You're reading: Lawyers follow companies that do business in nation’s regions

Business outside Ukraine's capital demanding top-notch local legal services.

Ukraine’s government might still be centralized in a top-down hierarchy, but its economy is well along the path of decentralization. And although large conglomerates like System Capital Management, or foreign commercial firms need offices in Kyiv just to be closer to the center of power, other foreign investors are taking a different path.

They are choosing regional bases outside the capital and demanding top-notch local legal services to follow them.

When Progency Solar general manager William Brady moved production from China to Lviv Oblast in October 2010, he said he needed to be serviced by a large international law firm with knowledge of American and local law.

“I travel to Kyiv maybe once every two weeks so it’s more convenient to receive legal assistance locally in Lviv,” said Brady, an American.

The move, Brady said, cut shipping costs of solar panels to his main client base in Europe.

For Europeans or companies whose clients are based in the EU, Lviv is the natural choice being only 60 kilometers from the Polish border.

Business association leaders in the region and Kyiv, say the environment is more conducive for business than in other regions, including Kyiv, because there’s less corruption, and the people are more open and have a can-do attitude.

“There’s a different style in western Ukraine, people talk more and address problems [with the authorities], and they are creative who have an attitude that they could make something out of nothing,” said Anna Derevyanko, executive director of the European Business Association whose Lviv branch has 77 company members, second only to Kyiv.

|Anna Derevyanko, executive director of the European Business Association

Forbes Ukraine magazine’s June issue named Lviv one of the top five cities for doing business. It ranked western Ukraine’s largest city number one for human capital, infrastructure and comfort.

This is partly why, “regional businesses are more often requesting that a lawyer be present on-site and not travel from Kyiv, Moscow or Warsaw,” said Markian Malskyy, who heads the western Ukrainian branch of Arzinger law firm.

Markian Malskyy, head of Arzinger’s western Ukraine branch office

A Lviv native who was educated in Sweden and Switzerland and worked in Paris, said that Arzinger had only five clients when it opened an office in Lviv five years ago.

“Today we have 200 clients and almost 10 lawyers,” said Malskyy.

There are some 50 Danish companies operating in western Ukraine out of a total 160 natiowide, said Lars Vestjberg, chairman of the Danish Business Association headquartered in Lviv. The majority of Danish businesses in the region are in textiles and footwear manufacturing, agriculture and metals processing.

“We need local legal expertise, companies like [global auditing firms] KPMG, BDO and Arzinger law firm are in Lviv,” said Vestjberg.

Other foreign companies with offices or bases in western Ukraine include AVE Energie, an Austrian energy company, German abrasive materials producer Klingspor, German Leoni wiring systems manufacturer, and Nexans, a French wiring cable maker.

So by having a local presence “we reward serious clients, you need certain experience to work in a region, to know the local peculiarities – the law and procedures might be the same nationwide but different in practice locally,” said Arzinger’s Malskyy.

In turn, the Arzinger partner said, lawyers become part of the business community and cultivate closer client relationships and are able to offer better assistance.

Mikhail Ilyashev, managing partner of Ilyashev & Partners said he decided to open an office in Kharkiv in 1998 because their clients did a lot of business there and it was difficult to service them from Kyiv.

“They demanded that a lawyer be nearby,” said Ilyashev who employs two lawyers in Kharkiv.
Ilyashev said not only does a local presence save money for clients, it allows their Kharkiv office to service other eastern cities like Donetsk and Dnipropetrovsk.

Other Kyiv law firms with regional offices include Jurvnesh service with offices in Ternopil and Sevastopol, and Dovhan & Partners with offices in Lviv and Dnipropetrovsk.

But the major international law firms like Baker & McKenzie, Salans, Clifford Chance and CMS Cameron McKenna have yet to follow suit.

“Unfortunately, I cannot confirm this trend,” said Lina Nemchenko, a Baker & McKenzie partner. “Major international law firms as well as the key local ones still operate from Kyiv only. Not only are lawyers mobile these days, with all the modern technologies and gadgets, lawyers are available and can be accessible literally 24/7.”

Lina Nemchenko, partner at the Ukrainian practice of Baker & McKenzie.

Irina Batmanova, business development and marketing manager for Salans said the trend of opening regional offices only applies to the Big Four accounting and audit firms, not to law firms.
“International law firms still send their lawyers on business trips, some engage local firms with very careful selection, but large-scale international transactions call for coordination in Kyiv,” said Batmanova.
Noerr local partner and co-manager Alexander Weigelt partly agrees with the emerging trend.

“Having a limited budget for legal expenses is definitely a driver behind some requests for local lawyers, but I don’t see a trend here that could be generalized,” said Weigelt.

Kyiv Post staff writer Mark Rachkevych can be reached

at [email protected].