"Before You Had to Be Ready for War, Now You Must Be Ready for Reconstruction of Ukraine," - Oleksiy Feliv
Oleksiy, do you remember Feb 24, 2022?
I guess there are no people in Ukraine who do not and will not remember February 24. I was in Kyiv that day. Like everyone else, woke up in the morning and couldn't believe that it was a war. Like most, I started preparations to evacuate from the capital.
What were the first things you’ve done in terms of workflow and internal communications?
The first was to ensure the safety of the team. By coincidence, we booked train tickets and hotel for a corporate party in the Carpathian Mountains. It was pure luck because that hotel ultimately became the place for accommodating staff evacuated from Kyiv. It was a gathering place for the team, some colleagues went abroad from there.
In general, in the first weeks of the war we were solely focused on the safety of our staff.
Things settled, people evacuated – what decisions did you have to take then?
We had to get back to work. Fortunately, during the pandemic, we introduced internal changes that allowed us to work remotely. The entire team, regardless of location, has access to all services and files. So, we quickly resumed working. Foreign clients are still often impressed how the firm can operate in a country which is at war, where there is a risk of air strikes. By the way, we not only provided legal advice but also helped clients with security issues, transportation, evacuation.
What about anti-crisis measures in terms of staff – salary cuts, dismissals?
During February-March, salaries at INTEGRITES remained at pre-war level. Then we took a more strategic approach, asking ourselves: How we will survive the war if it does not end in a month or by May 9?
The solution was to allocate an emergency budget which allowed to keep salaries unchanged for 80% of staff.
Only the highest paid lawyers had their salaries reduced to the limit of EUR 3000. INTEGRITES partners have voluntarily waived part of their compensation in order to ensure an emergency budget.
Do you stick to those conditions up till now?
We do. We foresaw a protracted war, the emergency budget will work until March 2023. We will stick to these conditions, although the workload on the team during the war is lower than before it. Of course, after martial law is lifted and the firm gets more work, we will return to the pre-war level of compensations.
From communication with peers, I see that our situation is quite unusual. In most firms everything is different, they are forced to make more complex decisions. Although we did not prepare for war, over the years we’ve accumulated a reserve fund for the force majeures like this.
We learnt the lessons of the crises in 2008 and 2014, so by 2022 INTEGRITES was well-prepared to keep going for at least one year. This includes preserving the team, because we believe that employees constitute our biggest value. After the war, during reconstruction, we will need all our people. That's why we save jobs even for cleaning managers, despite the fact that the office is closed.
What did your clients say? You’ve mentioned that they were struck by the fact that you resumed work quickly. But in general, how did communication go with the Ukrainian and foreign clients, given that they were in completely different situations?
Indeed, Ukrainian clients found themselves in a greater trouble, while foreign clients could count on their headquarters’ support. We felt their full understanding, solidarity and support. We, like any firm, had a certain receivable, which foreign clients quickly closed to support us financially. Everyone tried to give us some extra work, realizing how important it is to help the firm. We felt an unprecedented solidarity at all levels, from the management of the client company to the personal level. It was incredibly touching. Some foreign clients had their main business in Ukraine, and this war hit them hard. But despite this, they tried to show solidarity in terms of both support and compensation for our services. We walked in our Ukrainian clients’ shoes and offered them to do the work pro bono.
By the way, some partner law firms abroad did the same: they offered to work for large Ukrainian companies on a pro bono basis to show their solidarity. By the way, many clients did not bargain – and that was their way to support us. On the other hand, the work we do pro bono means our support to the Ukrainian businesses. It’s a two-way street: our foreign clients helped us, and we helped our Ukrainian clients.
How does client work look like now? What projects are "frozen" due to the war, and what kind of new mandates do you receive? Which practices are booming?
All projects led by transactional practices are on hold – even if you want to conduct a transaction, it’s impossible to do it legally. Access to registers is restricted, some state bodies are on pause. Now everything gradually gets better. The courts did not actually function. Most requests relate to supporting the relocation of business and staff within Ukraine or abroad, fixing the damage caused by the war (fixation, next steps, insurance, compensation). Losses – definitely on top of the list.
To help clients navigate through the war reality, we launched the War Help Desk. It’s an online knowledge base with basic recommendations for clients affected by the war. Projects that keep going are international arbitrations, cross-border disputes. We also proceed with projects in Ukraine started before the war. Some of them are now in the temporarily occupied territories, so there are many financial and currency control issues.
