown it was the tenth year in a row that we grew both in revenues and in manpower. In difficult times, quality rises to the top.’

A spokesperson for domestic firm Šavorić & Partners highlights IT and corporate as key areas of development: ‘We suspect that interest in the IT field has been driven by targets developing software that is internationally recognised and globally scalable. So we expect this to continue to fuel the practice’s pipeline in the near future as well.’

On merger activity, they continue: ‘One major story is the investment by One Equity Partners in Croatia’s Infobip software company. As a result of the deal, Infobip became the country’s first unicorn.’

‘All international firms work closely with local firms,’ Ostermann explains, with regards to the role of international players within the Croatian market. ‘Our market is too small to be bothered by the big firms.’ Topić agrees, suggesting ‘international firms are mostly using local firms. Regional firms (mostly Austrian) are doing well, but still not playing in the big league’. Topić does not see much prospect for international firms to progress, arguing that ‘the market will remain an independent firms’ market for a long time due to its small size’.

While most are optimistic about the legal market’s future, Topić sounds a cautionary note: ‘In the event of another downturn caused by the pandemic, we may see firms cease to exist for the first time, primarily those that focus on domestic clients.’ However, given the smaller, more independent nature of Croatian firms, Topić argues that ‘the majority will remain as they were, perhaps with smaller headcounts’. LB

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Romania has seen buoyant growth in recent years, with its economy upgraded to ‘emerging market’ by FTSE Russell in 2019. Gabriel Zbârcea, managing partner at Ţuca Zbârcea & Asociaţii, explains: ‘Until the coronavirus outbreak, business was flourishing in Romania: 26% more deals in 2019 as compared to 2018 with a value of €5bn; also real estate investments went past the €1bn line in 2019, standing 7% higher than in 2018.’

‘2020 has been an interesting year financially,’ says Răzvan Stoicescu, deputy managing partner of Muşat & Asociaţii. ‘We did see a slowdown during Q2 of 2020, but things picked up during the second half of the year and have been on a positive trend. However, since neither us nor our clients have gone through a situation of such a magnitude before, the process was not without challenges. For example, switching abruptly from what was essentially a direct contact way of working for our profession, to virtual meetings, unpredictable schedules and remote work was taxing even if ultimately manageable.’

Despite a Covid-related slowdown, optimism remains of a swift return to growth. Investment from major trading partners such as Germany, which has shown significant industrial demand, is anticipated to contribute to an upswing in imports and boost domestic production. The recent sale of CEZ’s Romanian assets to Macquarie Infrastructure and Real Assets was the largest deal in Croatia since 2008, reflecting continued confidence among investors.

‘2020 has been an interesting year financially. We did see a slowdown during Q2 of 2020, but things picked up during the second half of the year and have been on a positive trend.’ Răzvan Stoicescu, Muşat & Asociaţii

Key areas of focus for commercial lawyers include the country’s real estate sector, particularly on the residential and agribusiness side, and a rapidly-developing IT industry. Administrative law disputes provide a steady flow of work for litigators, with Covid-related procurement litigation also expected to grow. ‘Work levels are still high, with a significant number of important deals already in the pipeline,’ says Zbârcea. ‘The coronavirus pandemic somehow caught us better prepared as compared to the 2008 downturn. Notwithstanding this, competition on projects and people/talent in the legal sector has significantly increased over the past year and a half, meaning that we need to remain alert and grasp the opportunities emerging from the crisis.’

Stoicescu identifies other key areas arising out of the pandemic: ‘Employment, GDPR and technology lawyers saw a surge in enquiries from both employers and employees since the start of the coronavirus pandemic. This was fuelled by the need for alignment with work-from-home rules and other pandemic-related policies. State aid and pharma were also strong contenders in light of the support schemes and health measures implemented by the government for pandemic purposes.’

In legal market terms, the jurisdiction is dominated by major independents, like Filip & Company, Ţuca Zbârcea and Nestor Nestor Diculescu Kingston Petersen, as well as international firms such as Allen & Overy, CMS and Schoenherr, while a number of smaller, more agile spin-off firms have created some fractures. ‘International firms are present in the Romanian market, through local offices or associations with local law firms, but their presence is moderate,’ explains Stoicescu, adding that ‘we have built relationships with a substantial number of international law firms which now reach out to us for all their local work. With such arrangements in place there is generally little justification for international firms to set up shop locally.’

