Michael McBride: What had been built over the last 30 years with the Russian market vanished in less than a year

While acknowledging Cyprus' professional services sector is no longer benefiting from the results of decades of work with Russian clients, Michael McBride, Managing Partner at Chrysses Demetriades & Co. LLC, also underlines that crises create new opportunities.

Commenting on the current state of the professional services sector—including the legal sector—McBride talks about how geopolitical events have affected Cyprus, why he doesn’t think that the government is the best choice to handle Cyprus’ rebranding and explains why he doesn’t agree with a single supervisory authority.

Macroeconomic challenges and geopolitical strife have led to the contraction of the local industry in recent years. How do you assess its present state?

Recent geopolitical events and subsequent sanctions have hit many economies in the EU, including Cyprus, hard. We all see the resulting fall in services and the dwindling of income and consumption. In the case of Cyprus, what had been built over the last 30 years or so with the Russian market vanished in less than one year. However, as with any crisis, there are new opportunities and it is down to the expertise of each provider to exploit them. There will definitely be a rebound of services someday – history shows that all wars have an ending – but for now, it’s basically a waiting game.

Given these challenges, are Cyprus law firms identifying and pursuing new revenue opportunities by tapping into new markets or introducing new service offerings?

Frankly, while efforts are being made to open new markets for legal services, there is mediocre success, given that everyone is waiting for a better political environment. We, as a firm, are taking advantage of this ‘sluggish period’ to update many of our IT systems so we are ready to offer better service once the next wave of new work comes in.

Meanwhile, other industries are taking market share from law firms by providing ‘one-stop solutions’ to clients. Do you foresee this trend driving consolidation within the legal sector? Can law firms adapt to this competitive landscape?

The legal profession has a strict code of ethics, set by the Cyprus Bar Association, that it has to abide by. While most law firms are incorporated as LLCs, they do not and cannot operate as commercial enterprises, so there are limitations inherent to the profession. That said, most law firms also have their own service companies to take care of non-legal work and, in those arrangements, many are consolidating and re-organising themselves. So, yes, there is progress in that regard.

The Finance Ministry plans to introduce a single authority to supervise the whole of the professional services sector, as part of broader efforts to improve the country’s image abroad. What are your thoughts on this?

We do not agree on having a single authority that will regulate the entire sector, including the legal profession. The Cyprus Bar Association, as regulator of the profession in Cyprus, is well equipped to administer authority and has been doing so for decades. This fact that this is not well-known is simply because the CBA does not publish its regulatory work.

Finally, what strategies should be adopted if a substantial rebranding initiative is to be undertaken with the aim of restoring Cyprus’ reputation within the international business community?

I strongly believe that Cyprus has all the potential to be perceived as the best business, holiday and residential destination in Europe and in the wider area. I use the word ‘’perceived’’ because we, as local residents, know very well that we live (on balance) in a fantastic country that really is such a destination to us. As I see it, the problem is that the PR efforts of Cyprus are in the hands of the Government and it is well known that governments (or semi-government organisations) are not the best choice or the most efficient to undertake such activities. What is required, in my opinion, is for the Government to make a substantial amount of funds available for international marketing and to delegate this task to one of the top-tier global marketing agencies for implementation. With a clever and thoughtful plan, it will succeed. At a local level, we need to tidy up our own house in all aspects of living and cleanliness so as to make Cyprus even more attractive. Following the latest reform of local administration, we hope that things will improve.

Moving on to the failed rollout in January of the e-justice system. How did the profession react to this setback and how has it affected your firm’s operations in particular?

The legal profession has embraced the introduction of the e-justice system. It basically digitalises litigation to a large extent, which is a welcome development. There is still a lot of work to be done to perfect it and the legal profession is always available to assist. Admittedly, there is frustration in the profession that the system is not perfect but, looking on the bright side, it can only get better!

This interview first appeared in the August edition of GOLD magazine. Click here to view it.