While deal flow in Russia remains hampered by sanctions over the war in eastern Ukraine, local firms have made efforts to plan around these and develop new products and services to compensate for a decline in traditional mandates. The Russian market is also beginning to attract considerable volumes of work from the broader CIS region as well as Asia.
After promoting three new partners in 12 months, Russian firm Pepeliaev Group has now reached 24 partners globally. Sergey Pepeliaev, the firm’s managing partner, argues that the Russian market is becoming more sustainable and steadily diversifying.
‘If we compare activity with previous years, when we used to have stronger demand for services in bankruptcy and commercial litigation, nowadays we see more interest in corporate. This comes as the sanctions from western countries have boosted certain sectors like agriculture and pharmaceuticals, as well as strengthening our economic co-operation with CIS countries and those within the Eurasian economic community at large.’
Meanwhile, in the smaller Ukrainian legal market, two firms have fallen out of the Euro Elite table this year, largely due to their relative size compared to firms in more developed jurisdictions. In addition, newcomers like Aequo and Avellum are now taking work from the top players, in a market that has been left fragmented by international firms arriving and closing in Kiev in recent years.
However, Avellum managing partner Mykola Stetsenko remains optimistic: ‘Generally the Ukrainian market is experiencing a moderate growth and there is an increase in quality of legal advice as Ukrainian lawyers become more exposed to foreign clients. Also the West is pushing Ukraine to move forward and gradually implement EU legislation, which will eventually lead to a more sophisticated legal market.’
Stetsenko also expects international law firms to look at returning to Ukraine in the next three to five years. Until then, he hopes the market will consolidate further, as it was left fragmented when they pulled out of the country. For example, when Clifford Chance left Ukraine a couple of years ago, the team split to form local firms Everlegal and Redcliffe Partners.
‘Competition is always good. The only reservation I have is that international law firms who have left Ukraine have dispersed into too many small firms and are driving prices down. I do hope spinning off will stop and some of the smaller firms will eventually merge.’
The same scenario is described by Pepeliaev, but this time a positive spin is the bottom line: ‘A lot of US and UK firms that specialise in financing and funding of transactions here in Russia have pulled away. But Russian law firms are strengthening their relationship with eastern firms and this will lead to more demand.’
And capital markets are more open in Russia, despite Ukraine’s orientation towards the EU becoming ever stronger. Pepeliaev argues this is because Russian business has changed its outlook.
‘Looking back, of course there have been some difficulties connected to closed access to western financial resources, but I can confidently say that Russian businesses are now targeting eastern countries. For example, a few years ago Russian companies would not have considered Singapore or Hong Kong as a market, but this has happened.
‘Summing up I can say we are developing our business, confident that everything will be fine and I see no more significant adverse effects on the economy here in Russia in a few years’ time.’
And while dispute resolution remains the bulk of firms’ workload in Russia, particularly in bankruptcy, regulatory investigations and white-collar crime, non-contentious work has picked up in areas such as energy, projects, intellectual property. Disputes work continues to generate revenue for firms in a difficult, sanctions-stricken market that now looks almost exclusively to Asia for investment. LB
georgiana.tudor@legalease.co.uk
| Firm | Country | Total lawyers | Total partners | No. of offices |
| Egorov Puginsky Afanasiev & Partners | Russia | 302 | 36 | 6 |
| Pepeliaev Group | Russia | 160 | 24 | 9 |