[MGSA-L] SELLING GREEK STATE ASSETS ... THE LAWYERS ETC....

June Samaras june.samaras at gmail.com
Tue Feb 18 16:55:51 PST 2014


http://www.thelawyer.com/analysis/market-analysis/regions/europe-analysis/greece-survival-of-the-leanest/3016097.article

Greece: Survival of the leanest

17 February 2014 | By Jonathan Ames

At the depth of Greece’s debt crisis – when the euro was about to be
chucked into the Aegean and the central bank was poised to press the print
button on resurrected drachmas – German populist newspapers and MPs adopted
the sensitive approach. “Sell your islands,” screamed an early March 2010
report in Germany’s biggest daily, Bild, quoting two right-wing
politicians.

Why not a fire sale to flog the odd uninhabited island and decaying ancient
monument, reckoned Josef Schlarmann, a senior member of Chancellor Angela
Merkel’s Christian Democrats, and Frank Schaeffler of the Free Democrats.
In the end, they didn’t quite get what they wanted, but they’ve come close.

The Greeks – under the cosh from the renowned bully-boys of the global
financial crisis, the troika of the International Monetary Fund, the EU and
the European Central Bank – legislated in summer 2011 to create the
Hellenic Republic Asset Development Fund. It is a body that is effectively
supervising the sale of the country’s family silver in a bid to placate the
money men in Berlin, Brussels and Washington.

The Greek fund – a “societe anonyme”, of which Hellenic Republic is the
sole shareholder with a share capital of €30m (£25m) – is not a public
entity and is governed by private law. On its books are prize gems such as
Athens’ Hellinikon Airport, chunks of property on a variety of islands
including Corfu and Rhodes, infrastructure projects such as Hellenic
Motorways and the water supply and sewage businesses in Thessaloniki and
the capital, as well as corporate assets such as the Public Gas Corporation
and the Hellenic Football Prognostics Organisation.

All very embarrassing and humiliating for the Greek national psyche, but
potentially a feeding frenzy for local business law firms – monster
privatisation programmes always are. Surely.

Locally speaking

Well, not exactly, caution local lawyers. While everyone is getting a bite
of the fig, the fig isn’t that sweet and it certainly isn’t very
nutritious. “The privatisation programme constitutes some work for law
firms to an extent,” explains Dryllerakis & Associates senior partner John
Dryllerakis, “but not necessarily the biggest. The question is whether that
is enough to fill the gap resulting in the drop in normal business that
existed before the crash.”

The answer to that poser is an unqualified “no”, maintains the managing
partner of another leading local law firm. Catherine Karatzas of Karatzas &
Partners says the fund will instruct local practices but “its bidding
process is dominated by fee rates. With the current environment in Greece
it would be very difficult for any public servant to instruct a law firm
that was more expensive because of a belief in the quality being higher.
That argument would just not succeed”.

Karatzas says the fund’s parsimony means it will generally instruct local
firms – the list on the Hellinikon Airport deal includes Avgerinos &
Partners, C Papacostopoulos & Associates, Degleris & Associates and
Fortsakis Diakopoulos Mylonogiannis & Associates – because their fee rates
are two to three times cheaper than international competitors.

“That’s why all the local firms are getting some of the privatisation work,
but none of them is really that keen to get the instructions,” says a
resigned Karatzas.

On occasion, English and US global firms are called in – London-based
Watson Farley & Williams got the nod on the airport deal. But more often
the global firms act for the buyers in the mass sell-off programme. All the
usual suspects have been involved, say the local players, with London magic
circle firms Clifford Chance and Freshfields Bruckhaus Deringer along with
Baker & McKenzie, Cleary Gottlieb Steen & Hamilton, Dentons and Shearman &
Sterling named as being widely active.

However, even when buyers reach for global firms, those practices in turn
will often bring in local support.

“They will generally instruct Greek firms,” maintains Karatzas, “because
there are numerous issues of local law with which they cannot deal
themselves. Greece is a small market and the global firms don’t have a
presence, apart from those specialising in shipping – and they haven’t
penetrated the wider Greek market.”

Despite being crucial to the plans of the Greek government and their
international lenders to get the country back on its financial feet after
years of poor productivity and economic recession, the privatisation
programme, complain lawyers, is dragging far too slowly. Dryllerakis claims
the pace of the sales is slipping well behind even the fund’s own fairly
relaxed schedule.

Nonetheless, Dryllerakis warns against dismissing the privatisation
programme on the grounds that it is not generating big fees initially.

