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Interview with
ASSEN A. DJINGOV,
GEORGI T. GOUGINSKI LL. M.,
STEPHAN Z. KYUTCHUKOV
& MARIUS A. VELICHKOV,
Partners Of Djingov, Gouginski, Kyutchukov & Velichkov, Attorneys And Counsellors At Law
October 19th, 2001.
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My first question is very general. Can you give us some background information about the history of your firm, your main activities and its structure?
Assen:The firm was established in 1994 with the main goal and objective to service foreign clients and investors and to be a purely legal firm. So, we don't provide any other services except legal ones. It was established by four main partners and since then has steadily grown in size. Today we are somewhere between 24 and 26 lawyers providing exclusively legal services to international investors. In the brochure we have provided a list of representative clients. The various services include privatization type of works, infrastructure, all kinds of corporate and project finance and of course all other types of legal services a foreign investor may seek in the country.
We are more or less oriented to be a transactional type of firm, so we are very active in soliciting big transactions. Our monthly work portfolio is 60-70% transactions and the remaining part is servicing of long-term corporate clients. If I should mention some of the most representative deals we have had so far, I would say that the big development of our firm started in the second half of '96, mostly in '97 and '98. Since then we have had a steady curve of development. The most important deals are the privatization of the Bulgarian Telecom Company, which has been recently revived and is in the process of signing a second agreement with Deutsche Bankwith whom we are together in the consortium of advisors. Then there is the privatization of Bulgartabac, where we are again on the government side. We have been involved in a deal that was quoted as the most successful privatization deal in Bulgaria - the Balkanpharma deal, 2-3 years ago. We have been involved in most of the bank privatizations and most recently in the two largest investment projects in Bulgaria - the Entergy project and the AES project for Maritza East 1 and Maritza East 3. We have been representing the major foreign banks opening offices in Bulgaria, like Société Générale, Citibank, currently Bank of Austria, ProCredit Bank whose official opening was yesterday, the Turkish Ziraat Bank - the first and so far only Euro-bond issue for the city of Sofia, 2 years ago.
Bulgaria's economy has gone through important transformations for the past few years. What have been the latest developments in this respect and what has been your law firm's contribution to the ensuring a smooth process of privatization?
Marius: Actually, Bulgaria started its massive privatization program in '97. Since then a lot has been done and there is still more to come, especially with the new government, which is very keen on transparent and fast privatization. So far there has been privatization mainly in the industry sector, except for the energy sector, and the banking sector. Now we expect the new government to privatize some monopoly companies that are left, as well as a lot of infrastructure, which involves a lot of project finance work.
Our input was twofold so far because we have been at both sides of the table. On the one hand, we have advised the government how to privatize together with investment banks, international law firms and accounting firms. On the other hand, we have been advising those acquiring companies in the country.
To give you some background on the process itself, I will tell you why it is so important to have good service here. In Central and Eastern Europe we believe the due diligence process is celebrating importance because these are economies in transition. Transition includes in itself legal transition. There are a lot of new laws, new regulations, so at once it becomes very important for investors to be oriented exactly what law is in place, what is expected to be changed in regard to type of ownership, taxes, various regimes for approvals or concessions, or licenses. Here we see our main role: leading investors through this whole process and providing good quality service.
Actually the infrastructure changes that are about to come are of great importance to the whole country and the whole Balkan region in the respect that this process would involve our neighbouring countries as well. Now that the war is over in Yugoslavia, Serbia, and Macedonia, together with Turkey and Greece of course, investors will more and more envisage Bulgaria as a part of a region. So there is a lot of international work to be done as well. The good thing about the legislative systems in all these countries is that we are looking towards the EU, so we will all be implementing the same principles.
Assen: Coming back to the question what is our contribution to the privatization process, our feeling is that when a foreign company comes to a place with an unknown jurisdiction, to a place with not a long business tradition and established practices, it's very important that the investor feels comfortable in such circumstances and environment. Our role is to give such a comfort. A particular detail regarding that is that we have established close relationships and are working together with big international law firms and working hand in hand with such big names gives sufficient comfort to international companies who otherwise can get lost in a country like Bulgaria. Talking about working in teams with international law firms, you may be already aware that in Bulgaria, unlike all other Central and East European countries, they have no local offices.
