Information technology and cyber security are the basis of the future
— MK Legal Service celebrates its 10th anniversary this year. What has changed in the company and you as its managing partner during this time?
— Our company has changed significantly in 10 years, both quantitatively and qualitatively. We started as a team of 2 corporate lawyers who served several small companies and sole proprietorships. Currently, MK Legal Service is a cohesive team of 10 experienced lawyers, 5 of whom are professional attorneys. Our company is only gaining height, and we are currently working on further expansion of the team of experts.
Thanks to the effective work of legal advisors, I, as a managing partner, am able to devote more time to particularly important deals and projects, strategic development of the company, and increasing the team's legal expertise and efficiency.
— Over the past year, as a result of quarantine restrictions, the HoReCa sector has suffered almost the most. Someone reduced the staff, someone closed the business altogether. And thanks to your work, the "Eugene Burger" restaurant chain not only did not cease operations, but also managed to grow. What is the secret of success?
— The secret of success is in a complex and partnership approach to the client's business tasks. Support of the "Eugene Burger" case can be divided into several stages. At the first, our team established the client's system document flow. We identified 3 key groups of documents for him, which were unified and standardized. It was necessary for the company to look like a promising and attractive tenant for the leading shopping centers of Kyiv, including Skymall, GLOBUS, Retroville. At the second stage, we provided the client with comprehensive subscriber support, which includes providing legal advice, preparing answers to the requests of regulatory bodies, registering business entities, obtaining doses of free documentation, etc.
Legal support in a 24/7 format helps our clients not to drown in legal routine, but to engage in business support and development. At the third stage, we accompanied the attraction of investments for the development of the client's business. They carried out a legal check of the investors' reliability, and also accompanied the negotiation process and the transaction itself. Our team has successfully developed a complex of corporate and investment contracts to protect the rights and interests of both the client and the investor. In the fourth stage, our team helped develop the client's business by launching a franchise.
After all, when the business model is developed and brings a stable profit, it is quite simple to scale and develop the brand with the help of such a model. To do this, we checked the franchise business model for legal compliance, developed commercial concession contracts, implemented effective mechanisms of influence on franchisees, accompanied the launch of establishments and globally ensured brand safety as the basis of the client's business.
In working with clients, I always try to put myself in their place, understand their real needs and implement the most profitable solution. That is, in addition to purely legal expertise, I often create additional partnership values for my clients. For someone, it is advice on business development, for someone mediation in resolving a dispute with partners, and for someone attracting investors and funds necessary for business development. That is, in addition to purely legal expertise, I often create additional partnership values for my clients. For someone, it is advice on business development, for someone mediation in resolving a dispute with partners, and for someone attracting investors and funds necessary for business development. That is, in addition to purely legal expertise, I often create additional partnership values for my clients. For someone, it is advice on business development, for someone mediation in resolving a dispute with partners, and for someone attracting investors and funds necessary for business development.
— How long have you been accompanying "Eugene Burger"?
- About 2 years. At the time of quarantine, we were already familiar with the client.
— What projects for the field of IT/TMT has MK Legal Service implemented together with its clients?
— The field of IT/TMT is one of the main specializations of our company. With our constant support, the telecommunications operator GigaTrans has turned into a market leader in the form of a whole group of companies, including a telecom operator, a data center, a cloud operator and a cyber security agency. Our team provided GigaTrans with corporate structuring and tax optimization, obtaining the necessary licenses and permits, supporting inspections by regulatory authorities, obtaining the necessary international and national certificates, registering the ownership of the company's brands and technologies, etc.
— The Law of Ukraine "On Electronic Communications" will enter into force next year. What innovations will it bring to the TMT industry?
— This document went a long way from development to adoption within the walls of the Verkhovna Rada. The law will significantly modernize the conceptual apparatus, new subjects will appear, significant changes will take place among state supervisory bodies in the field of TMT, the provision of part of administrative services will take place on an electronic regulatory platform. An important new feature is that the law will specify parameters of the quality of electronic communication services, namely connection time, delay time, percentage of lost data packets. We should also expect a significant increase in the amount of fines and their likely application to providers of electronic communication services.
— On April 15, the Verkhovna Rada of Ukraine adopted in the first reading the draft law "On stimulating the development of the digital economy in Ukraine", better known as "Diya City". What changes does it bring to the IT field and do you support its adoption?
— In essence, this bill offers an alternative legal regime for legal entities working in the IT industry, with preferential taxation. It is about replacing the income tax with a flexible tax on withdrawn capital at a rate of 9%, reducing the income tax from 18% to 5% and the limited amount of the accrued EUV, which will be paid exclusively from the amount of the minimum wage. For example, with the usual regime of taxation on wages of UAH 100,000, it is necessary to pay more than UAH 39,000 in taxes, and for residents of "Diya City" this indicator will be at the level of UAH 7,820.
These conditions should, according to the idea of the Diya City team, convince the IT industry to abandon the use of the business model with FOPs. At the same time, in combination with the conditions for acquiring the status of a resident of "Diya City", this raises doubts. Such a regime can be most attractive to IT companies with foreign capital that have large payments abroad to parent companies and their investors, as well as IT structures of retail networks, insurance companies, banks that have large IT departments. It may be beneficial for them to bring such departments into separate legal entities and obtain Diya City resident status for them in order to optimize the tax burden.
It is also interesting that the "Dia City" regime introduces a number of contracts for its residents, including gig contracts, a more clearly formalized non-disclosure agreement (NDA), a non-competition agreement (NCA), a non-solicitation agreement (NSA , however, the Ministry of Statistics proposes to postpone this norm for 5–10 years), a loan agreement with alternative obligations, an option agreement, etc.
