Given Turkey’s recent economic problems including the currency crash and inflation together with continued problems created by the Covid-19 pandemic, how is this affecting your firm?
The economic recession in Turkey existed a year before the beginning of Covid. Covid has just made this situation obvious. Serious fluctuations in currency along with over 100% inflation rate have deepened the existing economic crisis. This has caused a disruption in all kinds of production in the markets. The fact that banks kept up the markets through loans has greatly disrupted the balance in the market. As a consequence, the case portfolio in our office has shifted to legal procedures such as breach of contract, mediation, litigation and internal arbitration.
What adjustments have you made in the current climate – fees, staffing levels etc?
Due to high inflation, there was a serious increase in fixed attorney fees implemented by the Turkish Bar Association. We reflected it in our fees as well. However, we have been trying to create easy terms of payment through instalments to our clients with whom we have worked together for a long time. There is no decrease in the number and quality of our personnel.
How can you and your clients mitigate the risks?
Within this period, it is essential to do short-term business with actors with a reputation in the market, and providing good legal texts should be the primary target. Serious economic processes should not be carried out without guarantee. In new processes for innovation and new ideas, business ideas that have proven themselves in the world should be determined and this off-peak period should be planned as a business development process. The actors in the market and our clients must create areas where continuous cash flow will be provided.
What practice areas are busy, ie, the biggest areas for your firm, and why?
Corporate law related matters, litigation, employment and enforcement procedures are what our office mostly focuses on lately. The reason for this is the density created by the economic congestion in the market and the weakness in collectibility.
Apart from that, we also consider this period as a business development opportunity. Our work on technology law continues. ÖZEL Attorney Consultancy is the legal representative of Ankara TEKMER, which is financially supported by a Turkish authority named Small and Medium Industry Development Organisation (KOSGEB) and aims to bring both entrepreneurs and investors together. ÖZEL also continues to provide advocacy services to LEAP Investment which provides smart money to early-stage technology based startups. Our partner Mr Osman Ertürk Özel is not only a partner of LEAP but also an executive committee member of Ankara TEKMER. Consultancy services for both LEAP and Ankara Tekmer involve corporate and contracts related issues, mostly focusing on shareholder agreements, articles of associations, NDAs, share purchase agreements, lease agreements. Other work includes, but is not limited to, data privacy contracts and intellectual property law.
What changes do you expect once the effects of the economic challenges and the pandemic have passed?
Most of the current problems in Turkey have exceeded the pandemic. What we believe is that the end of the pandemic cannot directly offer anything positive to the economy. The reason for the current problem is the fact that the producer price index has risen above 100%, which in turn will burn the consumer in the future, and possibly deepen the inflation. It is possible for Turkey to encounter hyperinflation in the coming period. The issue is that Turkey has to have a grounded short, medium and long-term economic policy and to make moves to bring inflation down.
Ankara, the capital city, provides an exciting environment to live and work in. It is an emerging legal market. Which sectors are growing in Ankara and how is your firm positioning for an anticipated resurgence in activity within the region?
Ankara is the technology capital of Turkey. Especially leading companies in the defence industry are located in Ankara. There are hundreds of technology companies that are working with companies in the defence industry and are working in areas that involve high technology. Ankara is also a centre for technoparks, technology centres and technical universities which makes this city more attractive compared to other cities in Turkey.
For this reason, IP and IT law is a rising value in Ankara. We are one of the leaders in technology law at the legal market in Ankara. ÖZEL Attorney Consultancy has been giving consultancy services for LEAP together with start-ups and tech companies operating under Ankara TEKMER from the beginning via an associate lawyer working at ÖZEL.
Also, our partner Mr Osman Ertürk Özel is not only a partner of LEAP but also an executive committee member of Ankara TEKMER. We aim to expand both our practical and theoretical knowledge within this practice area.
How are the corporate M&A, construction, technology, employment, arbitration markets – what types of work are most common and also to your firm?
Considering that Turkey’s current economic situation and Turkey’s unpredictable atmosphere have greatly reduced foreign investment, M&A procedures and areas dominated by international trade have been greatly suspended. For this reason, our office’s practice focus has been shifted lately.
We work intensively on technology, corporate and labour law.
Even though construction law is one of the core practice areas of Turkey’s legal market, this is still below the normal average of Turkey since there is a pause in the market due to the pandemic and economic crisis.
How much of your work is local versus international?
As of today, 30% of our workload is international and the rest is local. However, half of our local works belong to clients that are international companies.
There has been a surge in 2021 with environmental, social, and governance (ESG) in Turkey – how much more growth do you see happening in 2023?
ESG criteria are a vital topic with regards to corporate strategies. Not only multinational companies but also start-ups are taking proactive steps to engage with strategies for supporting a low-carbon economy. Providing sustainable finance and placing greater emphasis on substantive implementation are the topics that need attention.
How much progression has been made in the country on the issue of diversity and inclusion?
Recently, Turkey has withdrawn from the Istanbul Convention, which protects women against violence. The Istanbul Convention states that the relevant authorities should take preventive actions against gender-based violence against women and prosecute perpetrators. Quitting the Convention created tremendous impact on the country’s agenda. This is a huge step back regarding Turkey’s stance with regard to the issue of diversity and inclusion.
What Turkish legislation in 2021/22 will affect your clients and drive advisory work?
ÖZEL assists start-ups with data protection services, helping with issues as they arise in their day-to-day operations. Our support addresses questions about how to deal with the data and privacy aspects of specific business circumstances or commercial arrangements. Therefore, we are mostly benefiting from recent Personal Data Protection Board of Turkey’s decisions and communiques.
Cyber security is also a topic that is important for our clients. Cyber security as a concept is particularly included under the Electronic Communication Law. The Cybersecurity Board establishes, approves and takes decisions regarding the effective application of policies, strategies and action plans in relation to cyber security.
Additionally, one of our client considers to issue tokens which led us to identify the procedures on how to comply with the current legal structures, especially with tax law related issues.
Where do you see the Turkish legal business market heading in 2022 and 2023?
There is a massive problem with the competence and quality of the legal practice in Turkey due to insufficient training of actors of the legal market. Turkey’s recent economic fluctuations are triggering the decrease of the quality in the legal market. Apart from the economic situation, Turkey’s legal bureaucracy needs a radical reform.