Building resilience: Ukrainian law firms one year into the war
As Russia’s full-scale invasion of Ukraine hit the one-year mark, we asked Ukrainian law firms how they adjusted to the new circumstances, how their mandates and teams have evolved, and about the support they received from their colleagues abroad throughout this period.
Early days – safety first
“The war has had an incredible impact on the entirety of Ukraine, its people, individual families, and businesses,” Redcliffe Partners Managing Partner Olexiy Soshenko says. “This includes the legal profession, as well as our law firm.”
The initial period of war, according to Arzinger Managing Partner Timur Bondaryev, was perplexing: “everybody was scattered around the world during the first weeks and months of the war.” While dealing with the challenges, Avellum Managing Partner Mykola Stetsenko says, “the safety and emotional stability of employees and the overall prospects of the business were the top concerns.” To help us stay connected with the team and help them stay safe, CMS Managing Partner Vitaliy Radchenko says that the firm “developed the Emergency app, which helps track the status of the people and coordinate assistance as needed.”
One factor helping Ukrainian law firms navigate through the first shock of war was related to the COVID-19 experience: “COVID-19 has proven to be a great resilience training, which has helped us dramatically to adjust to war,” Bondaryev says. As an example, “during COVID-19 times we moved our data and business processes to the cloud and therefore came well-prepared to work remotely during the war,” Integrites Managing Partner Oleksiy Feliv notes. “The IT systems were perfectly adjusted to working from any point of the world and we did not experience any interruptions even during the most challenging first weeks of the war,” Sayenko Kharenko Partner Nazar Chernyavsky continues.
Other than physical safety, Kinstellar Co-Managing Partner Margarita Karpenko highlights that it was crucial to introduce a range of measures to support the firm’s staff: “these included offering eligible team members assistance to leave the country, including helping families stranded in eastern Ukraine, helping to arrange relocations to other Kinstellar offices or flexible secondments to other firms, offering advance payment of salaries to members of the Ukrainian team, and the continuation of salary payments to all Ukrainian team members regardless of working status.”
Another major issue on Ukrainian law firms’ agenda was ensuring the mental health and well-being of their teams. According to Radchenko, “the assistance of a professional psychologist has been made available to all team members and their families free of charge,” helping “employees and their family members deal with post-traumatic stress immediately after horrific events.”
Despite the ongoing war and all the complexities attached to it, many law firms continued operating from Kyiv. “From the beginning of the summer of 2022 our people started to come back to Kyiv and to the office gradually,” Stetsenko says. “We now have approximately 80% of employees based in Kyiv and working either remotely or in the office.” According to Feliv, 75% of the employees are in Kyiv, and those who have moved families abroad regularly come to Kyiv.
After the first shock hit, “another challenge that we faced was the electricity outages in the fall due to Russian air strikes,” Stetsenko continues. “However, even this problem was resolved with the help of our business center that installed a powerful diesel generator to provide electricity to tenants when the grid is off.”
Even today, other than ensuring access to power and internet for the teams working on-site, physical safety continues to be a concern: “our office has its own shelter in the basement and everyone can quickly get there when there is a missile attack alarm,” Chernyavsky says.
Retaining the workforce
The war has led to changes in the workforce. When discussing changes in the headcount, Stetsenko, Karpenko, Radchenko, and Feliv point out that their teams remained to a large extent unchanged: “we have a similar number of lawyers as we did pre-war,” Radchenko notes, while Feliv adds that “nearly 95-97% of both lawyers and administrative staff remained employed with the firm.”
Some circumstances that naturally led to the staff reductions include international relocations, army service, personal circumstances, etc. “We have several lawyers either currently or about to undertake international secondments to many exciting projects and countries, either with clients or with other CMS offices, and that includes online and off-line arrangements,” Radchenko says.
Another factor, according to Radchenko, Chernyavsky, and Karpenko, is related to military service. “One of our employees started defending our country from the first day of the war on February 24, 2022,” Radchenko notes, saying that he was recently wounded on a battlefield, but, “luckily, he is already on the recovery track.” “Some of our people volunteered to serve in the Army, which decreased the number of our fee earners by six,” Chernyavsky adds, while Karpenko highlights that “three lawyers are serving in the Ukrainian Armed Forces, and the head of the Kyiv office’s management committee joined the Territorial Defense Forces in the Kyiv region.”
Finally, “in addition to people being physically outside of Ukraine, we also observe some lawyers abandoning the legal profession during these difficult times,” Soshenko says, adding that “the war clearly changes mindsets.” Similarly, “we lost several junior associates who moved to the IT sector which was not hit by the war and was still able to offer very high salaries, as well as two partners who decided to relocate and take a sabbatical to focus on their family matters in these difficult times,” Chernyavsky points out.
The shift in mandates
Naturally, the war led to a decrease in some mandates, and the most affected practice seems to be corporate and M&A, with work dropping by half, according to Stetsenko. “M&A and transactional work has almost dried out,” Bondaryev agrees. “The projects, which started before the war, were put on hold and the majority of them later collapsed for obvious reasons,” Bondaryev notes, adding that “several fire-sales and forced-deals have to some extent fueled M&A.” According to Chernyavsky, “local clients are [also] cutting their budgets and are not ready to pay the same fees they used to pay before.”
