Legal life in... Slovakia
Rudolf Pfeffer, Partner at AKF Lawyers , shares his insight on business opportunities and developments in Slovakia’s legal market.
Tell us about your firm
I’m a partner at AKF Lawyers, a boutique corporate law firm based in Bratislava, Slovakia. The firm is currently led by three partners (each with previous Magic Circle experience) supported by a wider team of associates. We primarily specialise in M&A, banking and finance, IP/IT, venture capital investments, real estate and commercial litigation.
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.
Have you ever worked as a lawyer abroad?
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 over seven years focusing on banking and finance. I attended 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, more of our clients expect us to operate globally and pursue their interests across multiple countries. So my current role requires a lot of travelling and flexibility.
How would you describe the current business climate in your country?
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 the euro as its 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, an educated and highly skilled workforce, and one of the highest rates of labour productivity in the CEE region. For example, research suggests that in 2017, the number of UK companies doing business in Slovakia has increased by 35% compared with last year.
What are the main opportunities and challenges for foreign law firms in your country?
Foreign law firms bring international standards and expertise to the local environment, and so play a vital part in shaping the legal market in Slovakia.
However, the Slovak legal market has become increasingly competitive over past few years. Clients expect law firms to deliver “more for less“ when handling their matters. 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 (for example, in general corporate and transactional work) are affected by commoditisation which in turn makes them less attractive and calls for alternative delivery models. But also we see a continuing demand for sophisticated legal work on complex M&A, banking, venture capital and litigation mandates, as well as a growing demand for foreign (mainly English) law advice on regional cross-border deals.
What advice would you give to companies new to the country?
Understanding the local market is essential for any company to thrive. The most successful foreign companies are those that can adapt their business model to the local environment.
Building a strong network of contacts in the business community can be invaluable and 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.
What opportunities for co-operations are there between your country and UK law firms?
Slovakia is a well-known jurisdiction for UK law firms. Some firms 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.
Typically, the cooperation between Slovak counsel and UK law firm is 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.
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.
Do clients prefer smaller local firms or larger international networks?
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. But a substantial portion of legal services in Slovakia are provided to small and mid-size companies and individuals, which typically prefer smaller local law firms.
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 and 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.
What recent legal developments you have seen in your country?
The Code of Civil Procedure which came into force in 2016 was 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, 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.
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.
Are you aware of any changes that may affect or changes that took place and had an impact on the profession and practice rights in your country?
From my point of view, the current mandatory five-year training period for trainee solicitors in Slovakia appears too excessive. Combined with another five years at university (a law degree is also a mandatory qualification requirement), it constitutes a 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.
Finally, what are your recommendations for visitors to your country?
Slovakia is a beautiful country with marvellous nature and, interestingly, the world’s highest number of castles and chateaux per capita. My 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.