Sponsored briefing: Interview: Mr Nikolay Cvetanov – managing partner, Penkov, Markov & Partners

Can you give our Legal Business readers an overview of Penkov, Markov & Partners?

Penkov, Markov & Partners ( PM&P) was one of the first law offices established in Bulgaria immediately after the democratic changes in the country in 1990. During all these years we have been pioneers in various legal spheres. Currently, our law firm provides to its clients a full scope legal assistance in practically all areas of civil and administrative law, eg corporate and commercial law, real estate, banking and financial regulations, energy, competition, personal data protection, pharmaceuticals, litigation, etc. Our clients include a variety of domestic and international companies of varying sizes. Our team of experts is engaged on a daily basis with the provision of legal assistance to some of the primary Bulgarian businesses operating in various spheres of economy. PM&P is part of some of the leading international law organisations, including Lex Mundi, LexAdria, etc, as our office, as well as individual experts, are also regularly ranked in the most prestigious European lawyer’s ranking editions (The Legal 500, Chambers and Partners, etc). As a matter of principle, our professionals strive to help our clients and partners to find the best practical solution to any legal challenges lying ahead from a business perspective, as well as to understand and realise their projects in the best way possible.

What do you see as the main points that rank Penkov, Markov & Partners as a leading firm in the Bulgarian legal business market?

In every likelihood my answer would not come as a surprise, as I can safely admit that probably the main reason for our achievements is the team. I have the pleasure to work with some of the most prominent professionals in Bulgaria. Our team consists of young, innovative and creative people, as well as truly leading professionals with many years of practical experience in their field of specialisation. The PM&P team members, accompanied by a well-built internal structure over the years, presuppose the continuity and balance in our working environment. As a law firm with more than 30 years of history, we have managed to establish ourselves in the legal market thanks to our ability to adapt to business and legislation development, thereby achieving an optimal level of efficiency in the co-operation with our clients. Last but not least, our active support in various international commercial chambers and business organisations, both strictly legal and public, contribute to building and maintaining our name and reputation.

Given the problems created by the Covid-19 pandemic, how has this affected your firm?

The Covid-19 pandemic undoubtedly affected almost each and every business and individual professional in one way or another. Naturally, some of the working processes at our law firm needed adaptation to the new circumstances, to respond to the challenges brought by the pandemic. Surely, the fact that in the years prior to the pandemic our law firm already put a focus on digitalisation of some working processes helped our team to quickly and adaptively overcome the difficulties which initially arose in light of Covid-19. What was important from our perspective was the maintaining of the relationship with our clients, in a way minimising as much as possible the negative factors which have occurred in the new business environment (long-distance communication, lack of direct contact, other Covid-19 implications). Further, this was (and still is) a moment when our partners needed swift and efficient high-quality legal support in relation to the variable business environment (including from a regulatory point of view).

What have been the standout matters that demonstrate Penkov, Markov & Partners’ strengths?

Apart from the team strengths which I already mentioned, what certainly provides added value to our clients is the fact that we offer extremely experienced one-stop-shop service and our partners can receive legal assistance in connection with practically every aspect concerning their business. Providing full service makes it possible for our local and foreign clients to receive swift, competent and quality legal assistance, taking into account the deepest specifics and complexity of each particular case.

Can you talk about any trends or changes you are seeing emerge especially across commercial law, banking and finance law and litigation?

What we are currently expecting as changes in the banking and finance legislation in the near future is related to the recently adopted Digital Financial Package of the European Commission. The Digital Finance Strategy, as well as the other envisaged proposals, will inevitably lead to amendments of the local legislative framework implementing for instance PSD2 in Bulgaria.

Another sphere where certain developments are expected is the AML/CFT field where the EU is currently preparing a whole new package of regulations revoking AMLD4 and AMLD5. As the AML/CFT topic was and still is quite important for the Bulgarian business (in terms of local regulatory requirements, compliance measures, etc), this is certainly a sphere to be looked at.

Particularly important developments are currently happening on a local level as regards e-justice legal framework. In a way, this could be seen as a major step forward in the Bulgarian judicial system, which is being significantly accelerated by the global pandemic. A number of changes are being adopted in the main procedural law acts laying down that most of the administrative work related to court cases shall be done electronically (electronic service of subpoenas, ability to make inquiries online, creation of the so-called unified court information system, which allows centralised storage of cases in electronic format and integration with various external systems and registers).

What are your thoughts on the challenges facing the Bulgarian and the local Balkans’ energy ecosystems and their approach towards zero emissions? Do you see the European Commission’s European Green Deal as an answer to these challenges and also as the Commission put it, ‘a lifeline out of the Covid-19 pandemic?’

In Bulgaria, about 60% of the energy is produced by coal-fired thermal power plants, which now puts us in second place in the EU after Poland. In this regard, the transition to the green deal goals and severely reduced CO2 emissions will be extremely burdensome for the Bulgarian economy, especially for certain regions of the country, such as the Maritsa basin, where more than 70% of the coal output is concentrated. In that respect, Bulgarian society, as a whole, faces very serious energy, socio-economic and political challenges in terms of achieving the goals of the green deal in the coming decades.

‘Our team consists of young, innovative and creative people, as well as truly leading professionals with many years of practical experience in their field of specialisation.’
Nikolay Cvetanov, Penkov, Markov & Partners

However, I believe that such challenges could also be an opportunity. The financial aid under the Recovery and Resilience Plan and the territorial Just Transition Plans will definitely help the affected regions in making a successful transition to a more diverse ‘green’ economy (new industrial parks, electricity from RES and green hydrogen) without facing an adverse socio-economic impact for the population. Furthermore, following such transition a reorganisation in the local labour market is also expected to occur, resulting at the end into a possibility for significant workforce to merge the local labour market, thus making the local economy more competitive.

