Galyna Melnyk is the deputy director for the Ukrainian office of PETERKA & PARTNERS, which is also the ILN’s representative for Ukraine. In this episode, she and Lindsay discuss her optimism in the current marketplace, how continuing to work brings her peace, and the two things she’s curious about in the market.
You can listen to the podcast here, or we’ve provided a transcript of the highlights below.
Lindsay: Hello and welcome to the Law Firm Intelligence Podcast. I’m your host Lindsay Griffiths, executive director of the International Lawyers Network. And our guest this week is Galyna Melnyk of Peterka and Partners in Kyiv, Ukraine. Galyna, welcome. We are so happy to have you with us this week. To get started, why don’t you tell us a little bit about yourself and the firm and your practice?
Galyna: Hi Lindsay. I’m so happy to be here. So as was announced, I’m from Peterka Partners Law Firm. I’m the deputy director for Ukraine. I’ve been with this firm for more than five years. I also had the tax practice of our Ukrainian office. Our law firm was founded in the year 2000. So, we have been on the market for more than 20 years and in Ukraine we have been present since 2006. Our firm is a CEE law firm. We cover the whole region, and we are expanding. This year we opened an office in Croatia, but I will explain a little bit about our Ukrainian office. Our team is not that big, it’s around ten lawyers, but we cover the most common needs of foreign businesses, mostly European and American coming to Ukraine.
We provide full legal support for those companies who start businesses in Ukraine. For those who have some tax issues here, we provide counseling in the tax area and also we provide legal support within tax inspections and tax disputes. So basically, we would say that in Ukraine we specialize in providing complex legal support to foreign businesses doing their business in Ukrainian market. So that’s in a nutshell.
Lindsay: That’s great. Now, so we’ll dive into the questions now. The first one, I think a lot of people can imagine what your response might be, but what’s your biggest challenge at the moment and how are you working to overcome it?
Galyna: My biggest challenge is the same as my country’s. Unfortunately, it’s the war and I think that professionally wise we have to combine our emotional attitude and our work attitude in regard to what’s going on around us. Since Kyiv has been felled since maybe a year ago, we have to work in quite stressful environment. But personally myself, I just try to distance myself from that. Of course, I’m cautious and I try to listen to all those sirens and alarms, but I think that the more you concentrate on what you have to do just now, just today, just moving step by step, the more you gain inner peace and going to the office and dealing with day-to-day work helps a lot. So, my biggest challenge now is just to maintain that balance, that peace of mind. And my work helps a lot with that because it provides some stability, some routine, and in this way I benefit and our clients benefit because if you keep your mind in peace, you provide quality services.
Lindsay: Absolutely. And we spoke to your colleague a couple of months ago on the podcast and he said that you actually never stopped working from the beginning of the war. So, I know a lot of people were impressed and surprised by that, but I imagine that that’s helped as well
Galyna: Yes, definitely. And we agreed with our teams that we do not require working from the office. Basically, we just shifted from this remote work during the quarantine to remote work during the war. So, we just provide flexibility to our colleagues. They can work from any place they feel safe. They are not required to stay in Kyiv or even in Ukraine, but most of our team stays in Kyiv. So, we survive as a team, and we support each other and it’s very important for us.
Lindsay: I’m sure. And I would imagine that because of the size of your team that you’re quite close and that must help as well.
Galyna: Yes, definitely. So basically, we have this internal chat in the app and each time somebody hears something, some news about what’s going on around us, we always make sure that everyone knows and is warned should any danger be relevant. So that helps a lot.
Lindsay: Yes. So, talk to us about the current state of the market and what that means for you and your clients.
Galyna: I would say that surprisingly the market is not that afraid of the war. And I can judge based on our turnover and the figures in our company books. And I would say that surprisingly last year, 2022 was the second-best year financial wise in the history of Ukrainian office. So, businesses, even foreign businesses, were not scared off by the war. And some sectors of the economy like IT, which benefits from remote work, are now growing. And we have a lot of IT clients, both the local and foreign and also American IT companies and some of them they even have expanded. And we see that in general, Ukrainian business generates tax money for the budget, and I would say that there is no recession currently.
Of course, maybe these two or three months since Ukrainian counter offensive has been announced and there is a pause everyone maybe, but it’s not like a complete stop. Businesses are just maybe postponing some poor decisions till later this summer because they want to see the results of this counter offensive and which political decisions will be made. So, I would say in general, everything looks quite optimistic. We preserved our team; we preserved our clients and most of our clients are doing well. So, I would say that I’m optimistic for even this year. It looks quite optimistic for me and for our firm.
