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edition 5 (230)
May 2018
Investment & Finance

It’s not the letterhead that counts

As the real estate market matures, it has been evolving away from the big legal brands
It’s not the letterhead that counts
(From the left): Aleksandra Kaczmarek, Przemysław Kucharski and Bartosz Łaski

A few months ago they left the corporations they worked for and went their own way. How have they fared since taking this bold step? What has been the reaction of the market towards them? And was it a good time to take this plunge into the unknown? We talked about all this and many other issues with the founders of the Kucharski & Partners law firm

Eurobuild CEE: After years of working in corporations, you have recently decided to set up your own business. What has been your initial experience since taking this step?

Aleksandra Kaczmarek, managing associate, Kucharski & Partners: A corporation can spoil you a bit - apart from the actual work, you don’t have to deal with organisational issues as often as you do on your own. At the beginning of our business we faced many of these. Seemingly trivial matters, the resolution of which wouldn’t have previously taken more than a few hours, can now absorb you for a week or even two. However, because of this we’ve discovered talents in ourselves that we didn’t even suspect we had [laughs]. Everyone who’s started their own business knows perfectly well what I’m talking about and what you have to face: the day is still 24 hours long and needs to be divided not only into the actual work – we have to be available to our clients after all – but so that we can also focus on the organisational matters that other departments won’t do for us, as we could have expected in a corporation. This was a kind of shock for us, but after doing all this for several months we can say that we have emerged from it unscathed.

Bartosz Łaski, managing associate, Kucharski & Partners: We have also been surprised by the positive reaction from the market and our clients. This has given us a great deal of encouragement. Because of our total involvement in the work of the office, we have more control over everything. We can approach things in our own way. We can eliminate the shortcomings that large organisations struggle with and improve the work on our clients’ cases. We have attempted to convey this approach in our vision statement: ‘Light touch. Heavyweight matters.’

Przemysław Kucharski, managing partner, Kucharski & Partners: Nonetheless, the resources, time and work invested at the beginning have generated results, and in our case, these have actually exceeded our initial expectations. As a consequence we have started a recruitment drive. We have received applications from lawyers who see themselves in a smaller company as well as from people with established positions in the sector who would like to work with us.

Has this warm welcome translated into something more concrete, such as contracts and clients?

Przemysław Kucharski: Although we started relatively recently, we already have a solid base of clients, whom we are very grateful to, by the way, for the trust they have placed in us.

Your clients have also left your previous corporate law firms and followed you...?

Aleksandra Kaczmarek: It seems to me that clients are more mature than they used to be and are not just following the big brands anymore. Of course, there are those that require this and that won’t change – they have their own corporate requirements; but now people often follow the lawyer’s surname. So I have the impression that the trust that we have built in our previous companies has now paid off. To simplify this a bit: for most clients it’s not important which letterheaded paper they receive the work on as long as it is done well.

Przemysław Kucharski: This is related to the evolution of the legal market, which began a few years ago – in 2008, with the onset of the credit crunch. Since then the market has been evolving and brands are now of less and less importance. The personal involvement of lawyers in the matters they are entrusted with, their responsiveness, availability, efficiency and trust in specific people are becoming increasingly important.

The number of insurance policies is probably not without significance...?

Przemysław Kucharski: The size of the law office and primarily all the third party liability insurance policies they have at their disposal, of course, becomes clear in our conversations with potential clients. The largest have insurance of up to EUR 100 mln and more. However, you have to bear in mind that this amount covers the whole of their global operations. We have a policy worth a few dozen million złoty, but I don’t know what we would have to do to have someone suing us for a few dozen or even PLN 3–4 mln. We would probably have to have been confused about the identity of the property owner or to have committed fraud. In my opinion, a policy such as ours provides our clients with sufficient protection.

Bartosz Łaski: Let’s also remember that the insurance market has developed. A transaction can be made with additional insurance if need be. It’s not a problem. We offer this to our clients, if necessary.

Who are you working with now?

Aleksandra Kaczmarek: The scope of our work has not changed drastically. We work for corporate clients with large transactions as well as smaller entities.

Bartosz Łaski: Due to the fact that we have just started our activities, most of our cases are in progress and we cannot talk about them yet. Generally speaking, however, our clients are from the real estate market – we cooperate with entities representing every segment of this market, including the office, warehouse, retail and residential market. The state of the market is amenable to this – new classes of real estate assets have been opening up, such as student halls and homes for senior citizens, so we also want to be present in these segments.

Where do you see yourself in a few years time?

Bartosz Łaski: We specialise in real estate and this is the main part of the market where we have the incentive to grow. However, clients need a comprehensive service, which we provide them with. From the beginning our intention was not to set up a boutique law firm dealing exclusively with real estate, but one that would be able to respond to the diverse needs of a variety of clients, both large and small. Our goal is to maintain our position in the real estate sector and strengthen it in those that are not strictly related to real estate but are still required by our clients, such as financing, litigation and administrative disputes.

How many people work in the law firm?

Aleksandra Kaczmarek: Six lawyers at the moment. However, we are recruiting. We did not have any rigid assumptions that we would be employing around 20 to 30 people by the end of the year. We want to focus on quality rather than quantity.

