Greek crisis impacts on legal sector as old-fashioned partnerships buckle
Lawyers in Athens are facing the prospect of abandoning traditional law firm structures as the fallout from the country’s battered economy continues to grip the nation.
As crowds gathered in the country’s capital to protest against austerity measures brought in by the government to cut debt, some partners report tension inside Greek firms.
“Old firms are falling apart,” said George Bersis, partner at Potamitisvekris, which split from Ernst & Young last year. “We’re seeing more partnership or financial disagreements and I’ve had a couple of discussions with people looking for new firms.”
Worryingly for Greek lawyers, there are also reports of clients increasingly opting to represent themselves in court to avoid paying legal fees.
“Most of the market is dominated by smaller family-based law firms or sole practitioners and partnerships of two or three people,” said Theodore Rakintzis, partner at Kyriakides Georgopoulos & Daniolos Issaias. “They’ll suffer much more from the crisis due to the low profile of their clientele.
“I’ve heard many cases of litigations where the client elects to go to court themselves to avoid paying the fees. They say they’ve committed a small offence and will be convicted either way, so why pay anything on legal fees?”
A government proposal to introduce a 23 per cent tax on lawyers’ fees is also expected to affect smaller firms disproportionately, with one partner claiming: “The sole practitioner is dead.”
In smaller firms it is common practice for associates to share the risks of the business with partners, or to have one senior partner at the top and then a level of junior partners. Financial pressures, amplified by the traditional structures at firms, look set to cause unrest among staff.
“First you have the issue of late payments,” said Alexander Metallinos, deputy managing partner at Karatzas & Partners, ”especially for firms with large domestic practices and so they may face pressure. Some firms pay associates when they’re paid by clients, which could force them to move closer to our [Anglo Saxon] model.
“Many Greek law firms have one major partner and a number of junior partners. So if there’s a drop in profit, say around 10-15 per cent, it’s fine for the senior partner to absorb but less so for the junior partners. So we may see tensions there.”
The larger, international Greek firms will also face pressure from a lack of transactions and foreign investment from all but the most speculative investors, but any mergers between these firms are unlikely, according to lawyers.
Metallinos said: “You won’t see any consolidation among major law firms because the number of firms qualified to do international transactions is quite small and reducing it would just cannibalise revenues because you would end up at with a lot more conflicts.”
In a move consistent with a market hostile to smaller practices, Potamitisvekris has agreed to bolt on a labour law boutique run by Alexios Papastavrou, with effect from 1 July.
