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Overview
The Czech economy remained active in 2008 despite the global economic downturn, with a noticeable drop in real estate investment and mergers and acquisitions activity only impacting very late in the year. The state’s position as one of the Central and Eastern European countries that has enjoyed record growth, and an apparent immunity to credit crunch problems for so long, means a somewhat inevitable downturn in 2009 is expected to be short-lived and far less severe than elsewhere.
A period of political instability, characterised by successive coalition governments and inconclusive parliamentary elections, had in 2008 done little to dampen consumer spending or foreign direct investment in the Czech Republic. The governing centre-right coalition of the Civic Democratic Party, the Christian Democratic Union-Czechoslovak People’s Party and the Green Party appeared to be stable in the short to medium term, while the presidential election in Spring 2008 re-elected incumbent Václav Klaus for a five-year term in a second ballot after no winner emerged in the first round.
For law firms in the Czech Republic, a previously booming real estate market has slowed thanks to a global reluctance on the part of investors, though the country remains one of the most attractive for multinationals setting up regional CEE operations. Improvements in the country’s infrastructure mean any investment is now spreading beyond the capital Prague into the second and third cities, Brno and Ostrava, while employment and restructuring work is increasingly active in light of global economic pressures on existing investors.
A political appetite for the use of public-private partnerships to further develop the country’s road and rail networks looks set to finally bear fruit in 2009, with a number of projects now about to launch as the government looks to fuel economic activity with state investment.
International law firms have been present in the Czech Republic for many years, attracted in the first instance by a wave of privatisations that followed the collapse of communism and kept interested by a constant diet of corporate finance and commercial work for international clients investing in the country.
Four international law firms have committed significant resource not only to the Czech economy but to the region as a whole over the last two decades: Allen & Overy, Clifford Chance, CMS Cameron McKenna v.o.s. and White & Case, while a fifth, Linklaters, abandoned the market in November 2008. The firm’s operations in Prague and across CEE are now independently operated by its former lawyers under the brand name Kinstellar s.r.o advokátní kancelár.
The last year has been an active one for the major Czech law firms, who continue to give their international rivals a run for their money thanks to their ability to attract talented lawyers away from the larger outfits. Chief amongst them are the highly successful firms of Brzobohaty Broz & Honsa, v.o.s. (BBH), Glatzová & Co., v.o.s., Havel & Holásek s.r.o. Attorneys-at-Law, Kocián Solc Balastík and PRK Partners s.r.o. advokátní kancelár.
A number of international firms have identified the Czech Republic, and Central and Eastern Europe as a whole, as a growth opportunity as more mature economies suffer from the credit crunch. Two new entrants opened in Prague in 2008: the English firm Bird & Bird s.r.o, which will focus on intellectual property work and advice to its international clients in the TMT and energy sectors, amongst others, and Austria’s Schönherr, which took on the office of German firm Gleiss Lutz when it left the market.