Kazakhstan is becoming a bright spot in the global market for legal services
The country has grown on the back of its abundant natural resources, and now law firms are beginning to pile into a market rich with opportunity. But like many other developing economies, the jurisdiction is not without its challenges.
Earlier this year a joint study by KPMG and the Overseas Development Institute revealed that Kazakhstan is the fifth best placed country in the world to take advantage of opportunities in a rapidly changing global economy. As many countries continue to struggle in the tough economic climate, lawyers in Kazakhstan are optimistic about the country’s prospects.
Arnur Amirgaliyev, a partner at Linkage & Mind, which has offices in Astana, Almaty and New York, is convinced that Kazakhstan is an attractive option for investors.
“We feel that competitiveness is growing every year in Kazakhstan and although at the beginning of the 1990s international clients hardly ever came to Kazakhstan to do a big deal – and if they did, they only trusted international law firms to do it – now, they are also trusting Kazakh lawyers in Kazakh law firms and these are indications of good things to come,” he enthuses.
“The Kazakhstan economy has grown considerably in recent years and the government has invested in the education and qualification of its professionals, including legal professionals, who now join the offices of international law firms or local practices,” adds Aliya Aralbayeva, director of Grata’s representative office in London.
Most lawyers are prepared to admit that the overriding attraction for foreign investors remains firmly in the natural resources field.
“Kazakhstan is a resource-rich country and this explains why such a vast number of subsoil surface produces, such as oil and gas and mining businesses, operate in our country,” stresses Rashid Gassin, managing partner at Grata.
Gassin estimates that around 50 per cent of Grata’s work stems from the natural resources sector, but says the projects often require advice on a host of other areas, including regulatory and corporate advice, litigation and IP matters.
Although Michael Wilson, founder and managing partner of Michael Wilson & Partners, highlights the dependency of Kazakhstan’s economy on natural resources he is also quick to point out the variety of areas in which the country is beginning to make a name for itself.
“We have seen a lot of small to medium-sized M&A transactions by global corporates, often involving a Kazakh subsidiary, quite a lot of work for electronics, computing and consumer goods companies and then due diligence and the acquisition of oil and gas fields, mines and exploration areas – particularly copper, gold, uranium and coal, but also some iron ore, potash and vanadium,” says Wilson.
Amirgaliyev highlights the government’s efforts to attract investors and instil confidence in the Kazakh PPP market.
“PPP is still in the early stages of development here but our government has done a great job by turning legislation in Kazakhstan into attractive bait for foreign investors such that they are starting to pay a lot of attention to the market and potential projects,” he adds.
Moan of contention
Potential legislative changes that affect the business community are proving divisive, however, according to Aigoul Kenjebayeva, managing partner at Salans’ office in Almaty.
“There’s a new entrepreneurial code in the process of being passed that deviates from the principles of our Civil Code, so there’s opposition to this,” she says. “The concern is that it could complicate relations in business and I think the Civil Code is sufficient. If necessary, it would be better to amend the existing code with an article than to introduce a new one.”
A highlight of 2012 for Kenjebayeva has been the registration of a Kazakhstan Bar Association to help regulate the Kazakh legal market.
“It has been a great achievement as it is the first step towards a serialised law society concerned with ethics,” she enthuses.
As for the Kazakh legal market itself, although lawyers admit things aren’t quite as competitive as in their CIS rivals, there are a few intriguing trends.
“In the 1990s we watched a number of US law firms establishing offices in Kazakhstan, following their clients, most of [whom] were US companies operating in the oil and gas sector,” comments Gassin. “Since the 1990s we’ve seen a number of UK and US firms coming to Kazakhstan and another interesting trend is the development of the legal market we have seen is the interest from Russian and CIS practices in opening law offices here.”
There is clearly still plenty of interest from international firms looking to set up shop in Kazakhstan, with several having taken a rather back-door approach to entering the country in 2012.
On 1 January Norton Rose opened its doors in Kazakhstan off the back of its merger with Canadian firm Macleod Dixon. Then in April Dechert repeated history when, in a strikingly similar move to its raid on Chadbourne & Parke’s Moscow office in 2009, it poached the firm’s entire Almaty team to kick-start its office in Kazakhstan’s largest city.
Then, following in the footsteps of their Moscow counterparts, Dewey & LeBeouf’s Almaty team jumped ship to Morgan Lewis in May this year, allowing Morgan Lewis to launch a presence on the ground in Kazakhstan for the first time.
These developments have done little to rock the boat in the local legal market though, according to Wilson.
“Clients do not follow brands here, but rather people, teams and real expertise,” he affirms.
That expertise is bound to increase as the legal market continues its rapid development.