Lindsay: That’s great news. And I think from the perspective of the rest of the world, for us looking in, we are quite optimistic as well.
Galyna: Yes, optimism saves lives and saves businesses.
Lindsay: Absolutely.
Galyna: Because should foreign companies decide to withdraw from Ukraine, basically our economy would collapse, but they still stay in Ukraine, they employ people, they produce money for our defense. So that’s why optimism really plays a key role in this war.
Lindsay: Absolutely. So you mentioned before that your focus is on tax. So, what would you say is the biggest area related to your practice that you’re curious about and why is that?
Galyna: I would define two aspects of this. Maybe the first one is of course the war time is always the crisis time for the budget. It needs more and more money, it’s never enough money for weaponry. So, I would say now as in any crisis, during any financial crisis or other kind of crisis, usually the aim of the fiscal authorities is to collect as much revenue as possible. And now they try to make additional assessments or apply maybe fiscally directed approaches to some questions resulting in collecting additional revenue for the state budget. For now, general tax inspections are forbidden, but there have been talks that most likely they will be allowed in the nearest few months. So, I think the biggest challenge now would be that many of our clients will be audited by the tax authorities. And of course, the direction of these audits can be easily predicted because most likely there will be a lot of additional assessments made. So, I’m curious whether those assessments will be like.
Of course, in any business activity there are questionable decisions and tricky rules applicable. So of course our clients make those decisions to rely on their understanding of the law and how it should be applied. So, there’s always room for additional assessment and different interpretation of the room by the client and by the tax authority. So, I’m curious whether tax authorities would try approaching their task to collect revenue wisely, not making some ungrounded additional assessments which wouldn’t stay in court, or they would maybe just press some fiscal tendencies which have legal grounds and just maybe change some bylaws and try just press in some specific areas which have legal potential for generating more revenue. That’s one area.
And the second is that, as I mentioned IT sector is doing quite well in Ukraine and we have this special even regime, tax and legal incentive for IT companies and for big companies. So, it’s been developing, and it’s been developing quickly. And I’m curious whether it would result in new IT market players coming to Ukraine, even despite the war because the incentive is really good and some of our clients have already registered with this special, I would say, platform for IT companies. So, I’m curious whether this would help our market to attract more IT companies.
Lindsay: I imagine that it would, I can’t see why not, because as you said, it’s a fairly mobile industry and it would allow people to invest in Ukraine without having to physically be there.
Galyna: Yeah, I hope so because IT companies generate quite big portion of taxes for our budget, so it will be mutually beneficial tendency for our country.
Lindsay: Absolutely. So, switching gears a little bit, can you tell us something interesting about yourself that most people don’t know?
Galyna: I would say it concerns my main practice area tax, because when I was just the postgraduate applying for internships with big law firms, I thought I would be a civil law specialist, maybe contract lawyer or corporate lawyer. So, I applied to respective positions. And surprisingly, not surprisingly, there were a lot of students doing the same because taxes are very complicated for most, not only students but also mature lawyers. And there were so many applications, and I was filing maybe one of the last, so all the positions were filled in and I was offered this tax position with a major law firm in Ukraine at that time.
And I thought, “Okay, that’s only temporary.” And as they say, there’s nothing more permanent than those temporary decisions. And after that, even one year with that firm, there was still no open position for corporate for example or I don’t know, general commercial and distribution practice groups. So, I still stayed with tax practice and even after a year I changed my job and I also decided maybe to look in some other firm for that position. And surprisingly there were none, only tech positions available for me. So basically, I didn’t want to become a tax lawyer, just God made me.
Lindsay: Oh my gosh, that’s very funny.
Galyna: Yes.
Lindsay: Oh, it’s funny how you end up falling into your job sometimes, isn’t it?
Galyna: Yes, and basically in the end it turned out to be my calling and I enjoy it and thank God for that.
Lindsay: That’s really funny how you’re… Yes, wow. That is something interesting that people wouldn’t know.
Galyna: Maybe they should just listen to your fate.
Lindsay: That’s right. Follow the direction you’re meant to go in. Yes, that’s right. Who has been the biggest mentor over your career?
Galyna: I would say that my professors in my law school provided the most part of that practical knowledge I needed to kickstart my career. So, I would say that my university, I graduated from one of the oldest universities in Ukraine at Kyiv-Mohyla Academy. It’s like maybe four hundred years old. But when I graduated and started working in the practice area, I thought that it’s commonly known that you should forget everything you were taught in your high school, in your law school and now real life begins. But surprisingly, I was given all that practical knowledge, I was made to study all those bylaws I was actually using [inaudible] during my all five or six years in law school. So, my professors were also legal practitioners and they taught us approaches how to apply law, how to resolve tricky situations, not just like you are applying some formal approach. We studied practical cases and basically the legal mindset of a practical lawyer was we were taught to apply that mindset in practice even during my years in law school. So, my biggest mentors were my legal professors in my law school.