Georgi:I may say now that we have established a kind of a brand name for legal work. Not only within the boundaries in Bulgaria, but when colleagues and clients around Europe or in the Americas are talking about doing business in Bulgaria, it has been our pleasure to find out that our name comes across. Talking about legal profession and service, our aim has been to provide reliable sources of information and advice.
Assen: Just to add to the quality aspect of our work. Our philosophy is independence and I think this has made us successful throughout the years. We did not want to be associated with any government or political force, or strong political figure and this is a guarantee for a long professional life and competitiveness.
Georgi: Which not necessarily gives you only benefits. What we have been more concerned about through all these years however has been our reputation within the international legal and of course business community and our reputation here, our politically correct reputation let's say. We have suffered damages from that here in Bulgaria in terms of losing every now and then an interesting bid or project.
Assen:But we have never changed the bottom line and we have gained more than we have lost with this policy.
Georgi: Sometimes it has been depressing to find out that somebody else has been chosen to be in charge of the advice to a client because of political connections or relations to economic circles of the day. But still this is only the economic consequence. At the end of the day we can say we have gained the reputation of being an independent legal advisor to primarily foreign investors in Bulgaria and also to the government. When I am saying the government, I don't mean directly to the government but to foreign investment banks or consultant firms involved in privatization processes.
Your firm mainly focuses on international investments in Bulgaria. Where do most of your clients come from?
Assen:My answer to this question is that it reflects the statistical information. To a great extent our client base is formed of big investors. If you look at the numbers of different jurisdictions from where medium and large corporations come, more or less it reflects the ratio of our clients. Mostly, I would say, these are from Western Europe and the States. We don't have, with few exceptions, investors or clients coming from the Far East. We had Japan Bank for International Cooperation, we had Nomura some time ago for the privatization of Post Bank but otherwise we don't have any major Japanese clients. We have some Korean clients, but other than that, I would say are mostly from the US and Western Europe.
As far as the orientation of the firm is concerned,
first historically and then also language-wise,
all the lawyers in the firm are English-speaking.
We do 90% of our work in English (of course we have
lawyers with German and French). So, you can imagine,
when so much of the work here is done in English,
that is one. Second, the financial centre for Europe
and this part of the world is London, so I would
say that although some of the investors may come
originally from other countries, we do a lot of
work with London banks and London law firms. Our
geographical targets now are the German-speaking
countries. We have started putting more and more
emphasis on this and developing this market for
the past two years. It is going on naturally with
the mergers on the legal market - English and American
firms merging or acquiring German and Austrian firms
- so we are now seeking more and more opportunities
with German investors. Not only German, but also
Austrian, Swiss, and from this part of the world
which is not so aggressive in business sense. They
usually come with the second wave and need some
more time. |
For a firm like yours, which is so committed to clients with global businesses how do you project yourself to the international community?
Georgi:First of all, through the rating program among international representatives and international law firms. And this is a daily involvement. Because almost any of the projects we are involved in we undertake them with the international law firms. However, we spend more time now for business development purposes, to sit with colleagues we work with on projects, to discuss opportunities in terms of business development. We also do this from time to time with the investment banking community. I would say we rarely do it directly with clients because we don't see ourselves as sales persons.
Assen:its called product - the best way to convince somebody you are the best. Not knocking on his door saying these are my services, come with me.
Georgi:And we also try to be present at the most important legal conventions organized by the International bar Association. We are also active in providing the international legal and business community some essential legal information on Bulgaria. We publish articles in our specialized magazines or we put this information in articles or memos on our web site.
Assen:We use all other techniques for business promotion. We have been involved in some sorts of legislative efforts. We have been invited to participate in work groups for some quite important pieces of legislation like our partner who is not here at the moment - Stephan Kyutchukov - who was head of the drafting group of the new secured transaction law, which was adopted two years ago and provided mainly international financial organizations with minimum risk for their financing facilities. Before that all ways of securing were of the old type that don't work in modern business society. Apart from that, amendments and supplement acts to the Commercial Act, the new Securities Act, Stock Exchange regulations, Foreign Exchange Act and some other very important pieces of legislation.
