Romania has seen buoyant growth in recent years, with its economy upgraded to ‘emerging market’ by FTSE Russell in 2019. Gabriel Zbârcea, managing partner at Ţuca Zbârcea & Asociaţii, explains: ‘Until the coronavirus outbreak, business was flourishing in Romania: 26% more deals in 2019 as compared to 2018 with a value of €5bn; also real estate investments went past the €1bn line in 2019, standing 7% higher than in 2018.’
‘2020 has been an interesting year financially,’ says Răzvan Stoicescu, deputy managing partner of Muşat & Asociaţii. ‘We did see a slowdown during Q2 of 2020, but things picked up during the second half of the year and have been on a positive trend. However, since neither us nor our clients have gone through a situation of such a magnitude before, the process was not without challenges. For example, switching abruptly from what was essentially a direct contact way of working for our profession, to virtual meetings, unpredictable schedules and remote work was taxing even if ultimately manageable.’
Despite a Covid-related slowdown, optimism remains of a swift return to growth. Investment from major trading partners such as Germany, which has shown significant industrial demand, is anticipated to contribute to an upswing in imports and boost domestic production. The recent sale of CEZ’s Romanian assets to Macquarie Infrastructure and Real Assets was the largest deal in Croatia since 2008, reflecting continued confidence among investors.
‘2020 has been an interesting year financially. We did see a slowdown during Q2 of 2020, but things picked up during the second half of the year and have been on a positive trend.’ Răzvan Stoicescu, Muşat & Asociaţii
Key areas of focus for commercial lawyers include the country’s real estate sector, particularly on the residential and agribusiness side, and a rapidly-developing IT industry. Administrative law disputes provide a steady flow of work for litigators, with Covid-related procurement litigation also expected to grow. ‘Work levels are still high, with a significant number of important deals already in the pipeline,’ says Zbârcea. ‘The coronavirus pandemic somehow caught us better prepared as compared to the 2008 downturn. Notwithstanding this, competition on projects and people/talent in the legal sector has significantly increased over the past year and a half, meaning that we need to remain alert and grasp the opportunities emerging from the crisis.’
Stoicescu identifies other key areas arising out of the pandemic: ‘Employment, GDPR and technology lawyers saw a surge in enquiries from both employers and employees since the start of the coronavirus pandemic. This was fuelled by the need for alignment with work-from-home rules and other pandemic-related policies. State aid and pharma were also strong contenders in light of the support schemes and health measures implemented by the government for pandemic purposes.’
In legal market terms, the jurisdiction is dominated by major independents, like Filip & Company, Ţuca Zbârcea and Nestor Nestor Diculescu Kingston Petersen, as well as international firms such as Allen & Overy, CMS and Schoenherr, while a number of smaller, more agile spin-off firms have created some fractures. ‘International firms are present in the Romanian market, through local offices or associations with local law firms, but their presence is moderate,’ explains Stoicescu, adding that ‘we have built relationships with a substantial number of international law firms which now reach out to us for all their local work. With such arrangements in place there is generally little justification for international firms to set up shop locally.’
Despite reports of wage cuts and redundancies among some larger firms, most key senior lawyers remain in place and clients continue to have a broad range of choice in a highly competitive ecosystem that is somewhat of a buyers’ market for legal services. Stoicescu suggests that ‘uncertainty will remain the biggest enemy throughout this pandemic as it may spark further social and economic unrest. Locally, recent market data shows the Romanian economy is expected to grow in 2021. This is generally a positive sign for businesses and, by consequence, for us lawyers.’
His optimism is matched by Zbârcea, who says: ‘We feel reasonably confident about the business outlook, apart from the recurring work-related safety and health concerns. We need to help our clients navigate the increasingly complex regulatory and business landscape.’ LB