Eastern Europe at a Glance

POLAND

Warsaw’s legal market has become increasingly competitive. In the mid- to late 1990s, Poland was a hot spot for M&A and privatization work, and a crop of foreign firms opened offices there. “They used to say that marketing in Warsaw consists of answering the phone,” says Steven Shone of the Warsaw office of London’s CMS Cameron McKenna. “That’s not true anymore. There is nothing like an economic slowdown for increasing efficiency.”

After years of steady growth, Poland has seen increasing political and economic instability in the past two years. Some lawyers expect investors to pull back this year due to the slowdown in the U.S. economy. But there is some hope. Poland’s new parliament is dominated by the Democratic Left Alliance, which is expected to be better able to bring the country into the European Union than its former right-of-center government was. And that will make Poland more friendly to foreign investment, says Michael Davies, the head of Allen & Overy’s Warsaw office.

Along with Allen & Overy, the bulk of Polish work is captured by Baker & McKenzie; Clifford Chance P�nder; Linklaters; Weil, Gotshal & Manges; and White & Case. Each has between four and five dozen lawyers there, and they keep busy with project finance and privatization work. Even in the slow economy, infrastructure work in the power, telecommunications and highway sectors will continue, and energy, rail and real estate work will remain strong, lawyers say.

Still, look for a bit of contraction: “I would not be surprised if there is something of a shakeout in the year to come,” says Shone. “There have been too many entrants to the market in the last year.”

THE CZECH REPUBLIC

Clients in the Czech Republic face not only a global economic slump, but a constantly shifting legislative landscape. The country’s commercial code and securities and bankruptcy acts all have been changed this year in an effort to harmonize Czech law with European Union guidelines. In most cases, lawyers say, the changes have improved the clarity of Czech statutes. “This is good for business, but [it] also raises the complexity” because lawyers have to keep up with the changes, says White & Case partner Michal Dlouhy.

Change is not new to the Czech legal market. In the early ’90s, privatizations and capital markets transactions like bond issuances constituted the bulk of legal work, says Kenneth Schiff, the managing partner of Weil, Gotshal & Manges’ Prague office. By the late ’90s, however, the lending market had “all but dried up” and work began winding down, he says.

Today, only a handful of large privatizations are left to be completed, primarily in the energy, natural gas and telecommunications sectors. For such work, Weil Gotshal competes with White & Case and British firms Allen & Overy and CMS Cameron McKenna. Schiff says his firm is currently working on the privatization of a Czech energy power monopoly and the privatization of the Czech Republic’s last state-controlled bank, among other things.

Capital markets work in Prague is “pretty dead,” says White & Case’s Dlouhy, though he says his firm is representing the underwriters in a planned eurobond offering by Cesky Telecom. Firms stay busy doing bankruptcy work, which saw a dramatic increase this year. Over the long term, lawyers predict a stronger Czech market. Dlouhy notes that banking work is stable, with an increase in acquisition finance and real estate finance work. And because the country has recently reformed its tax incentive legislation, Schiff says that a rise in foreign investment in the Czech Republic is possible.