Rudolf Pfeffer, Partner at AKF Lawyers , shares his insight on business opportunities and developments in Slovakia’s legal market.
I’m a partner at AKF Lawyers which is a boutique corporate law firm based in Bratislava, Slovakia. The firm is currently led by three partners (each having a previous Magic Circle experience) supported by a wider team of associates. We primarily specialize in M&A, banking and finance, IP/IT, venture capital investments, real estate and commercial litigation.
Our aim is to offer complex legal services delivered in business-minded and solution-driven way. We cover all key areas of commercial legal practice and our clients include well-established corporates active in IT, telecommunication, infrastructure, and financial services segments, as well as venture capital funds and start-up companies of all sorts.
In addition to my Slovak law qualification, I also completed the English Legal Methods Summer School at the University of Cambridge to gain a broader understanding of English law and its relevance in the international context.
I started my professional career at Allen & Overy in Bratislava, where I spent more than 7 years, primarily focusing on banking and finance. At that stage of my career, I attended a number of trainings and workshops in London and regularly advised on cross-border transactions involving the wider CEE / SEE region as both local counsel and coordinator of multijurisdictional teams.
Nowadays, an increasing number of our clients expect us to be able to operate globally and pursue their interests across multiple countries. My current role at AKF Lawyers thus requires a lot of travelling and flexibility to ensure that our clients benefit from a well-balanced blend of our local expertise combined with capabilities for cross-border collaboration with our best friend law firms in other jurisdictions.
Slovakia is an open market economy which has significantly benefitted from its EU membership since 2004. Within the Visegrád Group, Slovakia remains the only country which has adopted euro as its lawful currency. Although Slovakia’s economy is still dominated by a strong automotive industry, a number of local companies are also showing their potential in the field of technological innovations and IT solutions and these segments are recently on the rise.
The country remains an attractive destination for foreign direct investments thanks to its strategic location, political and economic stability, educated and highly skilled workforce and one of the highest rates of labour productivity in the CEE region. By way of example, the latest statistics suggest that in 2017, the number of UK companies doing business in Slovakia has increased by 35 per cent compared with last year.
Foreign law firms bring international standards and expertise to the local environment and, by doing so, play a vital part in shaping the legal market in Slovakia. Having said that, one needs to add that the Slovak legal market has become an increasingly competitive place over past few years. Clients expect law firms to deliver “more for less“ when handling their matters and technical expertise, by itself, is no longer enough to win an instruction if not coupled with a thorough knowledge of the local market, results-driven execution and competitive pricing.
As the market matures, legal services in certain segments where foreign law firms have been traditionally active (e.g. general corporate and transactional work) are affected by commoditisation which, in turn, makes them less attractive and calls for alternative delivery models. On the other hand, we can see a continuing demand for sophisticated legal work on complex M&A, banking, venture capital and litigation mandates, as well as growing demand for foreign (mainly English) law advice on regional cross-border deals.
Every market has its local specifics and understanding these is essential for any company to thrive. Slovakia is no exception and the most successful foreign companies are those that can flexibly adapt their business model to the local environment. Building a strong network of contacts in the business community can thus be invaluable and it should be one of the priorities for any new company entering the market. In this respect, platforms such as the British Chamber of Commerce or the American Chamber of Commerce have proved particularly helpful in providing networking opportunities for foreign businesses active in Slovakia.
Slovakia is a well-known jurisdiction for UK law firms. Some of them pursue their activities in the country directly through their local branches, others forged alliances with well-established local law firms or operate on a cross-border basis.
Most typically, the cooperation between Slovak counsel and UK law firm takes place in the context of multijurisdictional deals coordinated from abroad and requiring Slovak law expertise, such as due diligence or transaction support in relation to assets located in Slovakia. Nonetheless, we also regularly advise on transactions which are originated locally but documented under English law, where close collaboration with UK counsel is essential to successful implementation of the deal. One way or another, I believe that Slovakia remains an interesting jurisdiction to look at for any UK law firm considering expansion into the CEE region.
I think clients’ preferences differ depending on the type of instruction at hand. Large international networks are a natural choice for some of the high-profile projects where clients look for a combination of global brand, international expertise and a multijurisdictional team of lawyers dedicated to particular transaction. At the same time, a substantial portion of legal services in Slovakia is provided to small and mid-size companies and individuals, whereby these categories of clients typically prefer smaller local law firms. Last but not least, Slovakia continues building its reputation as a CEE innovation hub for IT, digitalisation and high-tech industries. In response to this trend, a rapidly growing start-up & venture capital scene emerged as a relatively new segment of the legal market which is predominantly served by few specialized corporate law firms, including ours.
The new Code of Civil Procedure came into force in 2016, a measure meant to speed up and modernise the court resolution of civil and commercial disputes.
In an attempt to boost transparency of public procurement, the Slovak government recently introduced a special registry of partners of the public sector. Consequently, since 2017, entrepreneurs are allowed to do business with public sector only if they are registered in the registry and, to achieve that, companies are required to disclose rather detailed information concerning their corporate structure and ultimate beneficial ownership to public authorities.
On the corporate side, with effect from January 2017, the Slovak Commercial Code was amended to introduce a new legal form of simplified joint stock company which was specifically designed to operate as a modern investment vehicle for start-ups and venture capital structures.
Last but not least, local businesses are in the process of adjusting their internal privacy policies to the new GDPR regulatory framework which will be directly applicable in all EU Member States from May 2018.
From my point of view, the current mandatory 5-year training period for trainee solicitors in Slovakia appears to be too excessive. Combined with another 5 years at university (a law degree is also a mandatory qualification requirement), it constitutes a prohibitive barrier for young lawyers to enter the profession. As a result, attractiveness of becoming a solicitor is in decline among law students and it is becoming more challenging for law firms to attract and retain the best young talent. As the quality of legal training matters more than its length, I hope that continuing public discourse on this issue will result in a sensible outcome.
Slovakia is a beautiful country with marvellous nature and, interestingly, a world’s highest number of castles and chateaux per capita. My personal tips would include hiking in High Tatras, rafting Dunajec river on historical wooden rafts, visiting folk architecture reservation in Vlkolínec and enjoying a weekend in vibrant atmosphere of Bratislava’s Old Town district.
These views are the views of the author and not those of the Law Society.