You mentioned that foreign clients help you, while you help Ukrainian clients. Did this include any changes in pricing and compensation for staff?
We haven’t reduced our hourly rates because our foreign clients are willing and continue to pay. On the other hand, we have changed the approach where we offer work on a pro bono basis. If a client asks to do something for free because the business is in trouble, we will do it. Such flexibility and understanding are clearly important, and so far we haven’t seen anyone who wanted to benefit from it in a bad way.
How do you communicate with the firm’s offices abroad? INTEGRITES has an office in Kazakhstan, a contact office in Germany, you also had an office in Moscow which you closed last December. Do you keep in touch with ex-colleagues?
Yes, we closed the Moscow office. The head of this office had to leave Russia due to persecution, it happened after the war started. In fact, for a long time we were hesitant with the decision to close it because of solidarity with the people who worked there, because they shared our views on Russia's war against Ukraine. As for the office in Kazakhstan, our colleagues there fully supported us and the statements of refusal to work for Russian companies and Russian beneficiaries, which we signed on the initiative of the UBA. This refusal didn’t affect the work of our Ukrainian office, as we had almost no Russian clients. Even more, it didn’t affect the work of the Moscow office, as the clients there were either foreign or Ukrainian companies.
But for the Kazakh colleagues it was different. Russian business is active in Kazakhstan, and our team there had to refuse from cooperation with them. Our Munich office, headed by partner Julian Ries, also fully supports us. Julian helped us a lot from Germany to respond quickly to all the challenges posed by the war.
In terms of communication between offices and with our network of partner law firms abroad, our cooperation during the war became way deeper than before. For example, many law firms have accepted our employees for secondment. Our lawyers work in international firms, receive new experience and financial compensation. Some firms not only seconded our lawyers, their employees even hosted them at their homes. All those on the offline secondment enjoy it – it’s mostly junior and female part of the team which are allowed to leave Ukraine.
When I talked to our team members and asked how I could help, everyone said: "Give us work to do so that we can keep busy." So you see that secondment is not only about supporting the firm financially but also about helping the team to keep busy during the war, grow professionally, learn something new. And this is probably what matters the most.
Do lawyers go on secondment until the end of the war, until the end of hostilities or for a certain period of time?
"Until the end of the war" would be too vague a term. We mostly agree on 3-6 months with the possibility to return the employee to Ukraine in case the war ends sooner. We agree on this term also because a month or two is not enough to gain significant experience.
You said that the head of the former Moscow office wanted to leave Russia. Did he make it? Where is he now?
He and his wife left the country. I’d rather not share any more details. I can only say that they had to do it because of the persecution there.
In your opinion, how will the architecture of the global legal market change given that international law firms have been leaving Russia? How will this affect Ukraine and how will the legal business develop after Ukraine’s victory?
Of course, the impact of closing the Russian market on international law firms is much greater than on Ukrainian ones. Since 2014, we have seen this much better than peers in Ukraine, because we had a Moscow office. Russian business left Ukraine, and Ukrainian business plus a lot of internationals left Russia. I don’t think that this isolation will hit the Ukrainian market, except for some firms that were going to work on the side of the aggressor state.
As far as I know, most large firms have abandoned such cases. For example, Gazprom: most firms refused to represent its interests before the war. I don’t know a single Ukrainian firm which had a Russian company as a big anchor client and was impacted by that.
The isolation will definitely affect international law firms, as there are two camps there: some worked for Western clients, others – for large Russian companies, and for these firms it’s quite a blow. As for Ukraine, I am sure that the post-war local legal market will boom, reconstruction will begin. Most firms on the local market are Ukrainian, and this will be an opportunity for a breakthrough.
Of course, a lot will depend on how the market players survive this war, whether they preserve the team or manage to load it with work. See, before you had to be ready to war, now you must be ready for reconstruction. Firms that are able to cope with this task will continue to drive the development of the legal business in Ukraine.
What can you say about the legal services market now? What trends do you see?
For many, war is a question of survival. This is disturbing news. There are massive salary cuts, staff dismissals. We’ve seen this approach in 2008, when many firms had to go for staff reduction but after a while started hiring again, regaining strength. But one thing differs the crises of 2008 and 2014 from the current one. Those were economic crises, and what we have in 2022 is a war, its economic "effect" is derivative. It’s wrong to use the old pattern now. It’s time to show solidarity with employees, help them. Own benefit, corporate profits should go second.
