On June 14, 2021, CEE Legal Matters reported that the former DLA Piper office in Ukraine had merged with Kinstellar. We spoke with Co-Managing Partners Olena Kuchynska, Margarita Karpenko, and Senior Counsel Daniel Bilak – the Management Committee of the combined team – to learn more about the merger and their plans going forward.
CEELM: Let's start with the beginning – what brought about this merger?
Karpenko: I believe that we, as DLA Piper, served as the catalyst of the process. DLA has been considering its geographical footprint for a while, and the firm decided that Ukraine is not the place where it should keep a direct business presence. There were several reasons for this decision. In particular, the conflict with Russia caused professional and personal tensions in the office, since many of DLA’s major clients are based in Moscow.
We got in touch with an excellent recruitment firm, the Marsden Group. They helped us identify Kinstellar as an ambitious, forward-looking firm seeking to increase its presence in Ukraine and the region. Jonathan Marsden and Nick Paleocrassas introduced us to Jason Mogg and Daniel Torsher at Kinstellar and we started an eight-month discussion leading to us becoming a part of Kinstellar.
Bilak: I’ve known Jason Mogg, Senior Partner and one of Kinstellar’s founders, since our law school days at McGill. I reached out to him last year on behalf of some investors and we began discussing a possible role for me to assist with the firm’s further expansion in emerging markets. As it turned out, the first major expansion project was Kinstellar’s Kyiv office! Olena Kuchynska had just become Managing Partner and my role was to help her take the office to the next level. Then, in December 2020, Jason told me we were approached by DLA Piper with a merger proposal. I knew many of their partners and I had great respect for their reputation. It is a very successful practice with a global reach and has significantly boosted our position in the market.
Kuchynska: From my perspective, this was a logical extension of the changes that had already begun since a leadership change last summer. We felt that we had a good profile in the market and expertise in different sectors of practices, and were reassessing our strategic direction. We did not want to be just another law firm on the market – we wanted to grow. We also knew that organic growth needs some time, but life is moving fast, and we seized this opportunity.
CEELM: When you first met Daniel and Jason, what were the first discussion points on the agenda?
Karpenko: Initially, we had discussions with Jason about the upcoming merger and how to make it smooth. The spirit of our partnership was slightly different, for instance, in terms of partners’ compensation – while Kinstellar uses the lockstep system, DLA Piper had a different partner compensation model in place. It took about three months to convince partners about the merger and discuss all the peculiarities of a new compensation system.
Bilak: As I mentioned, I saw this as a great opportunity. I had spent the last three years as the head of the Ukrainian Government’s investment promotion office, UkraineInvest. The market had become more dynamic than when I had left private practice and having a scalable practice seemed important to achieving success. Kinstellar opened its office in Kyiv in 2016 with less than 20 lawyers, and we had to quickly grow and develop a successful startup. When Jason told me that we had been approached by DLA Piper, I knew instantly that it would be a great deal – I knew the market and had personal connections with many DLA partners. In particular, I had a great deal of respect for Margarita. It was a very successful practice with a global reach.
In terms of challenges, this is my fourth merger – they seem to follow me around! It’s been my experience that you succeed when you choose the best practices of each firm and try to create something new. The human factor is very important in this process. Despite different experiences of how practice and compensation work, partners from both legacy firms got along very well from the beginning. The legal market here is relatively small, and many of us already knew each other, which has been a great advantage.
CEELM: Looking back, is there anything that went surprisingly smoothly, or something that you did not expect to be this easy?
Bilak: One of the biggest surprises was the degree of synergy that we found among lawyers. We discovered that our corporate practices, skillsets, and values were virtually complimentary across the board. We did not encounter any significant disagreements. Our goal was to keep the business moving forward without any interruption by encouraging partners to do what they do best and by ensuring effective communication. We were also conscious of leaving behind certain practices from our legacy firms and of reflecting on lessons learned.
Kuchynska: As Daniel mentioned, we were trying to implement the best practices of both teams. During our decision-making process, a key element was that everyone was keen to make compromises, and it was encouraging that everyone was committed to successful integration.