Przemysław Kucharski: We want to grow organically. We are focusing on a model that has been developed in the US and elsewhere – organic development built on the basis of positive relationships, understanding and trust. We believe that this is the best approach.

Has the law firm already been involved in closing any deals?

Bartosz Łaski: We have managed to finalise one, a very large investment contract – but we cannot talk about it yet.

How has the competition reacted to your entry into the market?

Bartosz Łaski: The competition in this market segment is strong – the market is mature and we are not the only newly-established law firm in the city.

Aleksandra Kaczmarek: The signals we have been receiving are positive. I think everyone is aware that there is a lot of work to be done on the real estate market and there is enough of it for everyone. For this reason there are only a few possible situations where we might get in each other’s way.

In which fields do you feel you might have a competitive advantage?

Aleksandra Kaczmarek: We learned a lot from working in our former corporations. We want to be faster and more effective than larger firms, but at the same time comprehensive in terms of the range of our services.

Przemysław Kucharski: We have extensive experience and knowledge, and this is not only strictly legal know-how, since we are practitioners after all. We always try to use this as effectively and quickly as possible and explain the issues to our clients clearly. We don’t want to them to pay for unnecessary hours just so that everything adds up on the Excel sheets.

Is the real estate market at the moment a good place for debutants such as yourselves?

Przemysław Kucharski: It has heated up, but in a healthy and balanced way – unlike in 2008. I think that market participants have done their homework from previous crises. So we are now in something of a golden age.

Are there no clouds on the horizon?

Bartosz Łaski: There are always bigger and smaller risks on the market, but we have the impression that the sector is so aware of them and well-prepared for dealing with whatever is thrown at it. I don’t recall working on any project that seemed to have been carelessly carried out, or that was ill-conceived, or where the price expected was unrealistic. Projects are being prepared in a very meticulous way and there are not too many dangers from inside the market. There are issues arising from outside it, where we have to engage with the political environment, but they are not serious enough to devastate the market. However, they could cool it down to a certain extent, and one example of this could be the ban on Sunday trading.

There is also the issue of the political changes to the judicial system...

Przemysław Kucharski: What is currently happening with the judiciary poses a threat to the macro side. From the investors’ point of view, the threat to the independence of the courts represents a threat to property rights. The legal title is, after all, the most important thing in our sector! A dependent and politically subordinate court is therefore a big risk in this regard. But one thing that gives us hope is that the entire judiciary has been unanimous in defence of its independence and autonomy.

So how are investors now viewing the Polish market?

Przemysław Kucharski: Generally speaking, there is a lot of money coming onto the market and it is very cheap – and so, if anything, we are oversupplied with it.

Thats right, but the core capital that invests very conservatively cannot be measured in the same way as opportunistic money, invested when there is a greater risk...

Przemysław Kucharski: I think that we have a balanced market in this respect. We have opportunistic capital, which is looking for somewhat trickier ventures – and there have always been such investors and there always will be. They may even have an advantage over the others at the moment. I have no doubt, however, that large players are very active in Poland. That’s good for us. On the other hand, interest rates, which may rise in the long term, could pose a potential problem – both for the development market and indirectly for investors.

Aleksandra Kaczmarek: There has been talk about the possibility of rate hikes for some time now, but it’s difficult to predict anything accurately in this regard. However, investors are aware of this possibility.

Przemysław Kucharski: Predicting a hike in interest rates is like predicting another crisis. One will come eventually, but the question is when and what the scale of it will be. In my opinion, it won’t be as drastic as in 2008. Investors have drawn the right conclusions from that cataclysm and are now approaching their investments with much more prudence.

THE THREE PIONEERS

Przemysław Kucharski is a barrister who specialises in real estate law, construction law and advising on transactions. His unique skill is combining a thorough knowledge of the law with tax expertise and business acumen. He has over 15 years’ experience in international law firms, advising on numerous large real estate, corporate and financial transactions. Before founding Kucharski & Partners in January 2018, Przemysław was a property partner at Baker McKenzie. Earlier he rose from the position of associate to a partner of CMS Cameron McKenna’s real estate team. Earlier in his legal career, he worked as a tax lawyer in the real estate department of EY and in the real estate practice of Domański Zakrzewski Palinka (Poland’s largest law firm, associated with EY at the time).

Aleksandra Kaczmarek specialises in asset management matters including lease agreements regarding office, warehouse and commercial premises. Aleksandra is also well experienced in examining the legal and actual status of properties, in particular related to perpetuals usufructs, land register proceedings, administrative decisions issued during the investment process, restitution claims, infrastructural investments, spatial planning and land development. Before joining the Kucharski & Partners Law Firm, she gained experience at leading international and Polish law firms, including Kochański, Zięba and Partners and Baker McKenzie.

Bartosz Łaski specializes in real estate and corporate law. Bartosz provides comprehensive legal services to leading businesses on real estate transactions, in particular related to JV structures and acquisition of real properties. Bartosz provides day-to-day legal advisory to businesses operating on real estate market, particularly companies focused on the warehouse, office, retail and residential sectors as well as Polish and International investment funds. Before joining Kucharski & Partners, he was employed by such international law firms as Gide, CMS Cameron McKenna and Baker McKenzie.

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