This is war, and you’ve got to support your people. We support our team by paying salaries. In this way we support an employee, his or her family, and thus we support Ukraine. I think in the future a lot will depend on the path chosen by the law firm now. Of course, some firms can’t afford preserving the team, and the question is why they found themselves in a situation like that. But what matters the most is how they live through the tough times and how they manage to keep their teams. Having lost them once, it will be hard to hire again.
Why do you think some firms stay afloat and others face troubles?
The war puts everything in its place. There is no grey – only black or white. This is happening everywhere, not only in the legal business. The war reveals how healthy the business is. I associate that health with the firm’s values. If values aren’t just a declaration, it’s a healthy firm with a healthy foundation. What’s important about values is not just how you declare, but how you uphold them. The emergency budget is a good example.
The second is how healthy the foundation is. Third – how well the business was structured. If it depended on one client, then it will be difficult to stay afloat.
The way of responding to the crisis is also essential. People are different, and we react to war in different ways. Some panic. Others keep a sober mind (by the way, many women I know did) which helps to make the right decisions. The health of the firm and the way it responded to the crisis proved to be essential to market players during the war. You say, "When we win," and I say “We have already won”. Our country has already won, it has already happened. Yes, in a state of war, but it has already happened. And there will be the reconstruction. The only question is to what extent. Whether we will rebuild Yalta is an open question, but it is obvious that we will rebuild the country.
If you look at things this way, you ground the decisions you make as a top-manager on these principles, and not from the position "Will we get back to work?". The first question is how quick we will get back to it. And the second – how to ensure the functioning of the firm and to keep as much of the team as possible.
And now about the future. How fast do you think we will rebuild Ukraine and return to the pre-war life, and perhaps surpass it?
I think it will happen soon. Much faster than, for example, after Poland's accession to the EU. In 2014, Ukraine shouted that we shield Europe, so we must be both economically and militarily strong. Today, no one doubts that. All our allies understand this very well. There is no state that is strong militarily but weak economically
(and this is clearly seen in the example of Russia), because military power is economic power. Therefore, we will see a unique time of rapid economic growth. Ukraine will become not only an economically strong country, but also an eastern outpost, and this will affect regional leadership. The centers of regional leadership will be relocated to Ukraine, which will open opportunities not only in Ukraine itself, but also in the neighbouring regions. And I think it will happen pretty fast.
Can we expect Ukrainian law firms to open offices in Europe, and large international law firms that have left Russia to open offices in Ukraine?
I think foreign firms will definitely open offices in Ukraine, because they will follow their clients. All global companies, many of which were not in Ukraine but were in Russia, will come here, and their legal advisers will follow. It will not be easy for them because of the competition with the large Ukrainian law firms which show quite a similar level of quality as international firms. I mean international players will arrive, but they will see strong competitors here.
And this is good. Because competition creates quality.
Yes, competition is great. We will only benefit from it. Although I'm not sure that Ukrainian law firms need to go to Europe. If you followed INREGRITES path, you saw that we positioned ourselves as a regional law firm, considering the former CIS, Eastern Europe as a key region of presence. We know the rules, we understand the mentality, the legislation. And there are no international law firms among the leaders in this region. They have not been interested in it for a long time.
We will see how the situation develops after the Russian-Ukrainian war, but I see that for many Ukrainian players there will be a new opportunity, in particular, to expand to this regional level. This is what we tried to do before the war. After the war, I think it will be easier.
Then I have the last question – what do you think will be the developments in the periphery? Will Kyiv-based law firms expand to the regional centres of Ukraine?
INTEGRITES has not opened offices in other regions of Ukraine so far, because we haven’t seen what we couldn’t do in Kyiv for clients from other cities. Until recently, Ukraine was a fairly centralized state: all major decisions were made in the capital. Decentralization of power became the tendency only in recent years. But I expect that this situation will change as well. European integration will mean a deeper development of local governments, local budgets will receive more money, regions will become stronger, and they will need to be rebuilt. This will require the physical presence of law firms there.
So, I think that after the war, a regional presence on a temporary or permanent basis will be necessary, because there will be a large-scale regional reconstruction. It looks like certain regions of Ukraine will be assigned to certain countries, it is already being discussed. This means we can expect that business from a particular country will go to a particular region of Ukraine, and law firms will follow.
Prepared by journalist Anna Trishycheva, special for Yurydychna Gazeta