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19 January 2017, 16:07

Recent Trends in Legal Services Relating to Agricultural and Land Law

D. Alexandrov
D. Alexandrov Attorney, Managing Partner at ALEXANDROV&PARTNERS
O. Ruchko
O. Ruchko Attorney, Senior Associate at ALEXANDROV&PARTNERS

The agricultural and land law are the two areas of law, which are used mainly in the operations of agricultural companies. Therefore, we analyse legal services requested in these industries through existing needs and requests of agricultural companies addressed at the legal market.

The services sought by clients of law firms reflect the trends and processes of the business where a respective client operates. The agricultural business is not an exception and, as far as we believe, it serves as the best example of this message.

The changes that took place in our country, the rapid development of agricultural business and special attention paid by the state in the recent years have had a major impact on the farmers giving rise to unique tasks, challenges, problems, and their solutions for the farmers and their law firms.

If we speak of the trends we witness today and the up-to-the-minute services, we can draw an overall conclusion that at the moment agricultural business is striving to find solutions which allow for active development and competition in both Ukraine and the global markets, as well as to effectively solve the problems arising in due course.

Having mentioned the development of the agricultural business, one should point out that this is practically the only growing business nowadays, in particular due to active investments, acquisitions and creation of new assets. Indeed, lawyers receive assignments on advising investment activity, relating namely to the due diligence of investment targets. Among such due diligence inspections, the due diligence of land banks purchased by clients plays a special part. Recently, this service has become much more complex. Now, it includes not only the inspection of the availability of documents, but also a comprehensive due diligence of the land resources management organization applied by the previous owner, i.e. out of a mere due diligence it grew into a service with increased requirements as to the competence of law firms providing it.

In fact, today for most agricultural producers, land is the most valuable asset of every agricultural enterprise, and therefore the preservation and increase of the land bank are two major global tasks assigned to law firms. In such a way, while previous assignments used to deal mainly with purely legal issues related to the regulation of land relations in general, now they concern services relating to efficient management of the client’s land bank due to the shortage of land resources and fierce competition as to them.

Active legislative processes aimed to bring national legislation into line with European laws have created a demand for advice on legislative changes in Ukraine, the European Union, and the laws of those countries, which are considered by a specific company as a chance to enter their market. However, in most of the cases in-house lawyers satisfy this demand, while external advisers are addressed with more complex issues, including the organization of export models, foreign trade financing and tax optimization.

Services relating to structuring of group companies (holding companies) based on a European model or similarly to successful national holdings find a ready market. This is caused by the fact that lenders, which are now able to grant financing to such a group, demand a clear and transparent corporate governance structure in most of the cases. In addition, the need for services on structuring of group companies is often motivated by the desire of the owners to optimize business management system, which is associated with the evolution of national business and change in approaches to the organization of complex corporate groups.

Traditionally, agricultural business has a demand for representation in court. The most common needs of the customers include land plot disputes, in particular the conclusion, termination and prolongation of lease agreements, as well as disputes with state tax control authorities.

Unfortunately, the protection against raiding is also a major trend nowadays. Practice has proved that high-quality legal protection is an effective element of combating criminal encroachment on business. Furthermore, businesses that are more prudent take preventive actions requesting services aimed primarily at countering raiding before the attack on the company. By the way, high-quality structuring of a business mentioned above is one of the traditional elements of the anti-raiding protection. Yet, if raiding actions have already taken place, the lawyers provide legal services to restore the violated rights of the company or business owners.

Therefore, services relating to solving criminal cases are also of high demand. For instance, more and more farmers are seeking legal aid in case of illegal arrests of their assets as part of criminal proceedings against persons of no relation to a particular client. Furthermore, in our practice we have already had a number of projects where competitors, being not able to compete fairly, resorted to criminal acts such as setting fire to the harvest. In such a case, the injured party is compelled to initiate criminal proceedings and defend their rights in a criminal case, which also requires a qualified lawyer, who is competent to conduct criminal investigations and has a knack for agricultural business.

By searching for ways to optimize the financing, business starts to struggle not only with external losses, but also actively elaborates a system for combating intra-corporate fraud since law firms receive assignments for the development and implementation of such systems. By fulfilling such an assignment for one of our clients, in three months we received a positive feedback and the information that the target has been reached. Therefore, we make a cautious forecast that the number of such assignments will increase in the near future.

The state-of-the-art technology is an element already used by business. But for the high-tech industries, the farmers in Ukraine are the most progressive entrepreneurs in terms of using the latest scientific and technological achievements. Hence, law firms that have appropriate expertise, implement for their clients the solutions comprising the latest achievements of scientific and technological progress.

It is important to understand that in addition to the services requested by clients, the requirements set by the clients to law firms are also changing. According to our observations, universal firms (i.e. those providing the entire range of services in all practices) do not satisfy the needs of clients who require an advisor that focuses on one or more related practices. The boutique specialization in today's market realities has become a competitive advantage, as customers are well aware that for most law firms it is simply impossible to efficiently cover all areas of business.

However, along with narrow specialization, customers seek their business problems to be solved by lawyers applying integrated solutions. We have witnesses for a while now that the number of legal matters transferred to external advisers has been minimized. The trend looks as follows: clients transfer the most difficult tasks to external lawyers expecting the latter to provide them with not only an advice or proposals of legal nature, but also looking for a comprehensive business solution, i.e. covering legal, organizational and managerial aspects of one issue.

Narrow specialization leads to another typical requirement of a today’s client – the depth of specialization. The client wants its lawyer to be a perfect connoisseur of the whole range of issues faced by the client. Modern clients are not satisfied with mere knowledge of effective regulatory framework. One must share a common language with the client. We transformed this understanding into an approach that all company employees must acquire new knowledge and extend their specialization relating to burning issues of agrarian business.

Therefore, most of the recent projects in land and agricultural law are complex combinations in nature and are not limited to requests for a purely legal advice. Thus, a modern lawyer must be prepared for the new market conditions and have the skills that will allow for high quality of services required by the clients.

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