Fivehundred magazine, The Legal 500 Special Edition of the EMEA Elite — Interview with Oleksandr Ilkov and Alyona Shulima
28 January 2021
The article is published in Fivehundred magazine, The Legal 500 Special Edition of the EMEA Elite
Hillmont Partners has been invited to contribute an overview of the major developments affecting the market of Ukraine and the key trends to watch in 2021. In their interview, Oleksandr Ilkov and Alyona Shulima, the leaders of the firm’s Strategic Communications practice, provided insights into the team’s innovative approaches to comprehensive GR & PA strategies, commented recent changes of the legislation impacted the market noticeably, and considered projections for the next wave of investment coming from in Ukraine.
Which recent changes of the legislation have impacted the market noticeably?
Oleksandr Ilkov: We lead the Strategic Communications practice at Hillmont Partners, which drives government relations and public affairs strategy for our clients. We strongly believe that the business environment and market dynamics in a country are defined by its government policy and regulations. Ukrainian legislation is changing dynamically to reflect the country’s response to global challenges and its internal transformation, taking into account the rapidly changing needs of Ukrainian businesses and citizens. It can be critical for doing business in Ukraine to understand the political landscape in which the major legislative changes are made and to know how to navigate them.
The laws that have really revived the Ukrainian legal market are several novelties initiated by state bodies to attract investment, particularly in relation to the privatization of state enterprises, concessions and public-private partnerships. The legalization of gambling in Ukraine in 2020 has pushed many law firms to establish separate practice groups within their team to lead the already formed new specialization in some law firms.
Alyona Shulima: Obviously, for the past year the legal market was primarily engaged in working with the laws around additional quarantine restrictions in connection with the spread of COVID-19. Moreover, law firms had to react promptly to all legislative changes, even at the stage of their discussion and preparation, to minimize the negative impact on client’s business as much as possible. As the tension around pandemic issues still remains strong, sometimes one requires additional efforts to be heard during the legislative process. For example, the law on liability of business for violation of the mask regime, coming into force in the middle of January, needed additional advocacy support to make its provisions executable for business, in particular for retail.
What does innovation mean to you and how can firms be better at it?
Oleksandr Ilkov: Monitoring and analysis are essential for leading a successful and efficient GR & PA practice. Our team spends hours analysing our clients’ sectors in order to anticipate trends and assess the impact of future regulatory and policy changes. For our practice, innovation means thinking beyond cutting-edge technologies. This is about producing creative solutions in a constantly changing socio-political and legislative environment, and having those innovative strategies implemented in highly regulated sectors, including gambling, e-commerce, technology, healthcare and life science, urban transport and infrastructure.
Alyona Shulima: Innovation takes place in those law firms where deep knowledge and experience go hand in hand with unconventional and creative thinking. Being aware of changes, accurate forecasting in conditions of political or legislative uncertainty, informing businesses about real or potential changes in the regulatory environment and main regulatory risks, proposing GR steps to balance the interests of state and business – these are the components of our daily routine. I would say that our ability to deliver advance information, which is very important for shaping any public affairs initiative, serves as the most innovative early warning system for businesses. It helps move forward their decision-making on the forthcoming legislation or place issues proactively on the legislative agenda.
What are the biggest challenges facing law firms in Ukraine at the moment?
Oleksandr Ilkov: The fast dynamics of regulatory changes seems to be the main challenge for law firms in Ukraine nowadays. The ability to adapt knowledge, processes and deliverables to ever-changing regulatory market conditions is a major task for law firm leaders. That means that law firms have to be ready not only to promptly synchronise with the new legislation, but also to be aware of draft laws and upcoming regulations which appear on the state’s agenda.
Alyona Shulima: Moreover, for businesses in specific industries it becomes vitally important to actively participate in the regulatory process, i.e. in public discussions or working groups on its development.
