A first-of-a-kind conference took place in Israel during June 27, 2013, at the Carlton hotel, Tel-Aviv. For the first time in Israel, we held Israel‘s first foreign law firms conference – the Flow to Israel. The conference was held with the Tel-Aviv and Central District of the Israel Bar Association. For the full agenda of the conference, please click here
The conference was opened with greetings from Adv. Efi Nave – Chairman of the Tel Aviv and Central District of the Israel Bar Association, from Prof. Yaakov Neeman – former Israeli Minister of Justice, and from Adv. Zohar Fisher – Ceo of Robus (Legal Marketing company) who was also the Academic Organizer and Moderator of the conference. The conference was heavily covered by the media, including foreign magazines and blogs
The conference hosted hundreds of Israeli attorneys from tens of Israeli leading law firms, side-by-side with tens of foreign law firms who attended the conference, among others – from the US, the EU, UK, South America, South Africa, the Far East and so on. The participants discussed the entry and activity of foreign law firms in Israel, along with changes and trends in the international legal market
Robus (Legal Marketing and Consulting services) is happy to bring before you a full summary of the conference, including elaboration about the different lectures, panels, and Q&A which were presented to many attorneys. We hope you’ll enjoy reading the summary – and hope you’ll see you again at the next conference
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Click on the different lecture / panel below to see the summary
(A) New World and Colleagues- Prof. Yaakov Neeman
(B) Panel: Israel in the global eye
(C) Foreign law firms’ conference- Do’s and Dont’s
(D) Foreign law firms in Israel – the effect on the Israeli sector
(F) The Middle East – threats and opportunities – Adv. Gilead Sher
(G) High-Tech Panel
(H) Intellectual property Panel
(I) Tax panel
(J) Energy Panel
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(A) New World and Colleagues- Prof. Yaakov Neeman
If you ask Professor Yaakov Neeman (formerly twice Israel’s minister of justice, former minister of treasury and the founder of one of Israel’s top-tier law firm) about the Israeli legal markets’ newest reform, he would probably opt to exclude the “new” adjective from the phrase. For him, integrating foreign lawyers with Israeli firms is a common practice. The new amendment (the 33rd Israeli Bar Law amendment) simply Polishes the rough edges
Professor Yaakov Neeman studied law in New-York, and opened his own law firm together with a couple of foreign lawyers: the late Haim Herzog made aliya from Ireland, and the late Michael Fox left a flourishing London-based practice for his aliya
Connections between the Herzog-Fox-Neeman Firm and the foreign legal world are still prevalent today, as the firm is strict about its policy of having foreign lawyers consisting at least a third of the associates, and making internships abroad mandatory for aspiring partners
With this background, it’s quite clear why Neeman feels that foreign lawyer’s integration with the Israeli market is both natural and welcome
The new Israeli bar law amendment allows a foreign lawyer to apply for special registration in the Israeli Bar. After successful registration, that lawyer will be allowed to offer to clients and other firms all manners of legal services; with the exception of representation in courts
According to Neeman, the opening of the legal practices’ gates to foreign firms is a natural and indeed necessary step towards putting Israel at the global legal forefront. Israel merely toeing the line with the rest of the legal world – “Every country that opened its gates to foreign practice saw an improvement in its own local practice”, said Neeman
In the last couple of decades, Israel became a major global exporter. Legal services, with emphasis on foreign law expertise are in high demand in exporting. Neeman explains that the when Israel could rely on rich Jewish benefactors from abroad to serve as its main growth engine, and they have been replaced with multinational organizations
Israel needs to show these multinational organizations that it is fully committed to afford them the best legal services money can buy; that is, if it wants to keep drawing them in
In spite of Neeeman’s general optimism, many lawyer fears the new reform’s impeding implications over the local legal market. What will be the implications for the smaller firms? Will it mean the end of boutiques? Are we looking at further saturation of the local legal market
One of the local lawyers’ greatest concerns is of an overly-competitive market. Israel’s legal market is overwhelmed with many lawyers, with the government struggling to fight the rising demand for LL.Bs. Why is it necessary then, to make this seemingly competition-enhancing move
Neeman sees this in an entirely different way – foreign law firms won’t compete with Israeli firms, but rather serve as force multipliers for their existing and future businesses. The foreign firms will allow the local ones the leverage they need in order to execute top-tier legal and business endeavors
