The Art of Long-Term Partnership with Agribusiness
Konstantin Tkachenko, Valentin Horoshun 3.07.2019
Arzinger Law Firm is well-established in the Ukrainian agricultural market. It has participated in legal support of many high-profile cases and often knows more about clients from the agricultural segment than they do themselves. had a talk with one of the company's partners, Oleksandr Plotnikov, who heads the banking and finance practice and also supervises the agricultural sector in Arzinger.
— How did you end up being responsible for the agricultural sector?
— The core direction I supervised was and still is banking and finance law. And it so happens that over the past few years I have managed a lot of projects related to agribusiness, including various financing projects and restructuring the debts of companies such as Mriya Agroholding and Creative Group. I have developed a good understanding of the industry and attracted clients from the agricultural sector.
— What Arzinger practices are most involved in dealing with clients from the agricultural sector?
— Practically all practices are involved, but the market situation dictates which one is most in demand at a given time.
Some time ago, the practice of restructuring had the most work to do. Against the background of such high-profile cases as Mriya and Creative, there was also a lot of work on smaller projects, but it was no less complex. Now the wave of restructurings has subsided, and the issues of taxes, protection against raiding and fraud have become more urgent. Although the practice of tax disputes, perhaps, is constantly in high demand.
More recently, the M&A market has obviously picked up. Lately we have closed the deal on acquisition by Delta Wilmar of the Ukrainian manufacturer of foodstuffs Chumak and there are some more interesting M&A projects.
— A number of law firms position themselves as professionals of working with the agricultural sector. Will you tell about special instruments Arzinger provides agrarians with?
— I would not say that our company has narrow sectoral interests in agribusiness. We work in different sectors. Again, the agro industry is just one of many for us. But over time, we came to the conclusion that in order to work well for the client and provide him with services at the level of his expectations, for the money he pays us, we need to be good not only at the law, but also at the specifics of each separate industry.

This is why we develop not only out practices, but also our expertise in industries where we pay great attention not only to polishing our legal techniques and so on, but to communication with clients, understanding their needs.

At the same time, our company has no separate "agricultural division". Practically all the lawyers working for us, from time to time participate in projects related to agribusiness.
— How can agricultural companies benefit from the services you provide? Are there standard products that you offer to clients of this sector?
— The majority of large and medium-sized agricultural companies have their own legal departments, some of which exceed the number of lawyers in most Ukrainian law firms. We do not see any sense in competing with in-house lawyers, but offer assistance in issues they are unable to resolve for one reason or another. In most cases, these are non-standard tasks requiring the expertise and skills we have. Given the gravity of the situation in the country, the range of such tasks is rather wide — from defense in criminal cases to operations on international capital markets. So there is work for everyone.

Surely we have standardized solutions, such as compliance and anti-corruption audits. We do a lot of such projects for clients from other industries (e.g. pharmaceutical and banking), but such services are not in demand among agricultural companies yet. In my opinion, this is explained by the fact that they are not yet so deeply integrated into the international business system, where compliance with the established high standards is a prerequisite for work.
— Is it believed that agriproducers are rather peculiar clients. In contrast to the industrialists, one needs first to get through, to listen to them and only after that to establish business contact. Does this fit with your experience of dealing with clients from the agricultural sector?

