“This crisis is clearly generating some moderation effects. These will intensify throughout this year, especially in the human resource sector. One year ago there was a significant imbalance in this field, mainly due to the unprecedented rise in legal activity,” Ion Nestor, Managing Partner of NNDKP told Business Standard.
At present, the largest law firms on the local market are no longer raising salaries and have stopped recruiting. These decisions come after a year in which the market was supposed to grow 50 percent, and salaries were in line with this (entry-level wages amounted to €1,000). That was providing the international crisis had not hit. “Although the impact of the financial crisis on the legal service market is not a direct one, we are expecting a 10-20 percent drop in the volume of fees received at the market level,” said Cătălin Băiculescu, Managing Partner of Muşat&Asociaţii.
But where are funds coming from this year? “They are coming from continuing real estate projects that are too large and too far advanced to be stopped, from litigations and insolvency, from the labor law, from M&A [mergers and acquisitions] – especially in energy – in both Romania and the region,” said Sebastian Guţiu, Managing Partner of Schoenherr law firm. The most-affected fields were real estate, mergers and acquisitions, banking, and capital markets. “Revenues also come from fields labeled as “victims,” with only the perspective changing. For example, in banking, while there was a great deal of financing in previous years, because the economy was so effervescent, this year there was much restructuring of loans. Also, in real estate, businesses must be restructured or preserved, and this requires a certain type of legal services,” Costin Tărăcilă, Managing Partner of RTPR Allen&Overy law firm, said.
As concerns the decline on this market in 2009, optimists expect 10 percent while pessimists estimate up to 30 percent. “The law market is connected to the economy in general, and Romania’s economy is linked to that in Europe, and, in a broad sense, to the world economy. Thus, the increases in the past few years on the law market, sometimes spectacular, were registered on the back of the positive results due to macroeconomic stability and the decline in inflation, an increase in foreign direct investments and, in general, these benefitted from the favorable and safe international environment. In current conditions, a decline on the law market is inevitable, but how sharp this decline can be is presently impossible to say,” Ştefan Damian, Deputy Managing Partner of Ţuca Zbârcea&Asociaţii law firm said.
The local business law market is dominated by local companies, with Ţuca Zbârcea&Asociaţii, Muşat&Asociaţii, and NNDKP the top three companies, in terms of revenues in 2008.