Bulgaria continues to be particularly attractive for foreign investors. How would you describe the investment climate in Bulgaria? Which sectors offer the largest potential?

Bulgaria is seen by many investors as an attractive investment destination, with government incentives for new investments. The country continues to offer some of the least expensive and yet high-quality labour in the EU and low and flat corporate and income taxes. However, the steady rise in wages, significantly outpacing the growth rate of labour productivity, may gradually erode this competitive edge.

The pandemic severely affected a wide range of sectors. Bulgaria’s automotive sector, which specialises mainly in the production of spare parts, suffered due to the disruption of global supply chains. Also hit hard by the crisis were the tourism, transportation and logistics, and aviation sectors. By contrast, the IT sector appears to be faring relatively well.

On the other hand, the Covid-19 crisis demonstrated another serious economic weakness of the European market, namely leading European countries investing in third countries outside the EU (China, India, etc). We all saw how risky it is to create the so-called long supply chains and now reasonably hope that nearshoring destinations (such as Bulgaria, along with other Balkan countries, Ukraine, etc) will attract more investments, thus securing much more predictable supply chains to the EU companies. In this regard, the first such investment in Bulgaria is already here – a German company plans to start production of electric cars whereby the investment is expected to reach about €140m. There are also investment opportunities in the IT sector, energy, heavy industry, natural resources, etc. that can multiply the effect in the upcoming years.

Penkov, Markov & Partners has successfully supported its clients’ business through its global network for many years now. Are there any specific international jurisdictions your firm has earmarked for growth over the next year? And why?

We are constantly analysing the international stage aiming to identify jurisdictions where we could expand our services and practice. At present we see huge potential in the Balkan region where countries like Greece, Serbia, North Macedonia, as well as Croatia provide many opportunities for growth. Inevitably, the expansion of the EU in the region may accelerate certain processes even further.

Our team is currently part of a few considerable transactions taking place in the region, as in our opinion next year shall present even better opportunities.

What would you say is the most important part of any client relationship?

I personally believe that dedication, loyalty, trust and professionalism are paramount. It is not a coincidence that at PM&P we strive to establish long-term relationships with our clients, thus ensuring that the necessary grounds are in place in order for the said values to evolve in time.

Building synergy in the client relationship is what makes a certain partnership successful, as in a competitive legal market the simple provision of a high-quality legal service is just not enough.

What is it about Penkov, Markov & Partners that has enabled you to retain talent within the firm?

At PM&P we strongly believe in the concept of ‘home grown’ talent. Our team consists of both young motivated professionals, and trusted lawyers with many years of experience. This presupposes a good balance and continuity of techniques and knowledge, where the younger ones with their energy and hunger for knowledge are learning and gaining experience from the experienced ones (whereas the latter could keep track of the latest developments and innovations in the field through the younger colleagues). We aim to provide our talents with the opportunity for professional (working in high-profile projects and for challenging international clients) and personal (working with professional motivational coaches and an in-house psychologist) growth, while at the same time we strive not to lose our focus and values which we have been building for more than 30 years. Our desire is to make our offices a place which the young lawyers recognise not only as a good starting point in their careers, but as a place where they see their future and which they are proud to work at.

What is your view on the growing role technology plays in the global legal market place? And how has your firm itself embraced the latest innovations to the maximum effect for both your employees and clients?

Obviously, in the last few years technology has become a very integral part of our lives – both on a professional and personal level. Inevitably, this process has accelerated significantly in recent times during the Covid-19 pandemic. At PM&P we embrace technology and innovations. For instance, in 2019 our law firm won the prestigious international award for Law Firm of the Future, based on its vision for digitalisation of the legal market and the manner in which the law offices will operate in the future. Naturally, we may not visualise today’s legal world without the availability of a wide variety of online communication platforms facilitating our connection with clients, without sophisticated internal systems, digitalised and transparent billing practices, etc.

Saying that, what in my opinion is still important, is to preserve our personal contact with the person on the other side of the monitor. After all, the personal connection and the human relationships are what make us satisfied with what we do.

You have been at Penkov, Markov & Partners since 2008. What have been your personal highlights of how the firm has developed both locally and internationally?

Of course, the fact that we manage to retain and develop further the PM&P brand on a local and international level is something that I am truly proud of. A certain proof in this regard are the numerous continuing recognitions received by our law firm, as well as the individual professionals working therein, in the years since my collaboration with the firm started back in 2008. Being awarded Law Firm of the Year, invitations to take part in new Balkan networks, the continuing trust of our international partnering offices (from Lex Mundi) is also an evidence in this direction.

However, from my perspective, highlights which I may outline are actually processes rather than personal achievements. For instance, the successful building of the PM&P team (more as a ‘professional family’ rather than just relations between colleagues) is what gives me satisfaction and motivates me to continue ‘investing’ time and effort into it.

What has been your greatest achievement, in a professional and personal capacity?

Apart from the collective success, I strongly believe that each professional at PM&P has the opportunity for personal growth being part of the environment in our law office. The team we have formed consists of a diverse palette of people, each of which provokes the other in a unique way, so that in the end a balance of characters and knowledge is achieved. Personally, I am benefiting from and hopefully adding value to this environment every single day.

When you look back at your career and the knowledge you’ve gained, what advice would you give to students who are about to enter the legal industry?

Probably one of the most important attributes is that one should not allow himself/herself to lose motivation and desire to acquire new knowledge. As long as you strive to improve and be a better version of yourself every single day, progress and success will be an invariable consequence.