Despite reports of wage cuts and redundancies among some larger firms, most key senior lawyers remain in place and clients continue to have a broad range of choice in a highly competitive ecosystem that is somewhat of a buyers’ market for legal services. Stoicescu suggests that ‘uncertainty will remain the biggest enemy throughout this pandemic as it may spark further social and economic unrest. Locally, recent market data shows the Romanian economy is expected to grow in 2021. This is generally a positive sign for businesses and, by consequence, for us lawyers.’

His optimism is matched by Zbârcea, who says: ‘We feel reasonably confident about the business outlook, apart from the recurring work-related safety and health concerns. We need to help our clients navigate the increasingly complex regulatory and business landscape.’ LB

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Ukraine has broadly seen an improvement in its economic outlook since the 2019 election of comedian and actor Volodymyr Zelenskiy to the presidency. After years of turmoil, culminating in the 2014 defenestration of pro-Russian president Viktor Yanukovych and the Russian invasion of the Crimea, Ukraine has deepened its ties with the EU, adopting reforms that closely map those of European legislation. This has encouraged foreign investors, while legislative reform continues apace, with a new capital markets law coming into effect in 2020 that implemented the provisions of key EU law, including MiFID II, MiFIR, and CRD IV. There are also ‘grandiose governmental plans for the privatisation of state property and large-scale infrastructure projects’, in the words of Armen Khachaturyan, senior partner at major domestic firm Asters, while the legalisation of the gambling industry in July 2021 is also driving client activity.

Ukraine frequently competes with Moldova as the poorest country in Europe, despite its huge agricultural exports, though this is partly due to a lack of transparency in the economy, in which much economic activity goes unreported. Since 2014, the National Bank of Ukraine (NBU) has closed a huge percentage of the country’s commercial banks, partly to clamp down on corruption and money laundering, but state control of banks is part of the reason why inflation and interest rates remain high.

In terms of key practice areas, Khachaturyan says: ‘As the business complications caused by Covid-19 expectedly led to a larger number of commercial disputes, litigation and arbitration practices became visibly busier. However, their work was subject to serious challenges due to the pandemic’s restrictions. The economic crises spared sectors such as IT and renewable energy and these practices gained momentum. Ukraine has recently introduced new tax legislation implementing anti-base erosion and profit shifting rules and further cross-border tax transparency, which put tax practices in high demand.’

Another key area for legal work is white-collar crime, an area woven into the wider developments within the region. Since the state gained its independence more than 20 years ago, corruption has remained a significant issue in politics, in business and in the judiciary. There have been recent moves to reappoint judges and to empower and reinvigorate the anti-corruption bureau, though reports of how successful this has been are mixed. The result, however, is that some specialist law firms focus on this area, and it has become an increasingly important practice for some.

There is also a growing focus on international trade and EU issues, as the country moves slowly and steadily towards EU accession. This remains a contested topic, not least because of the corruption issues and mixed sentiment among the populace. Ethnic Russians are more aligned with the east but much of the country is keen to align with the west.

‘The Ukrainian legal market remains dominated by local players. We have established strong working relations with a large number of international law firms.’ Armen Khachaturyan, Asters

On that note, the conflict in the eastern region continues, and there are contested regions around Donbass, with unrest happening that has been accepted as part of the background noise in a country with a turbulent past. It does, however, show the problems that the country embodies – caught between east and west.

In the legal market, a number of domestic full-service firms dominate, including Asters, the largest by headcount, and other players such as Avellum, while many international firms such as Baker McKenzie, DLA Piper, and CMS also operate in Kyiv, alongside strong regional firms such as Kinstellar. ‘The Ukrainian legal market continues to be dominated by the local players,’ Khachaturyan explains, ‘international law firms without their own offices in Ukraine usually team up predominantly with local law firms for any transactional work or otherwise when they seek advice under Ukrainian law. Asters has established strong working relations with a large number of international law firms.’ This trend towards cross-border work being handled by local firms is likely to continue, though international firms will remain active within the market.