Still, some areas remain in high demand. As for the most resilient practice areas, Karpenko says that disputes proved to be among the top – “the focus has been on various dispute resolution measures, ranging from contract performance and related force majeure circumstances to comprehensive advice on collecting evidence, reporting war crimes, and pursuing legal remedies for compensation of war damages.” Feliv highlights that the firm has “submitted almost a dozen claims to the European Court of Human Rights,” and is now “preparing several investment arbitration claims against Russia for the projects now located in the occupied territories.” Overall, Bondaryev believes that litigation will likely keep lawyers “busy for the next decade or two, given the complexity of litigations and specifics of enforcement against a sovereign state.”
Karpenko and Radchenko highlight that there was a massive increase in employment-related work, primarily driven by the crisis and Ukrainian businesses becoming international. “With massive moves of businesses and personnel, the employment team became largely engaged with crisis measures,” Karpenko says, adding that there was an increased work “on complex employment reorganizations, relocations of businesses and personnel, and mass layoffs, as well as providing general employment advice.” According to Radchenko, “another change resulting from the war is Ukrainian businesses becoming international,” with “demand from clients concerning their expansion to other jurisdictions to secure the survival of their teams and businesses.”
In addition, “despite the natural decline of the Ukrainian economy, the country’s technology sector has continued to grow,” Karpenko notes, adding that, still, many technology companies are expanding their Ukrainian operations. According to Bondaryev, “thanks to the award-winning reputation of Ukraine as a Mecca for global IT outsourcing and development – almost each and every global high-tech deal has a Ukrainian angle – which requires diligent local legal advisory.”
Karpenko says that real estate also remained quite active, as within the first months of the invasion there was a need for “applying force majeure clauses, negotiating with landlords regarding rent discounts or commercial lease terminations, and making other crisis management decisions.” At the same time, she says, some clients such as medical suppliers and NGOs entered the country during the war, and “such organizations and businesses generated demand for office leases.”
For Bondaryev, the Sanctions & White-Collar Crime practices stand out: “it is caused by the constantly growing web of sanctions against Russia, its oligarchs, politicians, and their relatives. Given that Russia has always had very deep penetration all across the sectors in Ukraine, we have been extremely busy helping our domestic and global clients to identify, navigate, and manage the respective risks.”
Finally, lawyers highlight an increase in their pro-bono work. “A large number of international and Ukrainian NGOs, as well as private companies, started or expanded their activities in Ukraine,” Karpenko says, with her firm advising them on corporate, regulatory, commercial, tax, and other issues. “We also currently cooperate with the Ukrainian government on United24, a unified platform for donations to Ukraine,” she says.
“CMS lawyers, together with other Ukrainian lawyers and corporate professionals, founded the Yellowblue Force Foundation, an international volunteer initiative that unites professionals from the corporate sector, professional services, and technology,” Radchenko says, additionally highlighting the collaboration with a charitable organization, such as “Housing for IDP, which helps communities build or renovate dwellings for internally displaced people.” Feliv adds that among the latest are the “contributions to the Rehousing Ukraine Initiative pilot project in Truskavets and involvement with the project on housing for internally displaced persons under the auspices of the Ministry of Veterans Affairs of Ukraine.”
Stetsenko and Soshenko highlight the support they received from their colleagues abroad: “apart from moral support, many foreign firms offered accommodation and secondment options to our employees in the first few months of the war,” Stetsenko says. “In addition to the mentioned secondment opportunities, certain law firms shared with us work that they otherwise could do themselves, and they continue to find and explore opportunities for future work and cooperation,” Soshenko says.
Soshenko emphasizes that many foreign lawyers donated and got involved in volunteer activities in Ukraine “to help the Ukrainian army, refugees, and displaced people and people in the de-occupied territories.” “Some of the firms have also made significant donations to the Breathe Charity Fund we are running to help Ukrainian medics and social groups who suffered the most from the war,” Chernyavsky adds. And, according to Feliv, the fundraiser aimed at helping a wounded former employee received significant international support.
Karpenko and Radchenko point out that being a part of an internationally operating law firm was helpful: “Kinstellar’s Ukraine office is an integral part of the firm, and we have received both tangible and moral support from the firm and staff from all of our offices in 11 countries,” Karpenko says. “We continue to receive emergency support from CMS’s central management,” Radchenko adds. “All our people and their families who are currently in Ukraine have been equipped with emergency power stations, rechargeable lamps, power banks, head-mounted torches, sets of visibility jackets, and bracelets to help them stay safe, mobile, and able to sustain their needs and work during blackouts and other disruptions.”
Finally, Stetsenko and Chernyavsky address what kind of support, if any, they would like to receive from their colleagues abroad: “one thing that could be also relevant is access to knowledge and training, especially on EU law, given that Ukraine received its EU candidate status in the summer of 2022,” Stetsenko notes. “Harmonization of Ukrainian law with EU law has now become one of the top priorities for the Ukrainian Government.”
“At the moment, the biggest help we need from foreign law firms is lobbying Ukrainian interests in their countries, in front of their governments, to ensure continued support of Ukraine, as well as boycotting Russian businesses and stopping any revenue streams to the Russian budget,” Chernyavsky adds. “Obviously, any opportunities for us to work together would be also appreciated and it would support us financially while creating added value for their clients. Ukraine will provide a lot of opportunities for any business after the war, but it would be prudent to start planning it now and avoid any frenzy later,” Chernyavsky concludes.