Dr Nicolas Kyriakides: Cyprus is moving towards higher-quality markets with a greater emphasis on compliance

Dr Nicolas Kyriakides, Partner at Harris Kyriakides law firm, said that legal work in Cyprus is moving towards higher-quality markets with a greater emphasis on compliance, in an interview with GOLD magazine, where he also suggests that in order to remain competitive and relevant, law firms need to strategically adapt in several ways.

He also discusses how law firms are reacting to other industries taking market share by providing ‘one-stop solutions’ to clients, while also suggesting ways to refine the country's rebranding effort.

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

The legal industry in Cyprus is at a crossroads. On the one hand, out-of-court legal work has decreased to some extent due to macroeconomic and geopolitical conditions resulting from the reduction of a group of international clients. On the other hand, judicial work has also decreased due to the ongoing inability of the judicial system to provide swift justice, as well as various changes, such as the new Civil Procedure Regulations, which hinder (not in a negative sense) easy access to justice. This is not necessarily a bad thing. In both areas, legal work in Cyprus seems to be maturing. It is moving towards higher-quality markets with a greater emphasis on compliance. Moreover, lawyers will be dealing with judicial cases of greater value and significance. In this way, and provided that decision makers, judges and lawyers support this change, trust in the judicial system will be restored both from a justice as a well as from a commercial point of view.

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

Like all law firms internationally, Cypriot firms are actively identifying and pursuing new opportunities by tapping into new markets and introducing innovative service offerings. Firstly, as ESG considerations become crucial for businesses, law firms are developing practices that focus on sustainability, corporate social responsibility and governance issues, helping clients navigate these complex requirements. Additionally, firms are bolstering their real estate practices to assist both local and international clients in property transactions, land development and regulatory compliance. Also, with the growing importance of financial technology and blockchain, law firms are expanding their expertise in these areas. They offer legal services related to cryptocurrency regulations, blockchain technology and fintech compliance, as well as representing clients against fraudulent defendants in these industries. Moreover, with increasing concerns over data security, firms are offering specialised services in cybersecurity law, GDPR compliance and data protection advisory. Finally, another area that law firms could explore is public affairs, especially due to the recent law regulating lobbying in Cyprus.

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 trend of accounting firms and other multi-disciplinary service providers capturing market share from traditional law firms by offering one-stop solutions is likely to drive consolidation within the legal sector. To remain competitive and relevant, law firms need to strategically adapt in several ways: they may merge to pool resources, expertise and client bases, enabling them to compete with the comprehensive services offered by firms in other industries. Larger firms might acquire (some have already done so) smaller, specialised firms to broaden their service offerings and enhance their market position. They can also offer more flexible and client-friendly billing arrangements, such as fixed fees or subscription-based models, to provide cost predictability and value. Moreover, traditional law firms should put more pressure on decision-makers to further modernise the judicial system so that litigation, which is their strong point traditionally, remains relevant. Finally, lawyers should ask Parliament to regulate certain types of services, such as advice on real estate transactions, to be provided only by qualified lawyers.

In terms of 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 community has expressed considerable disappointment and frustration over the failed rollout. The Cyprus Bar Association rightly held a strike to make sure we went back to the i-justice system which was functional, contrary to the e-justice one, which was a disaster. Many stakeholders had high expectations for the e-justice system, anticipating that it would streamline court processes and improve overall efficiency. The prolonged implementation timeline is seen as a major setback. The failed launch of the e-justice system has also raised concerns about Cyprus’ reputation internationally, particularly given its last-place ranking on the EU Justice Scoreboard. There is a perception that the failed rollout reflects poorly on the country’s commitment to judicial reform and modernisation. Apart from the few days when the i-justice system was not functioning, the firm’s operations were not affected. The legal community is keenly awaiting the successful implementation of the e-justice system in 2025, which must provide the promised benefits, otherwise the further improvement of the i-justice system will be the only way forward.

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?

Due to certain actions in recent years, lawyers have lost their credibility and are on the verge of losing the right for their own disciplinary control. The problem is that, due to very high competition in the legal industry, it is difficult to find completely impartial individuals to be tasked with the disciplinary control of their colleagues. Even if such individuals exist, there is a great deal of suspicion. Therefore, a logical step would be for the disciplinary control of lawyers to be handled by another authority. On the other hand, if this happens, it will be another blow to the image of lawyers. Even at this late stage, the Cyprus Bar Association must propose ways to ensure the objective and fair disciplinary control of lawyers in order to retain this privilege.

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?

First of all, Cypriot institutions and the business world need to work harder on content rather than image. We must strengthen anti-corruption measures and demonstrate a commitment to transparency in both the public and private sectors. This includes enacting and enforcing robust anti-corruption laws and ensuring accountability. We must also ensure that our legal system is efficient, fair and transparent. Most importantly, we must implement reforms to streamline business processes and reduce bureaucratic red tape. Thereafter, or simultaneously, we must develop a new clear and compelling brand narrative that highlights Cyprus’ strengths, such as its strategic location, favourable business environment and modern infrastructure. This should ensure that the brand identity resonates with key international audiences. Key stakeholders, including government officials, business leaders and industry experts, should be included in shaping and promoting the new brand. This ensures that the rebranding effort reflects a consensus and is supported by influential figures. We must also continue enhancing trade relations by negotiating new trade agreements and participating in international trade fora and actively market Cyprus as a gateway to the EU and the broader Mediterranean region. The EU and the USA are new markets that can bring more business following recent geopolitical developments. Finally, Cyprus should invest more in higher education that meets international standards and attract foreign law students. These educational advancements should be promoted as part of the rebranding strategy. By adopting these strategies, Cyprus can move from political rhetoric to tangible actions, successfully rebranding itself in the international business community and enhancing its attractiveness as a business destination.

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