Therefore, for an ordinary law firm which may want to keep a hand on the pulse of the regulatory environment, this means either rearranging internal processes in the firm, adding selected GR tools to the fee-earners’ responsibilities (at least to those advising clients in the sensitive industry sectors), or bringing in GR specialists to the firm.
Where do you see the next wave of investment coming from in Ukraine?
Oleksandr Ilkov: At the end of 2020, the Ukrainian Parliament passed the law “On state support for Investment Projects with Significant Investments” (so called ‘investment nanny’ law). The law offers lots of benefits to businesses ready to invest more than EUR 20 million, including certain tax exemptions, customs duty incentives for import of equipment for implementation of investment project, prerogative rights for use of land plots needed for investment project, and building infrastructure needed for implementation of the project using state budget funds. The scope of the industries to be under the state support are the following: processing industries (except of alcohol and tobacco production), extraction with the aim of further processing and/or dressing of minerals (except of carbohydrates and coal), waste management, transport, warehousing, postal and courier delivery, logistics, education, science and technology, healthcare, art, culture, sport, tourism and recreational activities. Our team was involved in advocating some of the most critical provisions of the law in the Ukrainian parliament. We have seen a significant interest from investors towards this opportunity. Given the law’s progressiveness, we believe that it will be a successful attempt to lure big investors to Ukraine.
Alyona Shulima: The legalization of gambling in Ukraine is another topic on Ukraine’s investment attractiveness agenda. On a routine basis, our law firm is sharing its expertise on the specifics of the gambling law, which, inter alia, creates a regulatory framework that allows foreign investors to enter the Ukrainian gambling market. There are still some provisions that slow down its realization, but there is no doubt that the newly restarted market supported by efficient regulations will help to boost investment in Ukraine.
It also should be noted, that a couple of successful concession projects started in Ukraine in 2020. This fact increases interest among investors in public private partnership projects in Ukraine, which will probably be prolonged in 2021. The privatization of state enterprises in Ukraine is also looks like a promising issue on the investment agenda for 2021.
How do firms create value for clients in difficult times?
Oleksandr Ilkov: Creating value for clients always means adherence to the highest quality standards, provision of efficient legal solutions and timely advisory support. Collaborating with clients in turbulent times excludes the advisor’s right to ignore any minor risk which may eventually cause major problems for a client’s business. The nature of GR & PA services is that demand for such services grows immediately when the storm happens in the market. Businesses need guidance in developing effective communications strategies to build their narrative for public bodies and managing effective communications in a conflict environment.
Alyona Shulima: We believe that during difficult times we should be much more open to interaction, including providing clients with advice outside the set tasks. When a crisis hits both society and businesses, true GR advisors know how to make the most of this opportunity acting in the best interests of clients and the country. Innovative thinking and creativity push the birth of investor-to-state social initiatives and advanced pro bono advice. There was a remarkable case handled by our team in liaising between a major car-hailing platform and the state regulator to organise free transportation of medical staff during lockdown last spring.
What sets your firm apart from others in Ukraine?
Alyona Shulima: Hillmont Partners positions itself as one of the very few law firms in Ukraine providing GR & PA services on an ongoing basis. We treat our expertise and capabilities as a unique tool for making our clients’ voices heard by state bodies. This allows building a culture of dialogue to eliminate deficiencies in laws and regulatory frameworks which may affect business operating in or entering the Ukrainian market. In this regard our legal offering covers a wide range of issues which development and implementation of comprehensive GR & PA strategies; political and regulatory analysis and monitoring, crisis communications; association management; development and advocacy of draft laws and other regulatory acts.
Oleksandr Ilkov: We focus our work on finding a synergy and achieving the optimal balance between business interests and public policy goals. Such synergy is possible only if businesses’ demands and the tasks of the state have points of intersection. Then our next task as GR specialists is to create an environment (and in many cases, the content) in which businesses can organise their strategy taking into account the interests of the state, and the state in turn creating the conditions for doing sustainable business.