By David Clark
Consultant, Bener Law Office, Istanbul
Istanbul can be professionally challenging, but the rewards can be immense.
For Western law firms and companies entering the Turkish legal market one of the biggest challenges is the necessity to be flexible to fit in with the local business culture. Some big names have struggled to win business in Turkey because they have rigidly stuck to a business model that works well elsewhere without making any local concessions.
Personal relationships are crucial to success here.
Another element that can cause complication is obtaining of the necessary work and residence permits for foreign workers and their families. This needs careful attention particularly for professionals like lawyers and engineers, and is an area that Maria Celebi and her Immigration team at the Bener Law Office in Istanbul have helped many leading companies to navigate.
For Western lawyers who do take the plunge, finding success is not much different than in any other unfamiliar country. It takes significant individual investment in learning the local culture and business environment to become successful. Without taking the time to build a genuinely strong network and an understanding of what is important to decision makers here in Turkey when they select their lawyer, it is a difficult market in which to create a robust business.
David Clark is a consultant at Bener Law Office in Istanbul.
But for those who do enter the market, the benefits can be substantial.
Turkey does provide an exciting environment to live and work in. It is an emerging market so, provided one has a positive mind-set to the inevitable inefficiencies and occasional frustrations that can arise from a young system and different culture, it can offer a huge range of professional opportunity across many different sectors.
The business market is growing significantly and opportunities abound. Corporate and M&A work continue to be mainstays. Turkey has received investments from the West for many years but in recent times Gulf country based companies are playing a major and increasing role in investing in Turkey. We are also starting to see opportunities where Gulf based and Turkish companies are looking to form partnerships and joint ventures to do business with Europe. It is also common that international companies have set up in Turkey as a regional hub do conduct business with North Africa, Iran, Iraq, Azerbaijan and others; so Turkey’s role as a hub for the region and bridge between Europe and the Middle East as well as Africa, CIS and Asia is a crucial one.
In terms of lifestyle Istanbul in particular is very ex-pat friendly with a high level of English ability in the professional realm and a very welcoming people more generally. It is a large city with something to satisfy almost any interest, from immense history, culture and architecture to excellent restaurants, nightlife and café culture. It also has very nice weather many months of the year, which is a nice bonus for those coming from London! The wider Turkey is a treasure trove of experiences with varied cultures and cuisines to enjoy on beautiful beaches, amongst incredible landscapes and even at ski resorts.
Other emerging nations can no doubt offer interesting legal markets to rival Turkey, but for those with family and roots in the UK or other European countries it has the distinction of being much closer, with flight time to London of only four hours.
Istanbul versus Ankara, west versus east
The two cities are very different in their advantages. Istanbul is the commercial capital of Turkey and is where much of the business takes place, but Ankara is the seat of government.
It is important to consider the key stakeholders in the industries that a firm will be primarily involved with; for example many companies that need to be in close contact with government authorities for issues like licensing can be well advised to have a presence in Ankara. Istanbul does tend to be favored, however, for a number of reasons; aside from the higher level of commercial activity it is also easier to find the right employees and is usually preferred from a lifestyle point of view too.
Turkey has a very interesting society with many unique cultural complexities and polarizations that create great challenges, particularly in the current period of change, as well as providing a tremendous charm and advantageous position for the country.
Whether Turkey is culturally more aligned with East of West depends entirely on the perspective.
From the corporate point of view the ethos has been profoundly changing in recent years, and is now slightly closer to Europe in my opinion. This has been driven by elements like corporate strategies, generational change in leadership, the necessary influx of foreign expertise and government policy supported by various legislation changes to closer align with Europe.
When talking about the overriding cultural soul of the nation however, Turkey tends a little more towards the East. Naturally though, it is not that simple to generalize a culture that spans two continents from the borders and influences of Europe to those of Syria, Iraq, Iran, Armenia, Georgia and even an enclave of Azerbaijan.
The futility of trying to categorize Turkish cultural alignment is actually one of the country’s greatest strengths; Turkey is a bridge between east and west not only geographically, but its people are also adept at interchanging between the different cultures which bolsters its ability to profit as a hub not only between east and west, but also North Africa and the CIS. Many international businesses have located their regional headquarters to Turkey to take advantage of this, and the relative stability compared to some surrounding nations continues to add to the attractiveness of the Turkey.
Future market growth
There are already many significant Western law firms in Turkey. Bener Law Office has 15 years of experience handling major international transactions here. White & Case has been in the market for almost 30 years and is fairly unique in its level of experience as an international law firm because the vast majority of western firms have only opened Turkish offices in the last two years or so.
But more firms are likely to come and the recent influx has created a strain in the legal services market through increased competition and oversupply in certain practices, which will take a little time to settle. But in the long run it should be good for the market.
Rather than bar rules easing to allow more Western firms to enter, since many of them have already arrived we anticipate that bar rules may adapt to create a fairness of competition between local and international law firms, for example by easing restrictions on advertising and other business related matters.
Key industries, opportunities
Along with the legal work mentioned above, Public Private Partnership (PPP) is a relatively new trend driving significant work, although very few have closed to date and are currently experiencing challenges at financing stage. Activity in the healthcare, transport infrastructure, leisure and real estate sectors are prevalent.
There are a number of other factors that are influential, for example the boom in large scale construction and infrastructure work is naturally increasing the prevalence of cross border litigation and arbitration.
Retail and e-commerce are very strong areas at the moment. Our team, for instance, having handled the majority of major international ecommerce/internet investments, starting with acting for eBay, Inc. in what remains the largest completed transaction in the market, and a number of private equity transactions.
In retail we have seen an increasing number of joint ventures and M&A with investors from Europe and the Middle East with major coffee and fashion chain deals being completed among others.
In another interesting development, which is opening up opportunities, smaller cities in Anatolia such as Kayseri and Gaziantep are becoming interesting for small to mid-sized M&A activity as well as for real estate development, with one of our key real estate clients developing shopping malls in several cities outside of the normal locations of Istanbul, Ankara and Izmir.
The new commercial code has also increased the need for lawyers to assist SMEs, which is also generating work for our corporate maintenance department.
Positive steps
There have been a number of incentives brought in recently, including “zone” incentives for central and eastern Turkish provinces to encourage investment into those regions, which have been helpful.
Capital markets law also changed recently, with others not long ago, which have opened up the market in different ways, Mining and renewable energy laws being other decent examples. There are also a number of draft regulations in the pipeline, but it is not clear how they will impact the market at this point.
The recent amendment in real estate law is intended to permit foreign citizens to obtain residence permits if they buy properties; I believe this will be a very positive step.
Impact of politics
Finally, in terms of international investment, and particularly new investment decisions, the current political situation has slowed the market significantly in my experience.
The issues are fundamentally important for the Turkish people, but in reality the international investor is primarily interested in having a transparent environment where the various parameters and risks can be seen, understood and managed. The market is naturally unsettled as 2014 and 2015 are major election years that follow civil unrest, but the various additional factors including allegations of high level corruption as well as a perceived erosion of the independence of the judiciary have introduced some substantial uncertainties.
This current situation comes off the back of a number of years of strong development and legislative moves to encourage inward investment however, and it is my firm belief that Turkey will continue its positive macro trend. Irrespective of who emerges victorious from election season the dust needs to settle before investor appetite returns fully, and there is a lot of ‘dust’ in the air at the moment.
Turkey continues to grow both in terms of population and GDP and there will be increased business opportunity and continuing need for new infrastructure.
This will of course keep the attractiveness of the market high, drive inward investment and produce legal work.
David Clark is a consultant and business development specialist with Bener Law Office, a full service corporate law firm based in Istanbul.