Evaluating the advantages collectively, we can say that the draft law is quite revolutionary for the IT sector. If the predictions of the Diya City team come true, 450,000 additional jobs will be created in Ukraine, the capitalization of the IT business will increase from $5.5 billion to $16.5 billion. However, the bill still needs to be finalized and a whole series of additional measures for its effective implementation .
— In Ukraine, the level of cybercrime is quite high. What should the state implement in order to effectively fight virtual crimes?
— Today, Ukraine is at the stage of formation of cyber security. Our legislative framework in this area is outdated and does not correspond to modern realities, and the country still lacks basic cyber hygiene. Therefore, the state should take a comprehensive approach to solving this problem. It is necessary to modernize the legislation in accordance with the world standards of technological development. And it is important to do it at a pace no less than the pace of development and spread of cybercrime. It is impossible to fight cybercrime in the 21st century, using mechanisms, conceptual apparatus, and sometimes equipment of the end of the 20th century.
In the fight against cybercrime, the help of the private sector, which has enough experience and capabilities to build a cyber security system at the state level, should not be neglected. This can be done through public organizations, consultative and advisory bodies under the National Security Council, the Ministry of Digital Affairs and the Ministry of Internal Affairs. At the forefront of the struggle should be highly qualified specialists of the private sector, who have experience and certification of international organizations in the field of cyber security.
In addition, an effective cyber security system in the state is impossible without effective cyber intelligence. The state must create such a system for combating cybercrime that will quickly respond to every cyberattack and provide an effective solution to every cyberincident. Of course, it is also necessary to develop and popularize educational programs on cyber security. This will help to train enough qualified personnel and increase people's cyber security culture.
— Cyber police have been working in Ukraine for more than a year. What are the main problems of her work?
— Again, this is an outdated legislative and technical base that is currently at the disposal of this body. It is necessary to significantly change the current Code of Criminal Procedure, to create a separate chapter on conducting pre-trial investigations in the field of cybercrimes. Currently, a victim of a cybercrime applies to the territorial bodies of the National Police, which in the future already involve cyber police units. This reduces the level of responsiveness to such crimes and slows down the investigation of these criminal offenses.
Therefore, the powers of the cyber police should be expanded, it should be provided with state-of-the-art equipment, and the cyber police itself should ensure a high level of crime prevention. After all, every hryvnia invested in the prevention of cybercrimes can save thousands, or even hundreds of thousands of hryvnias in the long run.
— One of the directions of your work is GR. Which case was the most interesting for you in this field? What was its complexity?
— Last year, we had a very interesting rule-making case. Our company's team participated in the working group of the Committee on Digital Transformation of the VRU on the development of a bill on cloud services. On June 16, 2020, it was adopted in the first reading. This project is quite advanced. It is designed to implement the concept of Cloud First, which is already used in the USA, Canada, and Great Britain and involves the mass migration of state IT infrastructures and services to the cloud environment.
The difficulty of developing this law was the need to take into account the interests of the state and the main market players, on whom its implementation depends and who often have diametrically opposed interests. In addition, it was necessary to prescribe a large number of new definitions, take into account all aspects of personal data protection, establish a balance between budget savings and cyber protection of information, etc. All this, unfortunately, leads to a delay in the process of adopting this law. However, the implementation of the Cloud First concept in 5 years will save the state budget of Ukraine more than $3 billion.
— The legal services market in Ukraine is quite competitive. What is the uniqueness of services provided by MK Legal Service?
— MK Legal Service is the main business partner of our clients. And this is not only our slogan, but the basic principle of work. Founded 10 years ago by several corporate lawyers, our company was actually born out of business. That is why our mission is not limited to providing quality legal services.
Thanks to our in-house experience, we know what system enterprises really need today, so we comprehensively support companies, creating additional partner values for them. We manage the client's business risks — we predict, identify and minimize them, so MK Legal Service lawyers are ready to respond promptly and answer questions 24 hours a day, 7 days a week. Having studied the needs of our clients in detail, we give legal form to the most ambitious business ideas and solve clients' problems with minimum resources and maximum results.
— How do you see MK Legal Service in 5 years? Do you plan to develop as a typical law boutique or become a multifaceted law firm specializing in most popular practices?
— In today's conditions of rapid life changes and uncertainty, it is very difficult to talk about such visionary plans. But the rapid development of our company, even during the last year of significant quarantine restrictions, speaks for itself. We did not lay off employees or cut wages, but on the contrary, we developed and replenished the company's human resources. Whether it will be a multifaceted legal company or a legal boutique is a question of external factors rather than internal ones, because we can develop equally successfully in both directions. The first priority for me is not organizational form, but compliance with high standards of legal client service with 100% understanding of business needs and their satisfaction. Therefore, we will continue to follow our mission and continue to help businesses become successful!
— Are you considering the prospect of expanding the partnership?
- Yes, I am considering. Currently, I see various directions of expansion of the partnership. We actively develop and train our own personnel. Every employee of the company has a chance to become a partner. At the same time, we are open to partnerships with other highly qualified legal advisors and even legal companies. The main thing for us is common business values, reputation, experience and personal qualities of a potential partner.
— What book and film would you recommend to young lawyers?
— Today we have a huge selection of good and interesting books. Often the same topics are covered by many authors. Therefore, I recommend looking for those books that "walk in" from the first page. It will be a unique list for everyone. My favorites are The 7 Habits of Highly Effective People by Stephen Covey and Never Eat Alone by Kate Ferrazzi. The title of the first book tells about the main content, and the second book about the important role of environment and proper communication in personal and professional success. Of the recent films, I really liked this year's "Mauritanets". It is a British-American legal drama based on real events about the wrongful detention of a person accused of involvement in the events of September 11, 2001.
The interview was published in issue No. 10 (740) of the Yurydichna Gazeta edition