After the first month of the full-scale war of the Russian Federation on the territory of our country, the Ukrainian Bar Association conducted a survey among the law firms’ leaders on the impact of military aggression on the Ukrainian legal market.

The survey was conducted from March 29 to April 3, 2022 and processed with the assistance of LegalTalents.Report. The analytical paper was produced by Iryna Nikitina and Tetyana Benko, researchers at LegalTalents.Report.

1. People = solicitude

46% of law firms leaders helped relocate their employees to the western regions of Ukraine and European countries. 21% of companies relocated 100% of their employees.

Obviously, large and medium-sized firms had more opportunities and resources to relocate their employees: 86% of large firms with 45+ lawyers, 67% of firms with 16-45 lawyers, and only 39% of small firms (up to 15 lawyers) helped their stuff with relocation.

Of the total number of relocated stuff 60% remained in Ukraine, 40% moved abroad.

Undoubtedly, the western regions of Ukraine accommodated the largest number of lawyers. The first in a row are Lviv and Ivano-Frankivsk regions, followed by Ternopil, Volyn, Chernivtsi, and Zakarpattia regions.

The most popular destinations for relocation in Europe were Poland (36%) and Germany (32%). Other destinations included: Austria, Hungary, Italy, the Czech Republic, Switzerland, Bulgaria, Romania, Lithuania, Portugal, Great Britain, and Denmark.

Specifically, 50% of the surveyed law firms do not consider opening their offices abroad. Some of the respondents have a principled position of remaining exclusively a Ukrainian company, while others acknowledge limitations on business expansion.

Regarding the number of relocated employees:

• 21% of law firms relocated up to 30%;
• 24% of law firms relocated 31-50%;
• 34% of law firms relocated  50+%;
• 21% of law firms relocated 100%.

Of particular note is the fact that among the firms that relocated 100% of their employees there are only law firms consisting of up to 15 lawyers. Among them are both metropolitan and regional law firms. And this is despite the fact that of such small companies, 62% completely suspended their activities with the start of a full-scale war.

Two of the three partners of these companies claim that they have a reserve fund to support their employees for 3-4 months.

It is noteworthy that this group of respondents does not count on external support from both the state and professional associations. However, this does not mean that there is no request for support! In particular, 100% of the partners of this group of respondents wish to receive information about the opportunities to second employees in the legal departments of commercial companies and international law firms. Obviously, for them, this may become the only tool to take care of the team during the war.

It is worth noting that secondments are popular not so much in terms of financial support for lawyers, but as a tool to maintain their professional level and gain new experience.

It is clear that large and integrated international law firms will be able to handle this task on their own, while small firms need assistance and support from professional law associations.

Direct speech on the needs of such group of respondents:

“Fostering cooperation and international development”.

2. Business = clients, workload, money

87% of respondents claim that the company's workload and income have decreased significantly (by more than 30%).

At the same time, only 40% of firms will have enough reserve funds for 3-4 months, and 17% of firms do not have such reserves at all.

Reduced workload has a significant correlation with the size of the firm.

100% of medium-sized firms (16-45 lawyers) claim that the workload has decreased by more than 30%. At the same time, respondents in this group more often note the complete lack of workload. Regarding the income of companies of this size, 87% of respondents noted a significant decline in income (more than 30%), and 13% - a reduction in income to 30%. But this group of respondents is the least resilient in terms of doing business, as the reserve fund, although formed in 100% of firms of this size, will be enough for 1-2 months for 25% of firms and 3-4 months - for 75% of firms with 16-45 lawyers.

With the general trend of a significant drop in workload, one in three large firms noted that the load reduction is insignificant (up to 30%). At the same time, 100% of large law firms report a significant reduction in their revenues. This suggests that these firms bear the burden of pro bono and provide free legal aid. Among these companies, there is no one without an "airbag". The company's reserve fund will suffice:

• one third of respondents - for a year or more;
• the second third - for 3-4 months;
• the rest - for 1-2 months.

Small firms are the most adaptive. Respondents in this group produced a variety of responses on workload - from significantly increased to significantly decreased. They are the only ones who showed at least a few, but positive results both in terms of workload and income. At the same time, only every fifth company (17% of the total number of respondents) does not have a reserve fund, 10% have a reserve fund for a year or more, 36% and 32% have a reserve fund for 1-2 and 3-4 months, respectively.

We assume that IT-oriented law firms are successful, so for further analysis, we’d like to ask these respondents to contact LegalTalents.Report researchers for more in-depth interviews and a Success Story for the market.

Direct speech about the company reserves:

“It's hard to say, we haven't counted yet. So far, all employees receive a 100% salary.”

3. State

Despite financial difficulties, 80+% of law firms’ leaders said they supported the state and the army financially. Every second person participates in the information war or seeks medicines and protective equipment or helps citizens, NGOs, and charitable foundations with free consultations.

Law firms are actively helping the state in the fight against Russian aggression in Ukraine:

Almost every second law firm (43%) has defensemen among its employees - soldiers of the Armed Forces and fighters of the Territorial Defense units (up to 30% of employees).

17% of partners said that more than 30% of their employees joined the Armed Forces and the Territorial Defense units.

In addition, law firms are active in the rear:

• 83% help the state financially;
• 49% help with the search and purchase of medicines, protective equipment, etc.;
• 45% take an active part in the information war;
• 49% actively cooperate with public and charitable foundations;
• 55% provide free legal aid to citizens.

Regarding the state support of the Ukrainian legal business, all answers come down to the following categories:

1) By helping the army – you help us!

Direct speech of respondents:

“In the form of our victory in the war”

“Defeat the enemy and gain peace”

“First, win the war. Then we’ll take care of the rest!”

2) By helping the business – you help us!

Direct speech of respondents:

“Launch business recovery programs, if clients survive - we will survive, too.”

“The state takes care of citizens and businesses, and taking care of the latter leads to derived consequences - further demand for our services”

“Tax benefits for business, the most favorable conditions for doing business, and business is our main client!”

“Business lending on favorable conditions, without unnecessary bureaucracy”

3) By helping employees - you help us!

Direct speech of respondents:

“Opportunity to implement employment programs for Ukrainian lawyers abroad”

“Prolong the financial assistance of 6500 UAH per employee”

“Financial assistance for employees who have lost their jobs"

4) By resuming the work of the courts and reducing the tax burden on the legal system – you help us!

Direct speech of respondents:

“Resuming court proceedings and online hearings so that proceedings are not delayed"

“Opening of court registers”

“Opening access to the Unified State Register of Court Decisions and ensuring the proper functioning of the court”

“Ensuring the continuity of the trial”

“Deregulation and reduction of tax control”

“Reducing tax pressure”

“Tax exemptions”

5) Ideas for reflection

What we shall observe in the future, monitor changes, and compare over time:

1) Impact of the present solicitude on current and future business and relationships with stakeholders

2) Sustainability of business: workload vs income vs reserve fund

3) Endurance of the “big”, vulnerability of the “middle class” and flexibility of the “small”

4) The importance of gender balance during disaster management

5) Expansion of the legal business outside Ukraine

Profile of respondents

The survey was attended by 85 leaders of law firms-members of the UBA, including:

1) firms by the number of lawyers:

• up to 15 lawyers - 79%
• 16 - 40 lawyers - 12%
• 41+ lawyers - 9%

2) firms located in Kyiv - 58%, regional law firms - 42%

3) leaders of national law firms - 95%,

heads of international companies - 5%

4) male executives 68%, female executives 32%

5) age of respondents:

• up to 30 years - 9%
• 31 - 45 years - 72%
• 45+ years - 19%