Foreign lawyers man the niche that domestic law firms can’t provide. Israeli firms, needing tax planning and litigation in the USA, have no option other than hiring foreign-law experts. This new amendment allows foreign expert to have his firm established in Israel and provide its services here, on the ground
As aforesaid, foreign lawyer are prohibited from representing clients in Israeli courts. One of the claims that were voiced against the new amendment is that a foreign firm can easily bypass this limitation by hiring a local lawyer as a sort of “barrister”. When asked to his opinion of the matter, Yaakov Neeman said he cannot find anything wrong with this practice. To the contrary: the whole idea behind this reform is to integrate foreign and domestic lawyers’ practices
According to Neeman, strengthening of work relations between Israel’s lawyers and their counterparts abroad is the true goal of this reform
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(B) Foreign law firms’ conference- Panel: Israel in the global eye
Moderator: Adv. Chaim Friedland, Gornitzky & Co. (Israel)
Participants:
Adv. Adir Waldman, Freshfields Bruckhaus Deringer (Global)
Adv. Adam Snukal, Greenberg Traurig (USA)
Adv. Jeremy Lustman, DLA Piper (Global)
Adv. Joshua Kiernan, White & Case (Global)
Adv. Philip Rosen, Weil Gotshal & Manges (USA)
On July 27th, the Tel-Aviv and Central Districts of the Israel Bar Association hosted a conference titled “Foreign law firms conference – the flow to Israel”. On the agenda was the then-one-year-old Israel Bar Law amendment, which enabled foreign lawyers to provide legal counsel on matters relating their home states’ law. Robus Legal Marketing was the academic manager of the conference
How do the worlds’ top law firms perceive Israel was the fascinating question that formed the heart of a fiery debate, held by a delegation of the worlds’ leading law firms and led by the Israeli attorney, Adv. Chaim Frieland, a partner in Gornitzky & Co
“Israel has proved to be an economical phenomenon: while the global market has only recently started recovering from the worldwide recession, Israel has consistently showed growth throughout the years”, says Adv. Friedland. “Local law firms and domestic companies now look for opportunities overseas, and vice versa
What do your firms seek to accomplish by entering the Israeli market
Adv. Adir Waldman of Freshfields Bruckhaus Deringer: It started as a question from clients: they asked how it is possible that we, as a global firm, are not involved in any way with the Israeli market. We conducted a survey within our clientele worldwide, and found out that many of them have business interests in Israel
Our firm tends to focus on legal markets that show a professional “gap” which we could fill. In my opinion the Israeli market shows little to no gap in the competence of local lawyers, so we will focus our efforts on 1) Finding outstanding local practitioners for our clients and 2) provide a portal to the global market for Israeli clients in fields like international commerce, M&A and market penetration
Adv. Gary Epstein of Greenberg Traurig: We wanted to expand our activity to Israel for several reasons: First, we wish to access the local technology-rich environment. It came to our attention that in Israel’s warm business culture, 90% of deals are made through close working relations and face-to-face negotiation
Therefore, we believe the best strategy it to create a physical presence here, and weave a network of close personal relationships. Likewise we intend to develop working relationships with some of the top-notch local firms that will become part of our global one-stop-shop type of service
Adv. Jeremy Lustman of DLA Piper: it was Israel’s admission to the OECD that first drew our attention. We noticed several segment of the local market in which there is a demand for the kind of legal services our firm could provide; including pension funds, that tend to invest in foreign markets and large companies like EL-AL and ICL Group. Plus, we are very interested in the local high-tech market, which relies heavily on foreign funding
What can you tell us about your firms’ entry strategy
Adv. Gary Epstein of Greenberg Traurig: Our preferred entry strategy is to partner with a local small to medium sized firm, with two or three highly capable partners, and use that firm as a base from which to build a local desk or branch of our global firm
Up until recently it was possible for us to manage the Israeli local branch activity from abroad, but since the bulk of Israeli activity increased considerably, we intend to permanently place a few New-York lawyers in Israel
Adv. Joshua Kiernan of White & Case: I agree. Our firm tends to join with a small local firm, with only a handful of partners. We generally avoid mergers with large firms due to the complexity and the risks involved
Adv. Jeremy Lustman of DLA Piper: we prefer to take a pragmatic approach, taking into account the special features of each target market. Israel is unique in the sense that it is saturated with lawyers, many of them proficient with international law. Many of Israel’s top lawyers are immigrants from Anglo-Saxon countries, and they represent high-profile clients. Also, Israeli lawyer have experience consulting in Africa, Brazil, china etc. Therefore, Israel is considered a “low-cost-entry market”. In the meantime, my answer is slowly and humbly