Firms with strong ties to Russia are also finding it hard to maintain a market position. A good example is Magisters, which merged into Russian firm Egorov Puginsky Afanasiev & Partners a decade ago. This firm maintained its position in the market for a while after the Maidan revolution, but in the last few years it has drastically cut back its position in Ukraine. New law firms are regularly formed and re-formed, many being boutique firms in areas such as white-collar crime, disputes, tax. The proliferation of such firms is one driver of merger activity. LB

Return to ‘Southern and Eastern Europe: A long recovery’

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Despite a Covid-induced 8.2% contraction in GDP last year, compounding over a decade of economic decline, Greece serves as an unexpected source of optimism within the southern and eastern Europe region. Despite losing its title as the largest regional economy to Romania in recent years, it is set for a semi-swift bounce back, with the EU recently forecasting growth of 4.3% for 2021.

Supporting the buoyancy is the fact that, throughout its many years of economic torment, Greece has reformed its economy into a sustainable one which, in the words of Bernitsas Law managing partner Panayotis Bernitsas, is a ‘safe and welcome option for international investment’. Bernitsas adds that his firm has been heavily involved in a number of ‘legislative changes aimed at cutting back the red tape’ and ‘creating a more business-friendly environment’.

Renewed confidence in the restructured economy was evident in June when Greece secured its first 30-year bond deal since 2008 – the start of its financial crisis – raking in an impressive €2.5bn. The overall mood is a realisation that while Covid may have created an unavoidable – and presumably temporary – setback, all of the brickwork has been laid for a more fruitful and prosperous economy. Indeed, Microsoft announced plans in the autumn of 2020 to build three data centres in Athens, a project projected to contribute over €1bn to the local economy. Naturally, such significant investment from multinationals has been hard to come by during recent years and its return has been welcomed throughout the legal market.

Allured by the long-term prospects presented by Greece, high-end transactional work has understandably remained steadfast in the face of the pandemic. According to Pavlos Masouros, managing partner of corporate transaction specialists Masouros & Partners, clients are ‘betting that recovery will come sooner rather than later and they wish to make sure they are well positioned when it does’.

‘Our firm fared well during the Covid-19 crisis owing to its expertise in complex transactions.’ Alexander Metallinos and Catherine Karatzas, Karatzas & Partners

Such a mentality has understandably rendered the larger Greek firms as particularly well placed to weather the storm. Masouros reports a ‘stellar year for 2020’ and likewise Bernitsas’ firm was ‘if anything, busier than ever, with greater interest from international funds and foreign investors who sought advice on large-scale transactions’. Alexander Metallinos and Catherine Karatzas, both senior names at Karatzas & Partners, also report that their firm, a market leader in a number of practice areas, has ‘fared well during the Covid-19 crisis owing to its expertise in complex transactions’.

Lying at the crossroads of Europe, Asia and Africa, Greece has often been integral to major international energy projects, most recently the Trans Adriatic Pipeline. That said, its energy sector has been even more buoyant of late, not least due to the privatisation of DEPA, the nation’s natural gas supplier. The matter has, either directly or indirectly, generated instructions for dozens of firms, with six investors from countries as diverse as China and the Czech Republic currently shortlisted. The organisation is currently jointly owned by the Greek State and Hellenic Petroleum in a 65/35% split.

Evidently, the demand for cutting-edge transactional expertise has remained at a premium throughout the pandemic though the repercussions of such a significant decline in GDP have understandably been felt elsewhere. ‘Smaller firms are mostly suffering,’ according to Metallinos and Karatzas, a trend also noted by Bernitsas who says that ‘the closure of the courts’ had been significantly detrimental to more modestly-proportioned outfits.

An even more prominent victim of the pandemic has of course been Greece’s tourism industry, which receded to just 7.4 million visitors in 2020, down from 30 million in 2019. Tourism has historically contributed around a fifth of the nation’s GDP and its decline is the main reason why, despite having a relatively modest Covid case and death toll compared to larger European nations, the country has endured such a considerable decline economically.

Fortunately, there are no real doubts about the long-term prosperity of the tourism market. Greece’s picturesque Mediterranean beaches and plethora of historical sites have long made it one of Europe’s premier destinations. Bernitsas notes that while the market may no longer be ‘flourishing’, as was the case prior to the pandemic, ‘hotels have continued to change hands and there is a continuous international presence in the sector’.

