Upstarts likely to see slow start in legal services

More competition and a limited number of clients are pitting established law firms against start-ups, with the newcomers usually losing the battle. The start-ups have little or no chance of competing with the country's established leaders, industry sources said last week, and can at best focus on niche sectors and small clients. The market has shrunk because of Poland's economic slowdown and it has also become more competitive as new waves of attorneys and legal advisers obtain their licenses and enter the market every year. Out of 540 legal advisers who received their licenses last year, 140 joined the competition in Warsaw. Another 117 entered the Warsaw market this year, while only 15-20 advisers leave annually, according to Dariusz Śniegocki, dean of the Warsaw Chamber of Legal Advisers. More would-be advisers are expected to take their exams in the next two years. Record numbers of 188 and 194 were admitted to training in Warsaw in 1999 and 2000, respectively. "The number of legal advisers is growing at a substantial pace," Śniegocki said. "It's difficult for them now because of the lack of clients."

Where to start? Today's start-ups must deal with a shrinking market, on which established firms - most leading law firms were started in 1990s - are struggling to keep their clients and ward off newcomers. "The competition is tougher today," said Adam Śmigiera, who passed his legal adviser exam three weeks ago and wants to start his own law firm in the fall. "Clients are more demanding and lawyers nowadays have to offer more for less money." Today's leaders, 1990s start-ups, have grown into big organizations employing several dozen lawyers, giving them the potential to attract big customers and offer a full range of services. "Companies with two or three lawyers have no chance to compete with big firms," said Józef Forystek, a partner at Forystek Góralczyk Rychlicki Budzowska Fiutowski Jamorski Adwokaci i Radcowie Prawni, which employs 35 lawyers. Śmigiera knows it. "I'm not aiming to compete with big law firms, I hope to be successful with a different type of client," he said. He wants to attract small entrepreneurs and private individuals needing legal advice. "Big law firms usually work for big clients and provide them with comprehensive legal service, but small clients tend not to use them," Śmigiera said. Big and established law companies are up to 100% more expensive than small firms, a price that remains beyond the reach of many small entrepreneurs. "Recognition and brand are something you pay dearly for," said Ryszard Kuciński, owner of Kancelaria Prawnicza Ryszard Kuciński Radca Prawny, a small firm. "Small entrepreneurs cannot afford a renowned, that is, expensive law firm," he said. Even optimistic start-ups rarely go it entirely alone, instead choosing to associate their firms with established companies that offer a safe haven in the first years of operation. Śmigiera decided to link his firm with the law company Bąk Marszałek Szczepankowski i Wspólnicy (BSM). BSM was founded in the early 1990s and now employs more than 10 lawyers. "Cooperation with BSM will help me develop my business, as they'll share some of their work with me," Śmigiera said. "Also, I don't have to look for an office and I can use BSM's infrastructure." Ultimately, though, Śmigiera wants to develop his own clientele. "You begin with acquaintances, then they recommend you to other clients and the business grows," he said.

Specialization means survival Small clients are a given for start-ups today. But besides smaller customers, Kuciński see finding a market niche as the way to go. "One needs to be specialized ... and then your existence is guaranteed," he said. Specialization is required for such undersupplied areas of legislation as consumer rights and protection of public securities trading, according to Kuciński. "Poland is just about to join the European Union, where consumer rights are very rigorously protected, while here the issue is in its infancy," he added.