Constantinou-Panayiotou: Law firms under pressure – Sector to be reinforced

The legal services sector will find itself faced with global challenges, including economic pressures and heightened concerns about cyber security, in 2024, according to Georgia Constantinou-Panayiotou, Founding and Managing Partner at Constantinou Panayiotou & Co LLC-GCP LAW.

Speaking to InBusinessNews as part of its IN Business Forecasting 2024 series, Constantinou-Panayiotou said that law firms are under pressure to find safe ways to operate effectively and efficiently, what with rising interest rates and the high cost of living leading clients to factor in the costs when choosing a law firm.

As she indicates, in order to strengthen the field of legal services and justice more broadly, it is necessary to achieve small, but also larger, visionary goals, which she identifies.

To this end, she stressed the need to speed up the implementation of “Cyprus Vision 2035”, the government’s long-term strategy for the island’s sustainable growth.

As for Constantinou Panayiotou & Co LLC-GCP Law, the company’s Founding and Managing Partner said that in recent years its primary target has been to adjust to the new global state of affairs, focusing on technological transformation by purchasing modern software.

How do you see the economic environment shaping up in 2024, in light of inflationary pressures, high interest rates and unpredictable ever-changing geopolitical developments? What do you consider to be the biggest and most difficult challenges?

Based on the latest economic forecasts of the European Commission and the December 2023 Rating Action Report by Fitch, 2024 has a positive outlook and is expected to be promising for the Cypriot economy.

Despite the challenges throughout the year 2023 that highlighted the resilience of the Cypriot economy, a gradual recovery is expected in the coming years.

With expected GDP growth rates of 2.7% in 2024 and 3% in 2025, the economy is poised for positive momentum. The balance is projected to be in surplus for both subsequent years, while the public debt-to-GDP ratio is projected to decrease from 79.6% in 2023, to 73.5% in 2024, and to 67.4%% in 2025.

Contrary to the great pressures it exerts on businesses, the increase in interest rates created positive trends in the profitability of banks and consequently, better conditions for the banking sector, especially after the upgrades of the two largest Cypriot banks by Fitch last November, accompanied by the upgrade of our banking sector to 'bb' from 'b'.

I also note the inflow of significant capital from European funds which reinforces the favourable scenarios for further growth in 2024 and 2025. However, a realistic reading of the wider geopolitical situation, especially for Cyprus, should also be taken into account.

That is why I believe that further escalation of the geopolitical conditions in Ukraine and the Middle East will negatively affect both tourism and investments, especially in relation to Israel as our close trading partner especially in recent years.

Additional factors may negatively affect the positive forecasts, such as e.g. a failure to further reduce public debt due to a new macroeconomic shock.

What do you think will be the course of the sector in which you operate in 2024, what are the problems and what trends and changes will we see? If you could ask the government to take specific measures, what would they be?

A report recently published by the Law Society in England predicts several global challenges for the legal services sector in 2024, including financial pressures and increased concerns about cyber security.

With the increased need for cyber security, there is a growing demand for law firms to prioritise protecting client data from potential breaches.

Rising interest rates and the cost of living have led clients to become even more price-conscious when choosing a law firm. As a result, law firms are under pressure to find secure ways to work more efficiently and reduce costs.

In order to strengthen the field of legal services and justice more broadly, it is necessary to achieve small, but also larger, visionary goals. Starting from the small but immediately necessary goals, I would say that first of all, the reform of justice and the judicial system must be completed with the operation of the new substantively competent courts, solving the problem of huge delays in the trial of cases.

Other objectives are to solve the problem of non-execution of court decisions, as well as to solve the building problems for housing courts.

I also wish that the goal of increasing the legal matter, which has been plaguing lawyers, will be achieved soon, and here decisive and creative actions are required from the Cyprus Bar Association which needs to achieve synergies with the executive and legislative power to pass the relevant bills, not only for the drawing up of contracts for the purchase and sale of real estate, which I understand has been derailed, but also in other areas that will also help the smaller law firms and the younger lawyers.

Long-term and certainly more visionary goals are needed, among other things, to transform the tax system through a holistic reform, suppress destructive bureaucracy that is putting the brakes on every private sector effort, but also promote new business plans and modern sectors of the economy by providing incentives, and a shift towards technology, making Cyprus a more active participant in the 4th Industrial Revolution and creating conditions for the practice of law, and by extension, lawyers’ prosperity.

Finally, I will insist that the implementation of the Long-Term Strategy for the Sustainable Development of the Cypriot Economy "Vision 2035" of the Economy Council must be continued and quickly completed.

What are your firm’s plans/strategy for 2024?

The primary objective of the Constantinou Panayiotou & Co LLC-GCP Law law firm in recent years has been to adjust to the new global conditions, focusing on technological transformation with the purchase of modern software.

But beyond this, I would like to stress that for us, practicing law is not a business or at least, it is not just about business.

As lawyers, we will continue to serve justice through the relationship of trust that we build with our clients, which is why it is vitally important to continue to reinforce and enrich our human resources.

What role does the technology factor, such as artificial intelligence, have to play and how is it expected to change your industry?

The rapid development of artificial intelligence has far-reaching implications for the legal sector. In Cyprus the discussion on technology in justice at the moment is limited to the operation of the e-justice system, which we certainly welcome as a positive step, although it was at least a decade late.

There are six main ways in which artificial intelligence is used around the world:

Electronic information discovery, expert automation, legal research, document management, contract and dispute analysis and production, and predictive case analysis.

In these six key areas, AI is revolutionising the delivery of legal services, enabling faster and more accurate document review, automated routine tasks, and even predicting case outcomes.

As AI becomes more prevalent in the legal field, it brings to the fore many legal, ethical, regulatory concerns, most notably regarding the accuracy and reliability of AI-derived legal guidance.

Predictions for the future of the legal world, however, include widespread online courts and global law firms that rely primarily on artificial intelligence.

Therefore, it is evident that in the coming years, the legal world will have to embrace technology as a useful tool.