What kind of obstacles is your firm facing in entering Israel
Adv. Joshua Kiernan of White & Case: Israeli firms charge their clients with considerably lower fees than the standard we are used to. We have no choice but to charge higher fees if we wish to profit from this move. I see to possible scenarios: either the local market will go through a transverse change that will see a rise in local fees, or the foreign firms will have to compromise and offer creative and alternative fees arrangements
Adv. Jeremy Lustman of DLA Piper: While our American branches were excited about entering the Israeli market, the ones in the UK reacted rather coldly, mentioning the fact that among their chief clients are Arab governments. We needed to persuade them by emphasizing joint ventures between Israelis and Arabs in the Middle East; and European and Asian business interests in the region
Adv. Adir Waldman of Freshfields Bruckhaus Deringer: I have serious concerns regarding Israel’s status in the global community, especially with regards to the current political trends Israel is leading. It’s possible that if Israel’s political status will deteriorate, foreign law firms will find it hard to successfully operate in the local market
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Q: Adv. Friedland, do you think public opinion effects firms in their decision whether to operate in Israel
It is defiantly possible. U.S public opinion is significantly pro-Israel when compared to European public opinion, which tend to be hostile towards Israel. Also, American law firms tend to have many Jewish partners that influence the firms’ perception of Israel. I think that public opinion might prove an encumbrance for European firms seeking to do business in Israel
Q: Adv. Gary Epstein, do you agree with the saying: there is no significant gap in the Israeli legal market for the foreign firms to exploit
it is true that a small number of large firms dominate the Israeli legal market. Still, there are a few legal fields where foreign firms can successfully operate (and have been operating for the last 15 years). We tried to identify areas where our firm could have an edge over local firms, and operated there. That being said, Israel’s legal market is an accomplished one
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(C) Foreign law firms’ conference- Do’s and Dont’s
Moderator: Adv. Amnon Epstein, Epstein Rosenblum Maoz – ERM (Israel)
Participants:
Adv. Ariel Nachman, Simmons & Simmons (Global)
Adv. Elliot Lister, Asserson (UK)
Adv. Jan Wimpfheimer, Schwell Wimpfheimer & Associates (USA)
Adv. Paul Miller, Berwin Leighton Paisner- BLP (UK)
Adv. Stuart Krause, Zeichner Ellman & Krause- ZEK (USA)
“What can we learn from the experience of foreign law firms who already operate in Israel?” this was the underlying question of the panel: Foreign law firms – do’s and don’ts
The panel comprised of lawyers from diverse law firms. On one side, sat representatives from very large law firms, as BLP and Simmons & Simmons, while on the other side sat their colleagues from SWA and Asserson, and American and UK law firms (respectively) who focus on specific niches in the Israel market. Completing the panel members was ZEK law firm, a US law firm which holds an Israeli branch
Given this diversity, the panel moderator, Adv. Amnon Epstein from the Israeli law firm of ERM, kicked off the discussion with an inquiry about the different operational models used by foreign law firms in Israel, and their consequences on potential entries of additional foreign law firms to Israel
First to respond was Adv. Trevor Asserson, Asserson law firm, who told that his firm’s goal is to become the UK branch of Israeli companies who operate in the UK. His firm operates routinely vis-à-vis medium and large size companies in Israel, and is experienced in facilitating their penetration to the UK market
Following Adv. Epstein’s next question, Adv. Asserson unveiled his firm’s business model, which was proven to be very similar to that of the other panel members – not to compete with local Israeli law firms, but rather cooperate with them and supply specific services with added value
Advocating this model were also Adv. Jan Wimpfheimer from SWA and Adv. Paul Miller form BLP, as the latter advised foreign law firms who contemplate branching out to Israel to identify a unique and distinct niche they can operate in, given the sophisticated and ever growing Israeli market
Sealing this topic was Adv. Stuart Krause from ZEK who titled the notion that foreign law firms wish to compete with Israeli ones as a “misconception”. Their goal as a foreign law firm, stressed Adv. Krause, is to cooperate with Israeli law firms, as they do and have been doing throughout all the years they have been in Israel
But what exactly is this added value and tailored counsel? What does an Israeli client expect form a foreign lawyer? Adv. Ariel Nachman from Simmons & Simmons tackled this riddle by underlying the sophistication of the Israeli client, who expects a foreign law firm to provide him with a comprehensive package of tailored services, adjusted to every country and its respective legal system
