Stelios Americanos: To strategically adapt, law firms should consider merging with or acquiring complementary businesses

With macroeconomic challenges and geopolitical strife having led to the contraction of the local legal industry in recent years, and other industries taking market share from law firms by providing ‘one-stop solutions’ to clients, law firms should consider merging with or acquiring complementary businesses in order to strategically adapt, according to Stelios Americanos, Managing Partner at Stelios Americanos & Co LLC.

In an interview with GOLD magazine, he suggests among other that local firms should focus on niche specialisations to differentiate themselves, especially as other industries are taking market share from law firms by providing ‘one-stop solutions’ to clients.

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 local services industry and the economy as a whole have shown exceptional resilience amidst macroeconomic challenges and geopolitical tensions. Recent indicators suggest a cautious rebound driven by increased foreign investment, a robust real estate market and a thriving tourism sector. The Government’s proactive measures, such as tax incentives and streamlined business regulations, have fostered a conducive environment for growth. However, lingering uncertainties in the global economy and regional instability continue to pose risks. Our law firm remains vigilant, providing strategic legal counsel to navigate these complexities and capitalise on emerging opportunities. Overall, while the industry is on an upward trajectory, sustained recovery will depend on maintaining political stability and economic reforms.

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

Cyprus law firms are diversifying and innovating to tap into new revenue streams amidst recent challenges. At home, they are focusing on strengthening their local input and expanding internationally, by targeting both traditional and emerging markets, especially in the Middle East, while also forming alliances with foreign firms to enhance cross-border legal services. They are also capitalising on the growing demand for legal services in the funds, fintech and renewable energy industries and developing specialised teams for regulatory compliance, cybersecurity and HR. With Cyprus becoming an emerging headquarters hotspot and a growing tech cluster for big names, firms are focusing on relocation, wealth management and private client services for High Net Worth Individuals seeking residency and investment opportunities in Cyprus, including estate planning and tax optimisation. By embracing digital transformation and advanced legal tech tools, firms offer virtual consultations to broaden their client base, ensuring sustained growth and capturing new revenue opportunities.

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?

Yes, the trend is likely to drive consolidation within the legal sector. To strategically adapt, law firms should consider merging with or acquiring complementary businesses to create comprehensive service offerings. This can include partnering with financial advisors, tax consultants and technology firms to provide integrated solutions. Additionally, investing in technology to streamline operations and enhance client service is crucial. Law firms should also focus on niche specialisations to differentiate themselves and offer unique value propositions. By embracing a multidisciplinary approach and fostering strategic alliances, law firms can remain competitive and meet evolving client demands in this dynamic landscape.

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 delay in the e-justice system rollout has been met with significant frustration within the industry. This setback has hindered efforts to streamline legal processes and improve efficiency, creating operational challenges not only for our firm but also for the justice system as a whole. We’ve had to continue relying on traditional methods, which are time-consuming and less efficient. Despite these challenges, our firm has invested in internal digital solutions to mitigate the impact and maintain high service standards for our clients. We remain hopeful that the eventual implementation of e-justice, along with the additional reforms to our justice system, will bring much-needed modernisation and efficiency to the legal sector in Cyprus. In the meantime, we continue to adapt and innovate to navigate this transitional period effectively.

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?

Initiatives towards enhancing Cyprus’ regulatory consistency, transparency and accountability, crucial for restoring and strengthening the country’s international reputation, are necessary. The Finance Ministry’s plan for a single authority to supervise the professional services sector finds us somewhat sceptical. We are cautious about the impact that such an initiative might have on client-attorney privilege, which is safeguarded through numerous decisions of the EU Court of Justice and how it might undermine the rule of law. We also feel that such a plan poses a disproportionate limitation on the existing provision of administrative services by lawyers, an important pillar of the Cypriot economy. Ultimately, the effects of this plan remain to be seen.

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?

To rebrand Cyprus’ image in the international business community, we need a multifaceted strategy focused on tangible actions. We must (1) implement robust regulatory reforms to ensure transparency and high standards of professional conduct; (2) strengthen anti-corruption measures to demonstrate a commitment to ethical practices; (3) form strategic partnerships with reputable international firms to enhance credibility; (4) develop and promote niche legal services in emerging sectors; and (5) prioritise client satisfaction through personalised services and advanced technology for efficient communication. In the end, though, it is not about marketing campaigns but actual, practical actions aimed at reducing bureaucracy and improving the efficiency of the public sector, strengthening the credibility of our institutions and thereby retaining the trust of both local and foreign investors.

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