“In most cases,” he says, “a privatisation is not made simply for a private
investor to operate an existing business. The idea is that the new owner
will develop the business, will finance it, will make the necessary
modernisation and development. The main point of the privatisation
programme is to attract new investors to Greece, who will develop business
further, by making investment, by increasing personnel numbers. That is why
that programme is important.” And that is why, ultimately, Dryllerakis
maintains, the selling the family silver will lead to more lucrative work
down the road for Greek law firms.

Better than expected

The irony around the privatisation programme – increasing workloads for
significantly reduced fee rates – reflects the wider picture across the
Greek business law sector.

The consensus view is that business law firms in general have seen
decreasing revenues throughout the global financial crisis and Greece’s
subsequent debt traumas.

How badly individual firms have been affected depends on specialisation.
Those focusing predominantly on real estate work will have seen nosediving
revenues, while litigation specialists are maintaining fairly buoyant
workflows and incomes. Likewise, debt collection specialist firms will have
experienced increasing instructions, but if they are paid on the basis of a
percentage of funds collected, then they may get the feeling they are
spinning their wheels to go nearly nowhere.

“Firms certainly suffer from the problem of slow payment of fees,” says
Dryllerakis. “But considering how bad the economic crisis has been in
Greece, it its not as bad for lawyers as some might assume.”

Karatzas agrees the Greek legal sector is trying to keep its collective
chin up. “Rumours suggest that most firms are hopeful,” she relates, “but
they are still very stressed. For us, 2013 was not a bad year. We have a
lot of work, but we get paid more slowly and the fees are not as high as
they used to be.”

Lawyers claim that firm personnel movements are not compiled or officially
published in Greece, so discussion of the health of practices relies
exclusively on speculation.

That said, Gus Papamichalopoulos, the partner heading the energy and
infrastructure department at Kyriakides Georgopoulos, claims local firms
have “maintained a general sense of optimism throughout the difficult years
for the Greek legal market. By and large, there is the sense that lawyer
staff has been maintained at the same, pre-crisis levels.” Indeed, it is
widely agreed that firms have been reluctant to make lawyer redundancies,
preferring to cut costs in any other way possible.

“In our case,” comments Papamichalopoulos, “we not only managed to maintain
lawyer staff, but to increase the number of lawyers. This was accomplished
through more efficient management of costs.” He claims the firm is the
largest in the local market with 112 lawyers on its books.

Local lawyers point out there were considerable amounts of banking work in
the jurisdiction last year, generated by significant recapitalising and
market consolidation. Indeed, the Greek banking sector is considerably
slimmer than it was pre-crisis. There are four “systemic” banks – Alpha,
Eurobank Ergasias, the National Bank of Greece and Piraeus Bank – along
with a tight group of very small institutions that are either for sale or
destined to remain independent.

Karatzas, whose firm specialises in banking work, says there are hopes that
Eurobank will be privatised.

“It was the only systemic bank that wasn’t able to raise the 10 per cent of
private capital needed to be private rather than being capitalised by the
stability fund,” she explains. “So we’re looking forward to more private
funds coming into the Greek banking system and further recapitalisation.”

Papamichalopoulos agrees that banking “drove a lot of legal work”. Other
practice areas piquing lawyer interest include regulation in the energy and
transport fields, along with tax and employment issues. However, lawyers
remain pessimistic over project finance, which they say is flat owing to
the difficult situation around local banks.

Papamichalopoulos also points to a gradual return of private equity funds
to the Greek market, albeit at an “exploratory level”. Nonetheless, he
remains hopeful. “There is indication – even at this early stage in the
year – that 2014 will bring about a renewed interest in Greece, especially
in the infrastructure sector, which will result into more robust
investment.”

Greece has been on a hugely painful economic and social journey over the
last few years. And to be fair, local law firms have suffered far less than
many others in the wider economy. And while the prospect of bailing out of
the eurozone has receded significantly, there are still several doses of
strong medicine to swallow.

At the beginning of this month, Germany’s finance ministry suggested that a
third loan was headed Athens’ way, albeit a comparatively small chunk of
change of some €10 to €20bn. Maintaining lawyer numbers at Greek law firms
will become increasingly more difficult if another round of austerity is on
the cards.

SEE MORE DETAILS OF THE GREEK LAW FIRMS INVOLVED AT THE END OF THE ARTICLE

http://www.thelawyer.com/analysis/market-analysis/regions/europe-analysis/greece-survival-of-the-leanest/3016097.article

-----------------------------------------------------
June Samaras
2020 Old Station Rd
Streetsville,Ontario
Canada L5M 2V1
Tel : 905-542-1877
E-mail : june.samaras at gmail.com
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