Lindsay: That’s great. That’s much more useful than certainly US law schools. I’m not sure about other law schools around the world, but yes, that’s really wonderful.
Galyna: And I was really surprised because I was prepared for the worst. I was prepared just to start everything anew just to learn how it works and actually turned out I already knew how it worked.
Lindsay: That’s a relief.
Galyna: Thanks to our professors.
Lindsay: That’s really a relief.
Galyna: Definitely.
Lindsay: What do most people misunderstand about your field of work?
Galyna: The major misunderstanding, which I have to explain even to our clients and maybe once a month at least, is that tax lawyers are not accountants. We cannot provide some financial assessments. We are not financial directors. We cannot provide ready-made solutions financially when we are requested to say which option would be more profitable in five years perspective. I always have to explain that I’m not authorized to give that advice because I’m not a financial professional. And also, usually I have to explain that I’m not authorized to provide any bookkeeping advice or fill in customs returns because for example, my colleagues, at least from Prague office, I know that for sure they are authorized as lawyers to provide some VAT return filing advises or even fill in VAT returns. But in Ukraine you are not allowed to do that.
As a lawyer, you are not allowed to fill in the… Not allowed, it was not my university degree, and I was not professionally trained to fill in any special tax reporting. So, I usually have to explain that and usually we have to refer our clients to some accountants or other tax professionals who are not lawyers, because in Ukraine it’s a different profession. We don’t have this special kind of professional like tax advisor. We usually have tax lawyers and separate accountants or financial advisors. But usually, clients want to refer to one person like your lawyers and all the issues are solved. So, for that purposes we engage accounting firms.
Lindsay: That’s challenging.
Galyna: Yes, and you have to do that explaining very smoothly and very carefully not to maybe scare off your clients, because sometimes the client may get this wrong understanding that you are just unwilling to get this work, you are lazy or something like that. But we have to explain that, sorry, it’s not my competence, I was not trained to do that.
Lindsay: And the idea is not that they could go somewhere else and get the same, but that they’ll get different information from another law firm. It’s true for all lawyers in Ukraine that they’ll get the same information.
Galyna: Yes, definitely. And so those who would just gladly accept any work and fill in any returns just to keep the client, I would say it’s not a very cautious approach because you are not a professional in that area. It’s risky for your reputation.
Lindsay: Absolutely. What is the most important lesson you’ve learned over your career?
Galyna: The most important lesson is more on a psychological side because the most part of my work is correspondence. The communication is mostly in written form, mostly emails. And sometimes when you discuss something with the client you may get the wrong idea of the tone of their intentions of what they want. So, it’s always better to call the client and especially if the situation is somehow tricky, you are not discussing some provisions of the contract, you are discussing some maybe strategy. It is always better to talk to your client during the video call because sometimes you may assign wrong meaning to the written words, and it is always better to clear everything out during the face-to-face online meeting.
Lindsay: Yes, and I’m interested to see with this next generation who do everything by email or text or social media, how that’s going to go. Because I think there’s a tendency to just refuse to either pick up the phone or do a video call, and I agree that there’s a lot of nuance that’s going to be lost there as a result.
Galyna: And because understanding your client is something you… It’s you gain knowledge, gain practical knowledge in addition to your law degree. And basically, we are not selling purely legal services, we are selling legal services actually meeting the needs of your client. And if you just formally reply to the text, it’s not going to work. And competitors who do actually approach the clients and have face-to-face meetings or offline meetings, they will just beat you and you will lose your clients.
Lindsay: Yes, I absolutely agree. So, speaking of clients, is there a client that changed your practice?
Galyna: Yes, there’s a big one. For confidentiality reasons, I cannot name this client like the name of the company, but it’s-
Lindsay: Of course.
Galyna: Yes, the field of its business is heavy engineering, they are quite big in Ukraine. And as a tax specialist I provided, I have been providing tech services for them since maybe I joined Peterka. And what they taught me is that even if you… Of course, business is not always ideal. It’s only on paper ideal. I mean, ideal when you just do everything formally and 100% as it is required by some rules, [inaudible] of course you are not doing some wrong. But it’s always when you’re supporting big infrastructure projects, there are always some decisions which are maybe not documented to the greatest extent. And you have to just explain something to tax authorities just from the commercial point of view and not just from some point of view of some formal documents.
