The Chambers Europe team provide an insight into the legal market in Ukraine and share the thoughts of several Ukrainian law firms who Jurgita Meskauskaite and Abigail Ceban Keane interviewed in April and September 2022.
Ukraine's legal market transformed by the war
Ukraine’s legal market has been transformed by the war. Lawyers, predominantly women, moved abroad and found jobs in Europe and beyond as secondees and even partners at foreign law firms.
Those who continued to work on Ukrainian matters have seen their work transformed in many ways, from looking at how to make Russia legally accountable and freeze its assets abroad to the grim work of gathering evidence on the ground in Ukraine.
Our approach at Chambers and Partners follows the market. We aimed to reflect the change while also recognising that we can’t use our traditional research methods. For example, we felt that it was inappropriate to contact referees during a time of war. It was also difficult to rank law firms by work as much of it was done before the invasion. Additionally, many law firms focused their attempts on pro-bono legal work and ensuring the safety of their staff.
We therefore limited our rankings to the five most active areas: M&A, disputes, employment, competition and IP. We decided to use spotlight ranking to highlight those law firms still active in Ukraine and did not rank anyone who has not been ranked before February 2022. Law firms were also asked to provide two examples of the pro-bono work they are most proud of and we published that in our editorials. Previously ranked Ukrainian lawyers who now work in different jurisdictions have been highlighted for their Ukrainian expertise as foreign experts in the respective jurisdictions.
While the situation is highly changeable, the interviews offer interesting and important insights. We are grateful to all who participated and provided us with insight into a very difficult time.
Ukraine’s legal market at the time of war
Many went, many stayed, and some returned
“We now have our people, the majority of them lawyers, in 22 countries,” said Timur Bondaryev, the managing partner of Arzinger, in an interview with Chambers & Partners in September 2022. In February 2023 he had interesting news to add: “Over the last months we have welcomed four people who came back to Ukraine and rejoined the firm. Why? It’s very simple. The majority of those who left Ukraine immediately following the invasion were ladies. Even if we did our best to help them with jobs abroad, the majority of them still didn’t feel comfortable, since their boyfriends, fathers, brothers, husbands and elderly parents remained in Ukraine.”
The first reaction to the Russian attack was to flee to safety abroad and many Ukrainian law firms managed to negotiate roles for their employees at partner law firms or with clients as secondees. This included paying a salary to the secondees and therefore assisting the Ukrainian law firms’ balance sheet.
As months passed by, some of the lawyers joined their new law firms. Many Ukrainian law firms maintain that they retain a close relationship with those working abroad, sometimes comparing the situation to COVID lockdowns when people worked remotely. However, it’s unclear how much of the work from abroad was done for Ukrainian law firms that were facing a complete change in their workloads.
“Information on secondees is limited, not many firms are transparent about it,” Mr Bondaryev said in September 2022.
“Some of our lawyers found work in the West, and after the victory we will decide whether we will hire them. But I hope we will. We lost around 20% of our personnel because they stayed abroad, but the majority of staff are in Ukraine.”
The law firm promotes the return to Ukraine, with Mikhail Ilyashev saying:
“I encourage people to come back. When you are here you keep the country alive: you go to a restaurant, a fitness club, you get taxis – you participate passively in the defence. You support the country.”
Transactional work across Ukraine has gone
Most transactional work disappeared but there has been corporate work as well as work related to people and business relocations and the establishment of charitable organisations in Ukraine, wider Europe and the US.
“The economy is subordinated to the war, the bread-winner practices are not there. Transactions, CM, investigations. Many things are on hold, there is some general commercial work still,” said Mr Bondaryev in September 2022.
More recently, in February 2023 he added: “The strategy of the main market players remains largely the same: to ‘dive through it’ until the victory. Sanctions, white-collar & business crime, restructuring and damages work starts coming in and it looks like these particular areas will be growing dramatically and will be keeping us most busy in the nearest future.”
Serhiy Chorny, co-managing partner of the Kyiv office of Baker McKenzie and head of its banking and finance and capital markets practice agreed in September 2022:
“First there was a shock, people were taking care of their staff safety, but now many companies have commenced restructuring their finance arrangements and general business operations. Finance, debt restructuring, and corporate lawyers receive a reasonable workload as a result.”
He continues: “Various creditor groups show different attitudes to the restructuring requests of Ukrainian debtors. International creditors are generally very reasonable. Ukraine got two years of debt postponement. Private companies are only starting serious restructuring talks. There are discussions of postponing of maturity for three or five years combined with a freeze or decrease of interest rates for the martial law period.”
Contentious work is transformed
Disputes work took a different turn with the start of the war. With courts on hold for a few months and international arbitration proceedings involving Ukraine postponed, there was a stop. Still, new work appeared. Now, lawyers are busy working out how to make Russia legally responsible for the losses. Currently, there is no obvious international venue that could take on the claims for damages and the loss of life.
