Teamwork, in such cases, becomes more than just a fancy, politically correct concept that board members like to hear about when presented with a strategy plan. It becomes a must-have in blurry business environments, the one thing any potential investor has to make work.
Fade in to the otherwise bad-mouthed ‘partners in crime’ that make such plans actually come to fruition. We now get to meet the often-despised lawyers, auditors, management advisers or headhunters, who have built up a network so strong that things actually start to appear brighter.
When lawyer jokes are no longer appropriate…
Romania’s development over the last 23 years has been to the advantage of commercial law firms, with the shock treatment of rapid privatization and a mad rush from foreign investors seen in much of Central and Eastern Europe, meaning the legal industry in those nations grew massively in a short period of time.
The profession wins out when the good times roll, by fixing mergers and acquisitions and transactions and also when the bad times come, by dealing with liquidations and foreclosures.
The legal services market in Romania currently witness strong growth on the back of major deals in energy and dispute resolution.
Of course, with ‘crisis’ being everybody’s go-to word nowadays, challenges are popping out every given moment, but the legal market in Romania is viewed by most major players as a stable and mature enough one, highly competitive and yielding, if not hefty profits, at least solid basis for future development.
Although there is no official data that everyone can agree upon to confirm the top tier of law firms in Romania, they are understood to include names such as NNDKP, Tuca, Musat and Bostina – all Romanian-based firms. They have all managed to grow with the economy, continue to thrive and gain market recognition.
But there is competition in the form of a pincer movement: international firms scouting the market from above and a growing second tier of firms of young upstarts from below. With Romania becoming home to headline-making investment news in the past years, foreign counsel has followed suit, setting up shop locally to better serve the needs of their billion-Euro clients.
Along these lines, there is no doubt that commercial law has evolved into a distinctive branch of the legal profession, with ‘billing hours’ becoming one of the most popular ways to measure a lawyer’s productivity.
The demand for niche services in law will increase – but there still is dispute among the legal community as to whether Romania has a ‘critical lack’ of specialist lawyers, or whether it is still at the development stage where generalist lawyers are most necessary. With deals still in the making, and with every election year casting doubts on the natural functioning of any industry in Romania, one can only wait and see what’s in store for the years to come.
Taxation, view from a new perspective
The reduction of trade barriers, the ease of moving goods and services around the globe via the internet, and modern transportation means that cross-border trading – once the preserve of a small group of multinational companies – is now part of mainstream business activity.
Such cross-border activity exposes businesses and the people they employ to taxes and tax systems in the jurisdictions where customers are based, which brings not only opportunity but also potential issues and conflict between tax systems.
Tax consultancy companies make their way to the front of the line in such cases, with never-ending changes to Romania’s fiscal code and procedural glitches keeping market players on their toes. These changes have made the role of tax advisers ever more crucial in helping businesses reach their desired destinations and avoiding the hazards.
Although Romania continues to be an attractive location for important investors, due to its reduced flat-rate tax of 16 per cent both for individuals and corporations, cheaper labour force, strategic location and natural resources, the recent downturn in the economy has adversely affected the level of foreign investment. Investors are also discouraged by factors such as the unstable tax legislation or level of bureaucracy – which is indicated by the relatively high number of taxes and declarations a business must comply with.
When finding the right people really makes the difference
And yes, cheap labour force is another overused turn of phrase when referring to Romania’s most appealing assets.
But can cheap always mean better? How much does saving costs by paying low wages count in a company’s business plan?
A recent study by PricewaterhouseCoopers, dubbed ‘CEO Survey 2012’, reveals that Romanian managers believe more in a positive evolution of the businesses they run and are more sceptical with regards to the evolution of the global economy, expecting a new period filled with volatility and insecurities.
In a move to counteract the adverse effects of a climate flawed by political and economic instabilities, CEOs of large local companies say they need gifted managers and better prepared employees.
But Romania’s talent deficit still is a burning question for businesses wanting to grow their volumes, and, unfortunately, the Romanian education system offers less and less prepared graduates. The ‘brain drain’ seems more current than ever, when every young graduate’s dream is to leave this country and do whatever it takes to make it in other markets.
With such a background, recruiting firms in Romania are taking the extra step in tailoring results to requests that tend to produce low margins. Around 1,000 are employed in executive search and recruitment in Romania - while those employed in human resources are probably in the 10,000s.
On a side note, one extremely challenging and worth following experiment in Romania is the request by the International Monetary Fund - included in the agreement it signed with Romania for a loan worth 3.6 million Euro - to appoint private managers to several state-owned companies, in a move to instill private spirit into the ailing loss-making mammoths that stall development. At present, the Ministry of Economy runs two parallel projects - the support of private executive search companies - with the aim of, on one hand, selecting CEOs and CFOs for some state companies and, on the other hand, of changing boards of administrators for others.
The question still remains: can such a circle of trust be built?
And who is the right partner to move forward with?
