Law Firms May Be Losing Interest In Central And Eastern Europe, Report Reveals

by Robin Pilgrim, LawAndTax-News.com, London

27 May 2003

As several Central and Eastern European (CEE) countries gear up to join the European Union next year, a Legal Week report has revealed that, paradoxically, interest from UK and US law firms in the region may be starting to wane.

Much of the late 1990s, according to the report, was spent building up a significant presence in the region, with leading UK law firms such as Allen & Overy, Linklaters, CMS Cameron McKenna, and Clifford Chance all hungry for a piece of the action. However, according to Legal Week:

'In recent years the enthusiasm of the international firms for this region appears to have dampened. Lovells and Clifford Chance have both launched reviews of their CEE operations, while a spate of firms...have opted to close some, or all of their offices in the region. With accession ever closer, why has interest in the region seemingly stalled?'

Michael Davis, managing partner at Allen & Overy's Warsaw office, suggested that the decline in interest in CEE countries is probably a temporary one:

'This year will be a bit of a slow year because of the wider political issues,' he told Legal Week, adding that: 'The slowing of the German economy will also have an effect because Germany is a major trading partner with this region.'

However, the managing partner of an unnamed firm in Budapest expressed a more pessimistic point of view, arguing that:

'Of course there will be some investment because of accession, but there will not be a big boom. Most companies that wanted to invest in the region have already done so. Accession just gives companies an opportunity to review their policies with regard to the region.'

However, the general consensus appears to be that levels of work in the region will not dry up, and that the legal markets in the pre-accession CEE countries will continue to evolve.

'It is true to say that the region is not seen as sexy, exotic or new anymore and the big ticket work is no longer there,' Kevin Connor, managing partner of the Budapest and Bratislava office of US firm Squire Sanders & Dempsey revealed.

However, he explained that: 'The work we are now seeing is more sophisticated than it was, for example, more complex projects which we did not see a few years ago, as well as other financing work such as mutual funds.'

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