And this client is a multinational company, so they provide all the documents and internal correspondence in English and then we have to compose some documents in Ukraine which are formally required. And there’s always a question of translation and sometimes the translation is not very accurate and tax authorities try to question the documents as not a correspondent to the core of the client’s business and try accusing this client of doing something, just some potential transactions. And what this client taught me as a professional is that if you trust that you are doing everything right, that you are a compliant businessperson, you are open, you do everything by the law, then you will win. Because I had to support them during numerous texts and customs disputes when we were just ordering additional expertise to establish that they did everything correct based not on the form but based on the substance, of the core substance of their business.
And they were always 100% sure that they would win because they’re doing everything right. And in Ukrainian courts it’s always 50/50 and as Ukrainian lawyer, I had to warn them that there is no 100% guarantees that you will win. But they were so convinced in their righteousness that in the end we won. All the disputes and all the controversies were combated successfully. And I would say that this is the most important lesson in my life given by that client, but by their management of course, that you should believe that you are doing everything and that’s why you should win all your cases.
Lindsay: That’s great. I really like that. Sort of having faith in yourself because you’re doing the right thing.
Galyna: Yes, because you are helping this country. You are paying taxes; you are not avoiding anything. You are just maybe, of course there may be some formal mistakes like incorrect translations from English to Ukrainian, but this does not change the substance of your business. And I was surprised that Ukrainian courts truly listen to our explanations about the substance of the business because usually they’re quite formalistic. They’re just checking the documents and if the documents are saying something which is not formally correspondent to the tax treatment of this situation, then courts will just dismiss your claim. But we managed to persuade the judge in all three instances that the essence and the substance is what matters and not some formal documents.
Lindsay: That’s fantastic. I really love to hear that.
Galyna: And that was really my personal victory and the change of my perception of the law and maybe just a suggestion of a new approach towards your position in court just psychologically. You should believe that if you do it right, you will win.
Lindsay: Yes, absolutely. That’s wonderful. So, what does being a part of the ILN mean to you?
Galyna: Being part of ILN is an integral part of our business because maybe 70% or more of assignments work comes from referrals. And ILN is a big referral network and we are integrated in these networks, so we provide referrals, we give referrals and this generate 70% of our profits. So I think that it’s very important business partner for us and we are very grateful to be a part of this, I would say family, because Pavla Prikrylova told me that when the war started, she was at the conference at that time and so many members came to her and they wished us victory and they were very supportive. We even received some emails from just online members expressing their support to Ukraine and wishing us well. So, it’s not only the business partner but we feel it like just being part of this community, of this family. So, we are very grateful to be a part of this.
Lindsay: I’m glad, I’m so glad to hear that. And one final question to wrap up. We always like to ask separate from business and everything that’s going on, what is one thing that you are enjoying right now?
Galyna: Enjoying?
Lindsay: I know it’s a tough question.
Galyna: Yes, it’s a tough one. The toughest one
Lindsay: I know.
Galyna: I think maybe enjoying is not the exact term. I would say that what brings me peace and calmness is that I can still come to the office and that everything in our office is just exactly the same it had been before the war, and it provides some sense of stability and that you still cling to all that pre-war situations and atmosphere and surroundings. And I’m really glad that that is still present and that we managed to keep our team, that we basically have all our clients. And it would have been very sad if some of our clients, for example, had to dissolve their business in Ukraine due to the war. But thank God it didn’t happen. And for me that the possibility to be in that usual environment, that is stable, relatively of course, stable situation in my workplace, and of course in Kyiv, it’s the most important thing to me. And I cling to that. It gives me hope and peace and this helps me work better.
Lindsay: Absolutely. And we certainly do wish all of you peace hopefully sooner rather than later. And anything that brings you peace is a very good thing and we’re really looking forward to an end to the war and to the conflict. And we’re really pulling for all of you. I was just at a dinner last week and the defense attaché to Ukraine was there. We were really excited to see him as well as a number of other Ukrainians. So, we’re hoping for a peaceful end to the war very soon.
Galyna: Yes, we are too. Thank you for your support. It really matters to us. Thank you, Lindsay.
Lindsay: Good. Thank you very much. I’m so glad you could join us this week for the podcast. And to all of our listeners, please continue to send your support to Ukraine and thank you so much for joining us. If you like the podcast, please take a moment to rate, review, and subscribe and we will be back next week with our next guest. And thank you so much.
Galyna: Thank you.
