By Beata Balogová
Slovak law firms are now ready to expand into foreign markets, while the pressure for higher quality legal services will lead to a growth in specialised legal areas. So says Ján Čarnogurský, managing partner of law firm ULC Čarnogurský. In an interview with The Slovak Spectator, Čarnogurský shares his thoughts on the operation of Slovak courts, the challenges that face legal firms, and the complications in the investment in Slovakia of Korean carmaker Kia.
The Slovak Spectator: In 2003, Slovak lawyers claimed that 80 percent of Slovak courts were corrupt, according to a World Bank analysis. Do you share this view? Do you think that corruption in courts has diminished?
Ján Čarnogurský: Frankly speaking, I do not share this view. On the contrary, in our law firm’s experience, the courts have always respected the letter of the law when dealing with the cases before them. From what I can tell, there were no other criteria involved. Honestly, I can’t think of a single case we have litigated where I would have had doubts about the court’s judgment. Personally, I think that the media exaggerate things just to get the attention of the public. There is no rational justification for that claim.
The Slovak Spectator: Several high-level bankers have publicly stated that a lack of law enforcement hinders their business. What are your comments on this?
Ján Čarnogurský:The enforceability of law has improved considerably over the past few years in Slovakia. The country adopted several new laws and amended the existing legislation. The most significant changes are the amendment to the Code of Civil Procedure and amendments to the security legislation and pledge provisions. Also to be noted is the act on voluntary public auctions and the incorporation statutes. Although all these laws were passed fairly recently, there are considerable improvements to be seen on the enforcement side. As an example, let’s take debt recovery – if the amount at issue exceeds the statutory limit, the case cannot be fast-tracked and you are looking at two to three, sometimes even four years of litigation, even in Austria or Germany. And that is on par with the time it takes in Slovakia. Of course, each client, be it in Slovakia or Austria, wants to have a final court decision in their hands as soon as humanly possible. If anything, I see some room for improvement in bankruptcy proceedings.
The Slovak Spectator: The new law on attorneys makes establishing law firms less problematic. What positives has the new law on advocacy brought to the Slovak law business?
Ján Čarnogurský: From a practical perspective, we are not looking at a dramatic change. Being a partner or an authorised representative in a Slovak limited liability company is only open to attorneys-at-law. The only fundamental change is that a limited company has, as the name suggests, limited liability, whereas attorneys running their own business are wholly liable.
The Slovak Spectator: In January, the chairman of the Slovak Bar Association said that the bar might install a system of specialised licences for lawyers. Do you think that such a system would be more effective?
Ján Čarnogurský: The Slovak market is very small and despite the current number of lawyers, the time for strict specialisation has not arrived yet. So far, there’s no need to go forward with it. Later perhaps, as the demand for specialised services grows, these licences will make more sense. Certain lawyers have already developed a reputation of excellence for certain types of legal services. The clients know that and they tend to retain their services even without special licences. In fact, special licences could prevent other lawyers from being able to deliver the full range of legal services. Again, it is for the market to decide and the services of the best lawyers are retained more frequently.
The Slovak Spectator: Many involved in the law business in Slovakia were worried about the merger of the Slovak Bar Association and the Chamber of Commercial Lawyers. Have you noticed any fundamental changes since the merger?
Ján Čarnogurský: As a matter of fact, I haven’t. But I think it was the right thing to do – having a single professional organisation representing all legal practitioners is more likely to make a difference.
The Slovak Spectator: Has EU membership changed the market?
Ján Čarnogurský: Our accession to the European Union has opened the Slovak market to lawyers from other EU countries – and vice-versa. This is the right time for Slovak law firms to expand and experts will be in demand. Last month, our firm opened a branch in Brescia, Italy. We also plan to further grow our business and our focus will continue to be driven by the interests and needs of clients.
The Slovak Spectator: There is a tendency for Anglo-Saxon law firms to merge and create monopolies. Is there any such tendency in Slovakia?
Ján Čarnogurský: I am unaware of any major mergers among Slovak law firms. Such amalgamations come with a number of benefits, but there’s also a flip side – it is the stronger firms that tend to reap the benefits, not the weaker ones. However, at the moment, such mergers are uncalled for on the Slovak market.
The Slovak Spectator: Over the past couple of months, large strategic investments in Slovakia have opened up the issue of the public’s right to access investment contracts.
Ján Čarnogurský: The disclosure of contracts is a sensitive issue. On the one hand, the public have a legitimate interest in the management of public finances. On the other hand, businesses have a right to confidentiality. Both of these viewpoints are protected by law, and if we are to sway to one side or the other, it is necessary to deal with each case on its individual merits. Having said that, disclosing information on state aid provided to investors is important. That is, the amount of state aid, the timeframe for which such aid is provided, the number of jobs to be created, etc. This kind of information should always be released. On the other hand, these contracts also contain information that is of little relevance to the public but of potentially high relevance to the competitors of an investor. As a consequence, the investor has the right to keep certain information confidential. There are benefits in it for Slovakia as well, because being able to safeguard this confidentiality can tip an investment decision in our country’s favour.
The Slovak Spectator: Do you think that the law’s definition of a trade secret is sufficient?
Ján Čarnogurský: The law gives a rather broad definition of a trade secret. Basically, the protected information must not be accessible to the public and it may not become part of the public domain. Of course, one cannot expect the Commercial Code to contain detailed definitions as to which features of, for example, a car component constitute a trade secret and which don’t. As a matter of fact, the law merely puts in place a framework of reference for each business to define what is proprietary and what is part of the public domain. In my view, that is reasonable.
The Slovak Spectator: The investment by the Korean carmaker Hyundai/Kia has presented many complications, including the expropriation of land from owners who refused to sell at the price offered by the state. Do you think that the state has followed the letter of the law throughout this case?
Ján Čarnogurský: I do not have sufficient insight to say whether or not the all the formal requirements for expropriation have been met. But seeing the way the media have covered the story, I believe that the public authorities have made great strides to make sure that the the law is complied with. Generally speaking, I am convinced that the state should have the right to expropriate private property, provided that the expropriation is in the public interest. Failing that, it would be impossible to for the State to operate properly. If it were not for the expropriation of land, building roads, motorways, railways, power plants or projects of a similar magnitude would be next to impossible.
(In: Investment Advisory Guide 2004 published by The Slovak Spectator)