Given the challenges created by Covid-19, how is this affecting your firm post-pandemic?
We had already rolled out remote working capability for all our staff before Covid, so we were able to deal with our workload remotely, without huge efforts. It is now unthinkable for us that our staff would not be fully mobile and flexible in their work arrangements. Although we are still big believers in face-to-face teamwork where geographically possible, staff can choose to work from home a few days a week.
During the first few months of the pandemic, we saw a slowdown in transactional activity, with deals being put on hold due to uncertainty. However, we turned this into an opportunity and used these few weeks of relative slowdown to accelerate organisational and other changes which had been in the pipeline. We also prepared for the eventuality of needing to reallocate resources internally, but once the realisation set in among our clients in 2020 that life and business must go on, our workload returned to normal in June/July 2020 and has steadily increased ever since.
What adjustments have you made in the current climate – fees, staffing levels etc?
We continue to have a very full and demanding workload. Our litigation, tax, commercial, and private client practices continue to experience steady growth. Our corporate M&A practice remains very busy, although the M&A market has slightly cooled off when compared to 2021.
We have increased our intake of trainees, and we currently have recruitment drives open across multiple departments. Lateral moves between commercial law firms in Malta are not so common for lawyers at associate level upwards and there is, as can be expected, high demand by industry for good in-house counsel. Often, associates (if they move) move in-house rather than laterally.
We’ve always been open minded and flexible when it comes to fee arrangements. It is imperative that clients feel they are getting good advice and good value.
How can you and your clients mitigate the risks?
There’s never any shortage of risks, is there? Our main risks tend to be:
ii. AML and regulatory; and
As to market risk, we are sufficiently diversified practice-area-wise to benefit from the increase in workstreams in certain areas when others experience a slowdown. In parallel, we continue to grow all our various practice areas.
It must be said that M&A is an important revenue driver for us, but our corporate lawyers are strong across all corporate work, so we don’t feel exposed to any slowdown in M&A, because other corporate and corporate finance type work typically makes up for that. For example, this year we’ve seen an increase in private equity investment into game studios particularly, and software developers in various sectors generally, which are set up in and operating out of Malta.
As to AML and regulatory risks, we have in place robust screening processes for prospective clients, and ongoing screening for current clients. This is both required by law, and important for us because it safeguards against potential reputational issues.
I’ve already mentioned that recruitment is probably the biggest challenge we face. We are fortunate to be able to secure high-quality trainees year on year, most of whom stay with us. We are also very fortunate to have made some excellent lateral hires over the past few years. However, I find that it is so much harder to make lateral hires here than it is in other countries where I’ve worked.
Overall, I’d add that technology has helped us mitigate risk all round, that is, in everything from client screening, to interacting with clients and among us, as well as giving us better data to work with.
As to our clients, of course clients in different industries face different industry-specific challenges, but there are a few challenges which all face. Those which are top of mind for me are, in no particular order:
i logistics and strained supply chains;
ii recruitment and Covid-related visa and work-permit issues for immigrant labour; and
iii for the larger enterprises operating in Europe, the new common consolidated corporate tax base which applies to groups with consolidated turnover in excess of €750m.
What practice areas are busy, ie, the biggest areas for your firm, and why?
Our M&A and corporate/commercial, tax, licensing, compliance and regulatory practices remain our busiest, followed closely by our rapidly growing dispute resolution practice. Our private client practice has also grown since the start of the Covid pandemic.
How is your firm positioning for the continued surge in corporate M&A activity within the region?
While the M&A market remains buoyant, we’ve seen a slight slowdown this year.
Tendentially a lot of the M&A we do is in the technology or other IP rich sectors, although we’ve done M&A in the banking sector, and in transport and logistics. We typically act either as lead counsel ourselves, or as local counsel often working with the much larger international firms leading on a deal. I’d say that over 90% of the M&A we’re involved in has very significant cross-border elements.
How much of your work is local versus international?
It’s probably fair to say that the vast majority of our work involves significant cross-border elements, either because it has to do with incoming investment, including sales or acquisitions, or because it is for Maltese business expanding outside Malta, or because it has to do with assisting international clients to resolve disputes in Malta, or because it has to do with cross-border tax matters.
Our work force has a very international outlook. Several of our lawyers are dual-qualified, collectively we speak ten languages, and have worked in ten countries. We have busy Italian, Czech and Polish desks.
Where do you see the Maltese legal business market heading during 2022 and 2023?
I don’t expect to see any tectonic shifts in the market.
The market will, in my view, continue to be dominated by local law firms. I can’t see any of the large international firms entering the market in the very near future. Due to local regulations governing our profession, the big four audit firms have also held back from launching their own law firms in Malta. Maltese law precludes anyone not exercising the profession of advocate (whether in a law firm or alone) from providing legal advice in Malta. Also, persons not entitled to exercise the profession of advocate in Malta cannot lawfully be a partner in a law firm.
I’d like to add that we hope to see a long expected and much talked about bill on the regulation of the legal profession becoming law this year. It won’t necessarily have a significant impact on the market because all leading commercial firms here seek to operate to international standards, but it should crystallise a lot of these standards into law.
James Scicluna is the co-managing partner of WH Partners. He is a Malta advocate and a solicitor of the Senior Courts of England and Wales. James has practised law in the UK and Malta both in private practice and as in-house counsel.
WH Partners, Quantum House, 75 Abate Rigord Street, Ta’ Xbiex XBX1120
T: +356 20925100