What about the future of your law firm? Are you working on any new projects, are you involved in any current privatization process or joint venture partnership? Anything that you would like to share with the readers?
Marius: Our business is very dependent on the development of the economy. This year, with the elections that we had and the new government, we expect tremendous growth down the pipeline and we expect a lot of new projects. There is one interesting thing we see in our recent development - more and more Bulgarian firms are seeking our advice, which means that Bulgarian firms are already becoming international players for various reasons. Either they seek partners for joint ventures, or sell their businesses, or expand their businesses abroad, in which case we represent the international investors and seek the advice of our partners from various jurisdictions. These are the neighbouring countries, so far. There is a great potential for several industries to become if not international players, at least regional players.
Our main target for this year is to be involved in as many projects as we can to the extent of having no conflict of interest. Also help the new so to say privatization and the area that I mentioned, the infrastructure development".
Assen:I think that infrastructure development is the most interesting piece of the cake not only in the next year but also in the next couple of years.
Since you consider your human resources as a big part of your success thanks to the quality of the people that work here, could you please share your personal profile and your background with the firm? What do you consider to be your biggest achievement?
Marius:As I mentioned, at the moment we have 26 lawyers. First of all, they have good command of English. In Bulgaria we have the so-called language high schools where you study different languages. All our people have graduated from English language schools around the country. Then, we all have a law degree from the University of Sofia, the Law Faculty. Some of us have completed postgraduate studies in the United States or Western Europe.
Assen: What we have observed as a trend for the past two years is that there are more and more inquiries and job applications from Bulgarians who have not only studied abroad but have had the opportunity to work abroad, and have made their minds to come back and try to work in a firm like ours. Right now we have two applications from people with degrees from New York, who want to see what the opportunities are here.
Marius: People come back from London or US where they were in the legal and banking business. We see that this is a positive trend for the country where young people with good education, professional skills, and experience are coming back to Bulgaria either to help the administration somehow or to work in the private sector. All the people we employ are very smart, very professional. By the way, they are from all over the country and they are all young.
Assen:We are in fact the most senior in the firm and we are 35-36. All the rest are somewhere between 26 - 32.
Marius:It's a young firm in every respect, the average age is 30-32.
Georgi:I should say it is not a must for somebody who wants to work here to have studied abroad. It's not our idea to have a good profile staff-wise. However everybody is being encouraged to seek opportunities to improve their qualifications. Almost all the time there are people who are not here because they are specializing in international law abroad.
Assen:It's part of our incentive scheme to sponsor educational programs of our employees abroad, or internships.
Georgi:So, going back to the objective we have that the quality of service is our main priority, it's our position that it is very essential for a market economy like Bulgaria. The quality of any kind of service to be in line with what is being offered around Western Europe and North America and other economically advanced countries. And it is very essential for the people who work in this field, to understand the needs of their clients from their perspective. The perspective of Western business people used to a certain quality of service they have received all their life as business people, and at the same time to have the perspective of the local consultant. Very often this is a problem, a problem with local environment, which is not completely identified by the people you are providing advice to. It is our experience that very often people get confused when coming from England or France or Germany, trying to directly apply the methods of doing business they have been used to in Western Europe. They don't always get results in Bulgaria or in other East European countries. This kind of combined knowledge of western practices and local practices is very important.
What would be your message to our 600,000 readers, all businessmen around the world, interested in Bulgaria?
Marius:Do come to Bulgaria. There are a lot of opportunities here. You will find a lot of young, intelligent people here and most of them can provide the quality you are used to. Be a little bit patient, it's an economy in transition. But the reward is good. It is Europe after all, and we are in the heart where human civilization has started.
Assen:Use the privilege, which is still available here - to come before the crowd. And second, as an advice, don't listen to the complaints of investors who have failed here in the early 90's because a lot of things have changed since then.
Georgi:Think of Bulgaria not as a single country but as integrating more and more in Western Europe. We have specifics but we also have a typical European history and perspectives.
Note: World Investment News Ltd cannot be held responsible for the content of unedited transcriptions. |
© World INvestment NEws, 2002.
This is the electronic edition of the special country report on Bulgaria published in Forbes Global . April 29th, 2002 Issue.
Developed by World Investment News Ltd |
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