Acquiring and holding stocks on behalf of the clients, establishing companies also on behalf of the clients or even managing funds. Furthermore, the possibility to operate as limited liability companies, which is more profitable, in terms of taxes.
These are the main new rights that the Romanian lawyers have been granted as the new law practice legislation has been endorsed. These new rights will significantly change the market and even the consultancy market on the whole.
The new law has been recently published in the Official Gazette and brings the Romanian standards in line with the European system. Thus, the so-called fiduciary activities (purchasing and depositing stocks for the clients, managing their money etc.), which are highly-developed and extremely profitable in the West, will also be possible to apply on the Romanian market. This will have direct effects on the law firms' bank accounts and their growth directions.
"The changes brought by the law consolidate the capacity of law firms to counsel their clients and, depending on skills and strategy, to grow on the market. This is tremendous opportunity, especially for the young firms, as, in this field (fiduciary activities i.e.) we all start from scratch," says Catalin Predoiu, coordinating attorney with RacotI-Predoiu law firm and also a counselor with the Bucharest Bar.
According to Predoiu, the new law's impact on the market of law practice can only be compared with the influence of Law 31/1990 on the establishment and operations of trading companies.
Law 31 set the ground rules for the formation of the business law market, one of Romania's largest consultancy markets, with an estimated value of 25-30 million dollars annually.
At present, the Romanian business law firms' main source of income is legal counseling on mergers and acquisitions (including privatisation transactions), commercial, banking, project finance, real estate, telecommunications, competition, energy and international financing law.
As the new law has been endorsed, many law firms will be able to go for fiduciary activities, whereas others cam specialise strictly in this type of services, just like it happens in the West.
Practically, law firms will be able to take over part of the role played at this point by the offshore companies or to operate like the custodian banks. For instance, if an investor or a company intends to keep its identity a secret, it is no longer compelled to start an offshore firm, as it can delegate a law firm to acquire or deposit stocks on its behalf. Thus, although it holds the client's stakes, the law firm is recorded as a shareholder of that particular company, and the name of the real buyer is confidential.
"The changes brought by the law will allow us to provide our clients with services that they had been requesting for a long time. The fiduciary activities will help the law firms become more integrated and will fuel the growth of the legal consultancy market," says Mugur Filipescu, a partner with Voicu-Filipescu law firm.
Valeriu Stoica, a partner of Stoica & Asociatii law firm and former Minister of Justice, feels that the new law will drive the professional standards up on the Romanian market, but its effects will only become apparent in two or three years' time.
laurentiu.ispir@zf.ro
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