“Russia and its sanctioned oligarchs have assets frozen in some countries and these assets are now expected to be released in favour of Ukraine based on the due legal process,” says Armen Khachaturyan, senior partner at Asters, continuing: “Calculation of damages is important. While the right procedure and forum are yet to be determined, we collect and assess evidence for future trials.”
The most likely venue at the moment is the ECHR; however, it does not currently have a procedure that would fit Russia’s case.
“ECHR will have to develop a set of rules to consider the case against Russia. It's an untested field. In terms of evidence of damage gathering, the reality is that there isn't that much one can do on the legal side. We held a seminar on that, on evidence gathering and quantification of damages from Russian aggression. The difficulty is that there is no mechanism unless it's the ECHR, at least, as of today. We have made several applications to the ECHR, we filed claims against Russia on behalf of our clients. Our clients are also considering bilateral investment treaty claims in any event,” says Kostiantyn Likarchuk, senior partner and head of the disputes practice at Avellum.
Courts in different jurisdictions are an option and the lawyers are busy getting the cases ready.
“We are preparing cases against oligarchs that are providing the Russian army with petrol and food, we will try to prove that they are financing terrorism and aggression. We have different strategies; we provide different options to the client. They will decide if they go to the ECHR or Ukrainian court against Russia, or Ukrainian courts against a Russian citizen or company, or an English court against the Russian state or an oligarch – there are many options,” says Mikhail Ilyashev.
However, client choices do have a clear recommended direction.
“The better court is where you can find the assets – for example, if you can find assets in the UK, you should go to the UK court,” Mikhail Ilyashev confirms.
Still, the question of collecting evidence admissible in foreign courts remains difficult.
“When you go to court in London or New York, Russia will oppose. So, you have to follow a procedure. Collection of evidence should be done properly,” says Mikhail Ilyashev. He continues: “The evidence needs to be collected through criminal police, although there are other options. You need forensic examiners and all of them are very busy now. Now every day they have more work than in a whole decade before.”
Commercial courts resumed activity in May 2022 and remain operational.
“All courts up to the Supreme Court work, albeit with frequent delays caused by electricity shortages and air alerts,” confirms Armen Khachaturyan of Asters.
“It’s more difficult if you speak of the frontline courts that had to be relocated. Or law enforcement in remote places in Ukraine. Otherwise, the legal system is functioning, and people are litigating,” adds Kostiantyn Likarchuk.
Employment has a different focus across the Ukrainian legal market
Employment practices at law firms remained active but predominantly assisted with different tasks than before the invasion.
“Employment practitioners are busy. There are staff relocations, remuneration changes, redundancies, management contract alterations, as well as martial law and military conscription matters. All of this ensures a constant flow of work to our employment practice,” confirms Serhiy Chorny of Baker McKenzie.
Charities-based work was also a strong focus over the last year.
“Charitable organisations often start to operate with no legal presence. At some point, they realise they need to deal with labour compliance, pay salaries locally and respect other formalities. We are happy to offer special terms to them, as they are doing an important job helping Ukraine in these difficult times,” says Volodymyr Sayenko, partner at Sayenko Kharenko.
There is also a type of employment work that appeared with the conflict.
“It's not that easy to lose Russian citizenship,” says Mikhail Ilyashev, further explaining: “Some clients filed an application two years ago and still can't get their Russian citizenship cancelled. They support the Ukrainian army, they transfer money to the army, but are now under pressure in Ukraine. We are trying to help such people.”
IP continues in Ukraine law
“IP is about a strategic future. By May everyone had understood that Ukraine will continue to exist and if the clients have future plans for the market, they should continue to be active in IP,” says Oleksandr Mamunya, managing partner of Mamunya IP.
The firm hired two lawyers in the last months of 2022 and remains optimistic about the future.
“I see big prospects for the future, especially as the Russian market closes very quickly. The iron curtain is coming down and we have the opportunity to take Russia's place in the region,” says Oleksandr Mamunya.
The firm’s clients are predominantly international and remain active.
“In August 2022 we got information from police that they are restarting doing anti- counterfeiting,” Oleksandr Mamunya says.
Ganna Prokhorova, who was made partner in Mamunya IP in January 2022, confirms:
“Pharma companies are active in prosecution and enforcement. Others like food and the import of food, there might be problems with that, and they put those matters on hold. But pharma and agrichemicals still believe in the market and enforce their rights.”
“It’s trade marks and registration renewals as well as some IP litigation. Whether it’s rain or war, IP goes on,” says Serhiy Chorny of Baker McKenzie.
Thank you again to the law firms who have kept us up to date with the latest information in the Ukrainian legal market. Chambers will continue to review how we approach our research, and as ever, our thoughts remain with those impacted by the war.
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