Maria Kitromilidou: I do not believe that a single supervisory authority will change the perception of the sector or the country itself

Cyprus’ damaged image abroad, and the way legal professionals are perceived by some, could be improved by creating fairer conditions, Maria Kitromilidou, Managing Partner, Kitromilidou, Psillidou & Co LLC suggests, adding that a single supervisory authority may not be a cure-all.

Commenting on the challenges to and future of the island’s legal sector, Kitromilidou explained, “I do not believe that a single authority to supervise the professional services sector will change the perception of the sector or the country itself. "

"The country’s objective in this respect should be to detect and combat corruption at all levels. Creating a level playing field for all professionals regardless of political affiliations and connections would do much to change the perception of the country and the profession,” she continued.

When it comes to Cyprus’ rebranding efforts, meanwhile, the Managing Partner noted, “I believe that the simplest way forward is to create a business plan for Cyprus that includes objectives, goals and a clear implementation methodology.”

Among other things, Kitromilidou also shared her thoughts on the e-justice system, how the legal industry has been impacted by macroeconomic challenges and geopolitical strife, and how the sector is adapting to change.

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?

I do not believe that a single authority to supervise the professional services sector will change the perception of the sector or the country itself. Any step in this direction has to be carefully considered and planned to avoid hasty decisions based on simply aiming at a mere change of perception. Providing proper education, training and increased resources to current regulators to effectively monitor and supervise their members would achieve the same result. The country’s objective in this respect should be to detect and combat corruption at all levels. Creating a level playing field for all professionals regardless of political affiliations and connections would do much to change the perception of the country and the profession.

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 believe that the simplest way forward is to create a business plan for Cyprus that includes objectives, goals and a clear implementation methodology. Any initiative to rebrand or to make Cyprus more attractive to the international business community definitely needs a more comprehensive approach. All relevant government authorities including supervisory bodies (i.e. the Central Bank, the Immigration Authorities, the Department of Lands & Surveys, the Planning Authorities, the Registrar of Companies, the Tax Authorities, etc.) need to be aligned in implementing any such strategic plan so that we can avoid the obstacles we are now facing. Investors need clarity and efficiency when deciding to invest or not in a country. Obscure rules, unclear guidelines and a general feeling of uncertainty around timing or results create a disappointing experience for investors. I am afraid that rebranding Cyprus needs putting a lot of effort into addressing current inefficiencies and changing the current perception of foreign investors.

Let’s move 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?

In my humble opinion, the inability to successfully complete the e-justice system on time created a lot of frustration for all parties involved – lawyers and clients alike. The very poorly designed version of the system which was launched was not user-friendly, it caused significant delays, increased the overall time of court proceedings and, generally, was severely disappointing. We really hope, for everyone’s sake, that the final version of the e-justice system which is anticipated to be ready in 2025, will be better than the one launched as the use of technology in this context has the potential to enhance the way the justice system operates.

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

We are living in very challenging times and it is true to say that current market conditions have impacted the way the legal profession operates. A big part of the client base of many law firms consisted of international companies and/or family offices from Russia and the CIS countries operating in Cyprus. Due to the increased regulatory constraints, many of these clients have ceased their operations and/or transferred their base to other jurisdictions such as Dubai, Singapore, Hong Kong and Turkey. At the same time, the regulatory and compliance cost to law firms has significantly increased in recent years. Law firms have therefore needed to adjust and adapt to the new market conditions, in which, on the one hand, more resources are needed to perform the same services whilst, on the other hand, there has been a shrinkage/decline in the number of companies/clients seeking legal support services.

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

Law firms have inevitably become more agile, offering a wide range of services and often supporting international clients in their operations worldwide. A lot of work in the past year, at least in our experience, relates to restructuring international clients’ activities, including transfer of domicile to other jurisdictions and/or from ‘offshore jurisdictions’ to Cyprus. This has created a new market for legal services supporting the de-offshorisation of activities from, for example, zero tax jurisdictions to 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?

Many law firms are also strategically positioning themselves as a ‘one-stop-shop’ as part of a loose alliance of companies which offer a wide range of services and solutions to clients. I believe that consolidation within the legal sector is inevitable as it will be increasingly more difficult and disproportionately costly for small law firms to comply with all regulatory and compliance requirements without forming strategic partnerships with other law firms or even consolidating their activities under one roof.

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