Needless to say, the most prominent source of optimism for Greece’s tourism sector is the ongoing Hellinikon Project which will transform the skyline at Athens’ former Hellinikon International Airport. The scheme is one of Europe’s largest urban development projects, weighing in at a colossal €8bn, and will contribute an estimated 2.4% to the nation’s annual GDP. The project will consist of luxury homes, a marina, hotels and a casino and continues to be a significant generator of work for local firms across several practice areas.

Greece has clearly taken a stumble on its long road back to reclaiming its title as the regional powerhouse, though its long-term prospects look their brightest in well over a decade. Masouros even speculates that ‘more international law firms will position themselves in a post-pandemic Greek market’. Currently the overall market is dominated by local, independent firms outside of the shipping sector, which is largely the sole stomping ground of the handful of multinational law firms active in the nation. LB

Return to ‘Southern and Eastern Europe: A long recovery’

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Cyprus, a divided island nation, faces an uncertain future on the geopolitical front. The northern region of the country remains occupied by neighbouring Turkey and recent efforts for reunification between the separated Greek and Turkish Cypriot communities have reached a bitter standstill.

Among all the uncertainty, which has arguably become the status quo after 47 years, the country has undergone steady economic growth and enjoys one of the highest GDP per capita rates in the southern and eastern Europe region. A 5.1% contraction in GDP was experienced during 2020 though an almost instant recovery is forecast for 2021 with The European Commission predicting growth of 4.2%.

In terms of economic decline and its death toll, Cyprus has undeniably faired relatively well compared to other SEE nations and the broader continent. Its e-commerce, restructuring, fintech and renewable energy markets have fortunately remained steadfast, or even grown, throughout the pandemic.

‘Covid has brought forward a range of challenges but also opportunities for most clients, especially in transactional work.’
Stavros Pavlou, Patrikios Pavlou & Associates

The government continues to deliberately target overseas investment though was recently forced to scrap its controversial Golden Visa scheme, which rewarded passports for real estate investment and raked in over €10.8bn, in the face of EU pressure and widespread examples of abuse.

Enduring the pandemic in the city of Limassol, a hub for international property investment, has been Stavros Pavlou, managing partner of Patrikios Pavlou & Associates who reports a mixed experience over the past year, stating that Covid has ‘brought forward a range of challenges but also opportunities for most clients, especially in transactional work’.

Starting with the positives, the firm has ‘seen the workload expand to the extent that it became necessary to add more expertise to the team’ and even ‘ended up increasing profits overall’. Such a feat would have seemed almost impossible in March of 2020 and stemmed from the economic benefits of remote working, an abundance of ‘enforcement of pledge and recovery of asset’ instructions from major international banks, as well as a large volume of deals for ‘larger alliances and enterprises that are identifying good opportunities for acquisitions at better prices’.

As for the aforementioned challenges, Pavlou elaborates that ‘several projects were placed on hold’, difficulties were encountered due to not ‘being able to travel to meet clients or attend conferences’ and that, unsurprisingly, ‘the hospitality and retail industries have been battered by the pandemic’. As with Greece and Croatia, Cyprus is yet another country in the region afforded the luxury of a Mediterranean coast though its tourism industry was hit particularly hard during 2020, declining in revenue by as much as 84%.

Perhaps the most prominent takeaway has been the inability of the Cypriot courts, perceived as antiquated due to their ‘operation on the basis of physical presence and paper records’, to adapt to the pandemic. Indeed, from 16 March 2020 until 30 April 2020, a decision was made by the Supreme Court to largely bring the system to a standstill outside of a handful of exemptions such as urgent interim order applications and criminal proceedings in which the accused remained in police custody. The experience has led Pavlou to conclude that the ‘system needs major reforms in terms of digitisation and remote attendance’.

Fortunately, the inefficiencies are widely recognised with ‘great efforts’ being made to modernise. The adoption of technology for remote working and conferencing has evidently been a trend of the global legal market and one of the few positives to emerge from a very difficult 2020.

