Everything is in Our Power. Interview of the Managing Partner V. Vodolazkin
– Vitaliy, based on your company’s experience could you tell what is the difference between the practice during successful years for the economy of Kazakhstan and the practice during the time of crisis?
– At the end of the past year our company celebrated its 10th anniversary. The event was attended by more than 200 guests – our clients, partners, and colleagues. During these 10 years Sayat Zholshy & Partners Law Firm took part in hundreds of various projects. We always specialized and continue specializing in such field as “Mergers and Acquisitions”, “Corporate Law”, “Judicial Process and Arbitration”, “Tax Law”, “Antimonopoly Law”, “Subsoil Use”. In the successful time every year began with new investment projects with performance of a series of Due Diligences (a comprehensive legal expert examination of the juridical position). However the negative developments in the economy of both our country and the whole world in general, have slightly changed the accents of our work in the current year. As far back as the last year we participated in large projects aimed to attract foreign financing including that from the European Bank for Reconstruction and Development, and also in several large projects connected with purchase and sale of business. This year such questions began to appear only during the last several months, and their scope is far from that in the previous years. If before the projects were estimated at hundreds of millions dollars, so now it is very good when it concerns several tens of millions dollars.
– How has the crisis affected the work of Sayat Zholshy & Partners Law Firm?
We are growing. In 2008 the company’s turnover has increased by 20% as compared to 2007. We observe the same growth in the first half of 2009 as compared to the same period of the past year. Many people think that now lawyers have more work, and they allegedly “make profits” out of the crisis. I could not say that it is just the case. The crisis has certainly affected legal advisers, too. Now we see that many legal, auditing, and other consulting companies reduce their staffs dismissing their employees. We know famous law firms which staff and turnovers have reduced in half for the last year. It may primarily be due to reduction of the volume of works since the business has fewer projects. If there was enough work for all companies during the economic growth, so now implementation of projects is entrusted only to the most effective and professional law firms. Some consultants specialized exclusively in the projects which as a rule could be implemented only during the period of growth (for example, IPO), so now such consultants are, certainly, those who experienced the strongest impact of the crisis. In our turn, we tried to develop such specializations which will be viable in all times whether it be crisis or recovery periods. Therefore, the impact of the crisis on our company was not so strong. Certainly, today large investment projects are not prevailing ones in our portfolio of orders, but now we have a lot of law cases, corporate projects connected with restructuring of holding companies, as well as projects connected with operating maintenance of our clients’ activity. The law market directly reflects the spirit in the world of business. If it is not going very well in business, there are more lawsuits, appeals, and conflicts. If everything is well, there are more projects related to “Mergers and Acquisitions” and large-scale financing. The trend of this year is that from the first months of the year we have projects connected with lawsuits of various directions – from simple projects connected with collection of ordinary debts receivable to complex lawsuits connected with appeal of actions of state authorities including tax and antimonopoly authorities. In principle, this tendency can be explained. Before businessmen thought that they would be able to collect money from their contracting parties at any time and granted a respite. Nowadays nobody grants a respite. The business took a tougher tack towards debtors. As for the second part, it is not a secret that the reduction of tax revenues to the budget is observed in Kazakhstan, and that is why the state authorities carry out numerous inspections resulting in additional charge of taxes, fines, and penalties. Unfortunately, such actions of the tax authorities are not always statutory, and our clients refer to us with the purpose to appeal such actions. The antimonopoly agencies also carry out investigations. Under the pretence of protection of average consumers some officials try to regulate the activity of the entrepreneurs, carry out inspections in large companies and find out questions connected with recognition of some or other entities as dominants or monopolists, try to regulate prices for products produced by our clients. As I see it, the financial situation in the country is improving gradually, from the beginning of April of this year clients with investments projects connected with purchase and sale of business began coming to Sayat Zholshy & Partners again. Individual projects for attraction of external financing appeared. As a rule they are financed by Asian financial institutes. The crisis affected them less than European western financial institutes. It is necessary to note that now businessmen approach to conclusion of agreement more carefully and ask lawyers for legal opinions even for small issues, reassure themselves in order to avoid losses with any even small deals in the future.
- As far as you have already touched upon effectiveness, so what does it mean in your company?
- The main value of our company is the people working in the team of Sayat Zholshy & Partners. From the establishment of the company up to this day we always set strict requirement to the lawyers working in our company. If we employ an experienced lawyer to the Company, it is understood that the lawyer shall have a first-class education and is an excellent specialist in certain legal sphere. If we employ a young lawyer, a graduate from a university, it is understood that this lawyer not only graduated from the university with excellent marks but also understands the theory of law deeply. Our Company has never employed lawyers through the back door. Yes, there were years when we had more lawyers in our company than today, but now, in my opinion, we have achieved very good effectiveness with our twenty lawyers in terms of the time spent by our lawyers for project related works. Furthermore, now, despite the crisis times, we additionally look for established lawyers with western education who may join our team. During these uneasy years instead of reducing the salaries of our employees we try to raise them, to introduce additional financial inducements for them and bonuses, to send them to conferences and secondment. Again, we do it in order to maintain the highest level of professionalism of our lawyers, to ensure that all our team keeps up with the times, and to meet every demand of our clients. Another significant point of our company’s effectiveness is the fact that every lawyer in our company may become a partner. The gate to the company partnership is open. It means that established lawyers who are professionals in their respective fields, have good creative and communicative qualities, and are known as good lawyers in the business communities may be admitted to the partnership of the company and become an owner of our business by the decision of the Board of Partners. Today the company has about 100 regular clients with whom we work on the system basis. About 500 companies applied to our company for advice at least once. These are banks, food companies, oil and gas companies, transport and telecommunication companies, energy producing and distributing companies, and agricultural companies, i.e. the companies operating in various fields. During these 10 years of work we never confined ourselves to execution of standard common legal services. The main speciality of our company is that we always use a creative approach to every project instead of the conventional one, thus making it possible for our clients to have additional opportunities and advantages over others. Such approach is based on our deep insight into the philosophy of law and knowledge of our lawyers in certain specialized fields of law.
Eventually, such relatively simple things, as one may think, I told about, are the very things that distinguish our company from many other consultants and allow us to operate effectively even in the crisis period.
– What are the things entrepreneurs must know and understand in the new conditions?
– It is truly said, that cadres are all-important. This statement is especially relevant in the crisis times. It is only professionals in their respective areas who will always be able to meet competition despite any crises. In this connection I would recommend to all businessmen to pay their attention to personnel. This recommendation has to deal not only with selection of consultants, but also with selection of specialists who will work in your business.
– According to some analytics, the most negative peak has already been passed all over the world, and the companies should develop post-crisis development strategies. Do you, Vitaliy, think whether there is a cause for optimism or these are too early statements?
– I am strongly convinced that all these difficulties are temporary and will end soon. Everything is in our power. To stop the negative processes and tendencies we must handle all issues more carefully and work harder, and then the bad times will pass much faster. It may seem strange, but this crisis has its positive sides. The business has become more innovative and technologically effective. Today survive those who really work. The crisis gave an impulse not only to development of specific economy spheres, but also has changed the direction of legal services to a certain degree. The lawyers of Sayat Zholshy & Partners developed new more rigid schemes for protection of the clients’ interests, elaborated unhacked interesting movements. We have acquired an invaluable experience. The crisis made us work more, think more, generate more new ideas and law schemes. I think this is an advantage for us, for the blue-sky thinking, and our intellectual growth.