Turkey: Land of Opportunity
Recent events have not been good for Turkey. Following an impressive 7.4% growth in GDP last year, the country entered into a crisis in August when investors became concerned about structural imbalances in the economy: the Turkish lira reached a record low against the dollar, losing a quarter of its value in a fortnight and, despite a modest recovery, it is still down by a third overall this year. Meanwhile evidence of a sharp economic slowdown that could yet morph into a full blown recession is ubiquitous. Most notably, there has been a collapse in consumer confidence while manufacturing data has revealed a sharp contraction in growth, topped off by a 24.3% inflation rate recorded in October.
But many international investors see things differently: an interest rate hike in September, combined with a rapidly shrinking trade deficit, have served to strengthen the lira and helped to allay fears of a full-blown crisis. Despite everything, Turkish lawyers have been busy – not least because of changes to the country’s Enforcement and Bankruptcy Law, which came into affect earlier this year, and a recent Presidential Decree (plus amendments to Decree No. 32 on Protection of the Value of Turkish Currency) that placed restrictions on the use of foreign currency in some agreements affecting leases, sales and employment.
For one Turkish lawyer in particular, the country still has much promise in the years ahead: Levent Lezgin Kılınç, the Founding Partner of Kılınç Law & Consulting, which opened for business only four years ago. ‘There are a lot of people and companies that want to invest in Turkey because of the current situation,’ he says, pointing to ‘new regulations which were passed through the Turkish parliament about Foreign Direct Investment (FDI). The top five investors by country of origin are from Europe, particularly the Netherlands, Italy and Germany.’
Kılınç cites the new Presidential Investment Office, which ‘gives services to foreign investors in Turkey – when you want to invest, you have to be on the safe side first of all from the government part,’ he says. ‘For example, a client was planning to open a sulphuric acid factory, so we made an application to the government and said: this is the project, can you find a loan for the business? They found a loan and the investors started construction.
‘The next application was for the Incentive Certificate, which is more important. Turkey is now divided into six different regions; if you do a project in the Eastern part, you get extra incentives: exemption from VAT, exemption from 50% of income tax, and exemption from employment insurance. Because it was the first project of its kind, the government gave more exemptions.’
He also points to the Turkish government’s recent attempts to attract high net worth individuals to live in Turkey. ‘To get Turkish citizenship the conditions were very difficult,’ he explains. ‘But today, it is much easier. For example, if you buy a Turkish apartment for $250k, you may directly apply for citizenship, or if you have $500k in a Turkish bank account for three years, you can apply for citizenship. After these new regulations, a lot of people have come, especially from the Gulf countries.’
Before setting up Kılınç Law & Consulting in 2014, Levent Lezgin Kılınç had a varied international career. A graduate of Istanbul Kültür University Law School, he then spent six years in the United States, doing an LLM at Arizona State University, followed by a two-year stint at an insurance company, as Foreign Legal Counsel in Texas. He then worked as legal counsel, first at Al Baraka Türk Bank and from 2012–14 worked at SOCAR, Azerbaijan’s State Oil Company, in Turkey. While at SOCAR, he was involved in one of the two biggest projects in Turkey, the $10.2bn Trans-Anatolian Natural Gas Pipeline project.
‘After SOCAR I decided to establish my own law firm’, he explains. ‘Today, we have 26 lawyers: the main office is in Istanbul and we opened our second office in Izmir in August.’
Like any legal market, Turkey provides plenty of competition. ‘It’s very competitive,’ confirms Kılınç. ‘But the competition is getting worse because clients want to pay less for legal services. In 2006, there were very few lawyers who had LLMs or Masters from other countries, but in today’s Turkey there are a lot of lawyers who have those qualifications. English is still the most important language, but when we are looking for a lawyer, we want another second language, in addition to English.’ Apart from Turkish, Kılınç is fluent in English and Azerbaijani.
His firm’s core departments are corporate and trademarks, litigation, contracts, maritime and governance affairs and immigration. ‘Uber is one of our clients,’ he says. ‘They have problems with taxi drivers all over the world, we are trying to help them with everything legal in Turkey. We have been advising them for two years.’
As an energy lawyer, Kılınç’s own practice includes wind and pipeline projects. He has also advised on the new $6.3bn Star oil refinery: a new joint venture in Izmir, designated as the country’s first special industrial zone by President Erdogan, which encouraged Kılınç to open its second office there. Having an estimated annual processing capacity of 10m tons, Star will begin its full operations next January – the first such refinery to be built in Turkey for more than 30 years. ‘I was involved in the project finance part at the beginning,’ says Kılınç. ‘For the contracts and litigation aspects, we are giving services directly to the refinery.’
As a young, growing firm, referral work from non-Turkish firms, primarily European or US based, is important to Kılınç’s future strategy. Currently, they enjoy good working relationships with a number of international law firms, most notably Baker McKenzie and Covington & Burling. ‘Referrals are very important: we want to have more clients from Europe and US in the future,’ he says.
To compete with the big Turkish firms Kılınç also plans to grow. ‘In 2019, we want to grow our Istanbul office by 30%-35%; for our Izmir office, 70% to 75%,’ he says. ‘Istanbul and Izmir are going to be around 45 lawyers.’ Although every Kılınç Law & Consulting lawyer speaks Turkish and English, there are also Russian, Azerbaijani, Arabic, Dutch, and German speakers as well.
‘All of them are from Turkey. except for the two Azerbaijanis,’ says Kılınç. ‘So it’s the same culture, they are very well educated: 70% have LLM degrees from Turkey or other countries. As a commercial offering, we are ready to give services to foreign businesses and individuals who want to make any kind of investment in Turkey – to present our firm and our country with all the benefits and advantages that are available.’
This interview was published in Global Legal Chronicle