CEELM: You touched upon the corporate practice being quite complementary – what were the key synergies between the two teams?
Bilak: We have four highly professional and capable female corporate partners. There’s not much for me to tell them about how to run their practice. We did not have much overlap in many areas, but there were still some risks for complications. However, the ladies went out, discussed the prospects, key drivers, and their plans for the future between themselves, and came up with the suggestion for two Co-Heads of Corporate and M&A in Kyiv. It was a fantastic example of the cooperation, compromise, understanding engendered by the merger and I am very proud of this flagship practice – aside from classic M&A, it also involves technology and other areas.
CEELM: Looking at the whole process, what would you count as Day One, and what were its main challenges and successes?
Karpenko: For us, Day One was in mid-June. Continuation of business was our top priority. We faced some difficulties, adjusting to the system of time-reporting, billing, IT. But surprisingly, everything was resolved very smoothly and quickly. We also had to engage in a lot of client communication, and I was glad that virtually all of our clients followed us through the merger.
Kuchynska: For me personally, Day One lasted for a couple of months – it was a process. We had to inform the people in advance and to keep our ongoing business away from any dramatic changes. Even though DLA Piper and Kinstellar were different in size, we shared the same values, which was the most important aspect of success.
Bilak: For me, Day One was our first pre-merger partner gathering. I was a bit nervous – you rarely get a second chance to make a good first impression. However, right after our first evening together, I knew that we were compatible and that we would get along very well. I believe that law is not a complicated business, yet how you approach it can be decisive. Even after that, without a glass in our hands, everybody was fully vested in achieving a successful result.
CEELM: When you bring teams that have a considerable weight in the market, conflicts might happen. What was your approach to the potential conflicts?
Karpenko: Even before the merger, we tried to identify the potential conflicts using Kinstellar’s conflict search system, which worked well. We did not discover any serious issues that we couldn’t manage.
Bilak: I believe there were only two conflicts, out of which we resolved one and with the other, with the client’s consent, we “built a Chinese wall”. That is another example of how complementary our businesses were. We were quite fortunate, since often during a merger, groups of partners feel compelled to leave because they do not want to lose clients over unresolvable conflicts.
CEELM: If you were to do the whole process over again what would you make sure to pay close attention to?
Karpenko: I would make the process quicker. The decision to merge was a difficult one for the partners and my goal was to keep the whole team together and to continue growing. We considered three merger options and the choice of Kinstellar was made reasonably quickly. Yet, the process still took some time.
Kuchynska: It is hard to say what could have been done differently. COVID-19 has had a considerable impact on the integration. It was and remains our biggest challenge, which slightly delayed and complicated the process.
Bilak: We were not independent decision-makers. We had to ensure that the decisions at the corporate level worked for all the partners. If I could do it all over again, I would probably implement more team-building and integration activities early on, as there is some frustration among people in getting to know one another, especially resulting from the lockdown. Unfortunately, there is not much that we can do. There are no manuals on how to deal with lockdowns – even governments are making up rules spontaneously.
CEELM: Now that the dust is settling, what are your mid-term goals? What can we expect from you in the near future?
Bilak: We want to be the gateway to Ukraine, the go-to law firm for foreign investors and clients. Our relationship with DLA Piper is very important, but not exclusive. We plan to focus on targeting the US market more and to do more as an ESG-compliant law firm – this is not just a branding exercise but affects and impacts how we do business.
Karpenko: I would add that we need to complete our integration process – due to the COVID-19 pandemic, it still remains a challenge. We have moved all of our personnel into one building. I believe that sharing offices, having lunch together and, overall, physical presence will make the integration process more effective.
Kuchynska: I want to stress that in the context of ESG, we would like to create an attractive work environment for our employees and continue to engage top talent. We understand that, in this environment, focusing purely on being more profitable and growth for its own sake is not very sustainable internally. Young talent appreciates a new generation of employers, and we want to be the employer of choice in this market.