The agricultural clients can be divided into categories. That is, there are large companies, business leaders, well-structured holdings with a streamlined corporate structure and a management structure where specific people are responsible for specific areas. They are basically more business-oriented, they have international experience. It is easier to communicate with them in terms of quick getting down to business.
If we talk about smaller companies, smaller sizes, where the processes are not yet well-established, where the owner is still quite strongly involved in business management, there really are some peculiarities. Although it takes much more time, here it is necessary to build relationships, to gain trust as a person treats a company as his brainchild. It is difficult for him to entrust an important piece of work to a stranger. He tries to control it. One should not underestimate the importance of finding a common language with such people. But if you succeed, they will much loyal to the company.
Oleksandr Plotnikov interview for
Oleksandr Plotnikov
— Speaking of clients: how is Arzinger different from other law firms? Why do clients choose you?
— Clients often ask this question at the consultant selection stage. And many are puzzled by this question. It may seem like a simple question, but in fact 90% of them will have the same answer — we have the best lawyers, the best expertise and experience. It's all true, but over time you realize that there are a lot of competitors with the same experience and lawyers who migrate from one company to another now and then, but the client chooses you. Or, on the contrary, he doesn't choose you. There are several top-level companies on the market that can provide services in core practices at more or less the equal level. It turns out that there are basically no fundamental differences. Therefore, at the level of top clients it is not so much the experience and knowledge that matters, but rather the trust in you as a consultant and partner. And it is not that you are different from your competitors, but how you will be different for this particular client. What can you do for him to gain his trust? We always try to be not only consultants for our clients, but also business partners, sharing their values, interests and risks.
— Does the price matter?
— It depends on a case. Obviously, in many cases, when the choice is made of companies of the same level, price is one of the main criteria. But there are situations when the issue of price becomes a minor one. This is dictated by the complexity and urgency of the issue. Not to mention the names, but lately there have been several projects in which the price issue has not even been raised — the client has paid everything we have charged. In such cases it is crucial to deliver the result the client needs, and he appreciates it. Naturally, such projects do not just appear, they are preceded by years of cooperation with the client and unconditional trust on his part.
— Judging by your experience, what are the main internal problems agricultural clients have?
— Each industry has specific features, but if one moves away from industry specialization and regard them as a business as such, then as a lawyer I see a few features inherent in agricultural companies. Above all, there are legal issues. Many of them are related to the rapid business growth. In a relatively short period of time, some companies have grown from small businesses to the size of large holdings with subsidiaries not only in Ukraine, but also abroad.
During the period of rapid growth, many people did not pay due attention to the quality of merger processes legal support and business expansion, resulting in violations of antimonopoly legislation. This is one of the most painful topics, which is aggravated by the fact that many do not suspect its existence.
Besides, we often see that the legal department of the company does not keep up with the growth of the business and at some point stops coping with the duties assigned to it. Sometimes it is related to the number of lawyers, and sometimes to the level of their competence. It is not easy for owners to part with people who have worked in the company for a long time but no longer correspond to its level. This inevitably leads to failures and increases the risks for the business on the whole.
Oleksandr Plotnikov interview for
Another feature characterizing large companies is an unnecessarily complex corporate structure. Sometimes there is no logic in such a structure, and the main explanation is "It is historically so". In addition to the fact that such a structure is rather difficult to control, thus creating additional risks for business and contributing to internal corruption, it is also expensive to maintain. The issue of optimizing the structure is quite painful and often meets with resistance within the company. Therefore, it is essential that the changes are supported by the owners, management and executors. If some of them have no interest in it, the already complicated process of reorganization can turn into a real nightmare. Therefore, the problem should be identified in time and brought to light.
— Many clients are being supported for about 10 years. What facilitates such a long-standing cooperation?
— This apparently is a matter of personal trust. This means that they are satisfied with the services we provide. Well, trust, in fact, develops into personal friendly relations, because once you go through many ups and downs with them during this time, it is really difficult to stand aside just as a consultant. Actually, we strive to be not just consultants, but business partners. Maybe that's why many stay with us for so long. Indeed, it is quite often, although it may not be right for a lawyer, when we take the client's problems as our own. It's harder to live with, but clients appreciate it.
— How has the market as a whole and agricultural in particular changed over 9 years since you joined the company?
— There certainly are changes. But I cannot say that they are radical. The global problems remain the same: tax disputes, land conflicts, raids, fraud. That's if we talk about the bad things.

However, there are positive changes to mention like the clear progress in corporate governance, the successful application of foreign colleagues experience and the cooperation of all market players in building a civilized market in Ukraine and training qualified personnel for the agricultural sector.
— Do you think with the liberalization of land market, there will be plenty of work for lawyers and you personally?
— I'm sure there will be a lot more. Because the sale of land will surely be a very strong impetus for the development of a number of sectors: the agricultural sector, the financial sector, and related industries. The problem is that today it is difficult to predict when the moratorium will be lifted.
— You are in contact with market participants. Do they have expectations about the coming year?
— There are individuals who predict that the theoretical lifting of the moratorium may be achieved in the near future after the change in the composition of parliament. But so far, this is just a guesswork. In Ukraine, a lot of different forces of influence are involved in the land market. And it is very difficult to predict what will be the result of their interaction.

