Modern Twists for the Legal Services-Opportunities and Challenges
Written by Emily Christofidou
US President John F. Kennedy excellently said, “Change is the law of life. And those who look only to the past or present are certain to miss the future”. Undoubtedly, in an era of rising technology, innovation and expansion, law firms in Cyprus are eager to find new competitive services and dynamic workforce to differentiate and stand out.
Over the past two years, the legal profession had to deal with unprecedent challenges. The covid-19 pandemic together with the financial, sectoral and individual restrictive measures imposed by the Westerns to Russia in an attempt to penalize the invasion to Ukraine, has tied the hands of law offices dealing predominantly with the provision of fiduciary and corporate services and has affected their progress and economic stability. The traditional services of nominee and administration appear to have considerably diminished as the main and most profitable market for decades was the Russian market.
Consequently, the next big question is what new opportunities lie ahead for the Cyprus law firms? The time has come for the traditional law firms to expand and modernize their services to include technological and innovation advice as well as licensing and on-going legal support to companies relocated to Cyprus.
Licensing lies at the heart of the professional services industry as it presupposes substantial commercial presence in Cyprus, in contrast to the so called ‘letterbox companies’ which used to play the leading role in the corporate services so far. The island’s advantageous tax and regulatory regime and its geographical position makes it the best jurisdiction for applying for a license for an EMI, a Payment Institution (PI), Crypto-Asset Service Providers (CASP) and Fund Managers. To a great extent, licensing consultancy services require knowledge of the latest technological trends and developments. A good example of how law and technology can work alongside and complement each other is their meaningful cooperation when it comes to headquartering or relocation projects. To give a concrete example, in the course of a headquartering or relocation, the client will seek for advice in the field of data protection or for the conclusion of software agreements. Such advice will necessitate a fruitful collaboration between the lawyer who will advise the IT consultant for the implementation of the relevant legal framework and negotiate the main terms of such agreements and the IT consultant who will install the software and accommodate it to the needs of the client and follow the legal advice given by the lawyers.
Furthermore, technological advancement is also intrinsically connected with the new worldwide trend of Fintech. Fintech companies, fintech start-ups and data firms are fairly characterized as the new era in the legal profession with great opportunities for the investors who will choose Cyprus as their business destination for investment.
As regards the traditional finance and corporate transactional work, this will remain the dominant source of work for all leading law firms. The magnitude of success in this field is impressive, since Cypriot lawyers have proved to be top-tier advisors with great and valuable experience. However, the new challenge would be for lawyers to explore new markets such as Israel and India. Israel and Cyprus are only separated by a less than one hour flight which makes things easier. The paths are now open for these two countries to strengthen their business relationship and flourish their co-operation. In addition, India is already considered to be an attractive destination for doing business. The new double tax treaty signed on 18 November 2017 provides a strong regulatory basis for Indian companies to be benefited from Cyprus. In particular, Indian investors could invest in Cyprus and be benefited from its competitive tax environment as well as to use it as a gateway to further investments in Europe.
The shift from the traditional fiduciary and corporate services sector towards a business model influenced by the business needs of Tech innovators is obvious. This does not necessarily mean the decline of corporate services and financing transactions as we have known them, but that traditional corporate and transactional work shall be further enhanced to accommodate the latest technological trends with a view to servicing regulated entities that offer technological solutions, such a EMIs and Fintech companies. In that respect, business leaders in Cyprus are in the process of adapting their business models to the needs of a more technology orientated clientele and the exploration of new markets. Certainly the future looks promising.
For further information or advice on these matters, please contact Emily Christofidou, Senior Associate in the Corporate Services Department (email: firstname.lastname@example.org, telephone number: +357 22 653323)