Cyprus appears to be an especially resonant example of this with Pavlou even predicting that ‘in the long-run, the country will benefit from reforms ushered in by Covid-19 which have simplified and digitalised previously lengthy procedures’ and that ‘independent firms will need to evolve and demonstrate flexibility to advanced technologies in the public sector’. LB

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Bulgaria has, to say the least, performed commendably at shielding its economy from the significant disruption seen in many other European markets. GDP sank 4.2% in 2020, one of the lowest figures in the EU, and was partly supported by an extensive wage subsidy scheme that saw the government cover 60% of wages for employees who would otherwise have been made redundant.

Unsurprisingly, the relatively stable economic climate has allowed larger law firms, both international and local, to continue undisrupted throughout the pandemic period. Veronika Hadjieva of Kambourov & Partners reports that ‘2020 was arguably one of the strongest years the firm has ever had’ as it ‘managed to complete a large number of M&A, even some that were initially put on hold or pending’.

As is the case throughout most of the region, the Bulgarian market is dominated by local, independent firms such as Kambourov & Partners. One such exception to the rule is CMS, which is the largest international law firm in the nation, with over 40 lawyers, having opened its Sofia office in 2005. Ivan Gergov, a senior associate at the firm, shares a similar experience to Hadjieva, reporting that ‘the last financial year was on par with our performances in the past’.

In terms of drivers, the nation’s goal to align itself with the EU’s green energy targets by adding 2.6GW of renewable capacity by 2030, has been a considerable generator of activity. Hadjieva points to the energy industry as one of the nation’s ‘most dynamic sectors, with a particular uptick in renewables’, a sentiment shared by Gergov, who notes that ‘multiple energy projects have come to fruition, the majority of which related to green energy sources’.

‘2020 was arguably one of the strongest years the firm has ever had.’ Veronika Hadjieva, Kambourov & Partners

Evidence of the vibrancy of the sector, as well as the inward investment it is garnering, came from CMS as it advised Malta-based ACF Renewable Energy on the sale of its 60.4 MWp photovoltaic site, known as The Karadzhalovo Power Plant, to Energy Development, Austria’s largest owner and operator of PV plants. The site is of enormous magnitude, generating 85.56 GWh of carbon-neutral energy in 2019 and consists of 214,000 solar modules, powering 27,000 households. The transaction, which is the nation’s largest ever for an operational renewable energy project, is emblematic of the market’s appetite for deals within the shadow of Covid, eventually closing after 18 months of negotiations due to pandemic induced delays.

Also of note, according to Hadjieva, has been the ‘regional expansion of major players, as well as the European expansion of international companies’ while Gergov also highlighted a rise in M&A activity stemming from ‘cheap debt and large cash deposits, accumulated by institutional investors and private equity funds alike’.

In another market standout and testament to Hadjieva’s regional expansion comments was her firm’s advising of United Group, an SEE telecoms provider, in its acquisition of Bulgaria’s Nova Broadcasting Group, the nation’s largest multi-platform media company. The acquired company operates ten TV channels, four radio stations and several websites, most notably NetInfo which is estimated to reach 80% of the Bulgarian population each month. While the exact figure of the acquisition is undisclosed, local media have reported that it weighed in at a hefty €300m, a figure which, combined with the profile of the client, clearly showcases that market-disrupting deals remained steadfast throughout the pandemic period.

Needless to say, given the nation’s resilience through the worst of the pandemic, both lawyers were fairly bullish on the next 12 months, for both their firms and the wider legal sector. Hadjieva reports that ‘the market is quite robust and stable’ and that ‘while the pandemic is still a test of adaptability and survival, our performance in 2020 means we can safely say that we are well-positioned to tackle any adversities and reinvent ourselves if needed’.

‘Established law firms are well positioned for a continued pandemic on the basis of established relationships with long-lasting clients.’ Ivan Gergov, CMS

As for Gergov, he warns that another lockdown would ‘cool off investors and lead to a decline in transactional activity’ though forecast that ‘the established law firms are well positioned for a continued pandemic on the basis of established relationships with long-lasting clients’.

In the longer-term, he even speculates that the biggest market disruptor will not be Covid but rather the repositioning and ‘inevitable consolidation of independent law firms’ as they look to position themselves for an influx of international investment through ‘boosting their headcounts which will attract even more referral work from abroad’. LB

Return to ‘Southern and Eastern Europe: A long recovery’

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