On professional commandments, loyal clients, working into the future and
word-of-mouth marketing

— One of the main commandments of a lawyer is do no harm. Do you have your personal professional commandments?
Do no harm is a good commandment and I definitely stick to it. In addition, one of the basic rules that I follow and teach our lawyers is that one should never be afraid to ask a client questions. If you're not sure if you understand the client correctly, you should ask again. Often lawyers are afraid that additional questions may provoke discontent with the client. Sometimes they do, but it is still better to find out everything from the start than to misunderstand, do the wrong thing and as a result lose the client.
— Have you ever lost a client?
— Surely there were situations when clients refused to work with us for one reason or another. Arzinger Company will soon turn 16 years old. But, as a rule, the clients' refusal is not connected with any faults on our part. Sometimes it is connected with the pricing policy, sometimes it is caused by some personal preferences. But we do not make a tragedy out of it. Moreover, very often our former clients come back to us in a few years. This is a normal course of business.
— What companies do you like to work with?
— First I would like to note that we do not split clients into those with whom we like to work and those with whom we do not. This is not the criterion by which we choose our clients.

We appreciate customers willing to develop. Working with such clients is interesting, it allows us to develop together with them. It is exciting when you face professional challenges and gain new experience. It is also interesting to do something no one has ever done before. Although this rarely happens in the legal profession.
— Do clients hire you more often to work into the future or to solve extraordinary cases when a thing is done? Are there companies you provide permanent services?
— It can go either way. Indeed, there are companies that we provide services on a regular basis, and we actually back up their legal department. But these are mostly foreign companies with a limited number of lawyers who cover only specific internal issues of the company. Everything else is outsourced.
As for Ukrainian companies, when working with them, we are aimed at solving complex problems and non-standard situations. It happens that the client does not apply to us for half a year, and then, within the next six months, he sends five requests simply because the time for our services has come.
— How do agricultural clients learn about your company? Is it word-of-mouth marketing?
— We have reached the level when the brand is working so that the company needs no introduction. We are quite recognizable in the market, we are known. Although this does not mean that we actively participate in various business associations, we have many meetings with current and potential customers. That is, it is a whole set of actions for business development.

On career and travelling

— Let us get personal. How did your career progress?
— Basically, I haven't always worked for a law firm and I've come a long way. After graduating from Yaroslav Mudryi National Law University in Kharkiv, for three years I was working in the Prosecutor's Office as an investigator. Then I moved to the banking sector to work at UKRSIBBANK and Credit Agricole Bank until I joined Arzinger in 2010.
— One may say you've seen the job from different perspectives. Is it helpful now?
— Absolutely. Some may say that working in the prosecutor's office is a waste of time for a lawyer who is not going to develop a career in public authorities or as a lawyer in criminal cases. But in reality, this is more of a competitive advantage, a good life experience. Thanks to it, one may see many things others cannot. And this experience, of course, came in handy when I faced challenging projects of debt restructuring.
— Are you MBA graduate?
— Not yet, no. In my opinion, it makes no sense to go for MBA just to have extra sheepskin or hang a diploma on the wall. It's a different matter if it helps to build a career and solve the tasks that clients set for you.
For me, MBA is, before all else, an opportunity to develop contacts with business representatives. With people who are or will be managers in large companies in some time.

Well, in general, MBA probably helps to achieve some deeper understanding of the business, the principles of its work, which many lawyers really lack.

Maybe at some point, I will go for it.
Oleksandr Plotnikov interview for
— How often do you travel?
— I travel quite a lot on business and I've been to many countries. I would like to travel more with my family, of course, but so far my travels are actually business trips. Although sometimes they can be combined with vacation.
— What necessitates the frequent trips abroad?
— Most of the projects we work on are in one way or another related to other jurisdictions. Therefore, we need to know lawyers from other countries and we need them to know us. Despite all the modern means of communication, personal acquaintance is the best way to get to know a person and tell them about yourself. In addition, we actively participate in various professional events abroad. It also allows us to be in the open with our colleagues and share our experience.
— Do you have a favorite TV-show about lawyers like Suits?
— I am no fan of TV-shows. Especially about lawyers. I have not seen a single episode of Suits. Firstly, I've got no time. Secondly, in reality, everything is most definitely not so. And when you know it, the TV-show fails to be interesting.

A one-for-the-road joke

— Perhaps you could remember an amusing story with an agrarian client.
— I don't think I can remember one such. Unfortunately, mostly sad stories are remembered. But I won't tell them.
— Well, then what is your favourite professional joke?
— Not my favorite, but it's just this one that comes to mind: Two lawyers come to the bar, sit and start eating sandwiches they've brought with them. The bartender admonishes them: Gentlemen, I'm sorry, but you don't BYOB here. Lawyers exchange glances, shrug, exchange sandwiches and continue eating.

This joke perfectly illustrates the specifics of lawyers' way of thinking.
Konstantin Tkachenko​ and Oleksandr Plotnikov
Konstantin Tkachenko and Oleksandr Plotnikov
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