The thing you don’t want to do as foreign lawyers, stressed Adv. Nachman, is to automatically send your Israeli client to a foreign lawyer overseas, without verifying that the services he receives are tailored to his business and profound needs
At this point Adv. Amnon Epstein (ERM) turned to the panel members and asked them for a 5 year prediction – to which direction is the Israeli market heading? Are more foreign law firms expected to enter, and if so, in which manner
Adv. Paul Miller (BLP) predicted that the market for outsourced legal services, which is currently making its first steps, will expand, and referred to this prospect as “dramatic and exciting”. He further claimed that Israel has a distinct advantage over many competitors in the field of outsourcing, like India, and can provide UK and US companies with first-rate legal services in competitive prices
Adv. Trevor Asserson (Asserson) predicted that more foreign law firms will enter Israel, including full service firms, which will adopt his firm’s model of bringing the legal services to the clients’ doorstep
The discussion concluded with a final note from Adv. Ariel Nachman (Simmons & Simons) who predicted that international law firms will not acquire local ones, nor is a consolidation among local law firms expected. What we will witness is the continuance of cautious entries to Israel, in addition to an interesting development – Israeli law firms branching out overseas to London, Berlin etc
Small talk…
We asked Adv. Paul Miller form BLP
* Are there differences between serving a foreign and an Israeli client, and if so, do they require different treatment from the lawyer’s side? Adv. Miller replied that Israeli and foreign clients are basically similar. However, the Israeli client is definitely shrewd and savvy, and expects ‘out of the box’ thinking and creative solutions from his lawyer
* Is the business activity and commerce between Israel and the UK expected to grow in the coming year? Adv. Miller said that some markets are definitely growing in the UK, like technology and media, which attract Israeli companies. In addition, the financial crisis in the UK is gradually passing, which also attracts Israelis, as we witness more and more capital raisings in London Stock Exchange
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(D) Foreign law firms conference- the effect on the Israeli sector
Moderator: Adv. Maayan Nave, founding partner, Com&Sense- international PR consulting company
Participants:
Adv. Amos Konforti, Shenhav Konforti Shavit & Co. (Israel)
Adv. Alan Sacks, Herzog Fox & Neeman (Israel)
Adv. Barry Levenfeld, Yigal Arnon & Co. (Israel)
Adv. Michael Zellermayer, Zellermayer Pelossof Rosovsky Tsafrir Toledano & Co. (Israel)
Adv. Yonatan Altman, Amit Pollak Matalon & Co. (Israel)
The panel discussed the present and future influences foreign law firms’ entry, of the Israeli market. The panel host, Adv. Maaya Nave asked the obvious question: have any of the panelists felt any changes to the Israeli legal market following foreign law firms’ entry
Adv. Alan Sacks from Herzog Fox & Neeman testified that his firm prepared in order to provide services to foreign investors; and the resent growth of the firms’ professional team attests for the need to accommodate rising demands. Adv. Sacks points out, that in order to fully understand the outcomes of foreign law firms’ entering the market, one should take into account that this is a process that started over 20 years ago, when foreign investors first discovered Israel’s potential
Sacks claims that foreign law firms and attorneys have come to Israel to compete with Israeli law firms; rather they came in order to collaborate. This is evident in the fact that the volume of incoming referrals has risen tremendously
Adv. Barry Levenfeld from Yigal Arnon & Co. haven’t felt significant change either, and says that “the main sign for change is that thanks to the new amendment, the foreign lawyers that have been practicing in Israel for years can now come out of hiding and put a local address on their business card
Adv. Michael Zellermayer from Zellermayer Pelossof Rosovsky Tsafrir Toledano & Co. told the panel that in his 20 years experience practicing abroad, the greatest change will be the ability of Israeli lawyer to learn from the American and British business heritage. He claims that only a small number of foreign lawyers operate within the Israeli market, and even they are doing so as a marketing tactic (albeit an effective one) – meant to attract Israeli clients
Adv. Zellermayer believes that a significant change to the Israeli legal market will only happen when a presence in Israel would have profitability significance, and not just marketing significance. “Sadly, this will only happen 20 years from now due to the unbridgeable gap between the U.S and Israel resources” says adv. Zellermayer. “All in all”, said Zellermayer, “foreign lawyers’ presence in Israel is beneficial to the local market
Adv. Yonatan Altman from Amit Pollak Matalon & Co. believes with that with the economy’ growth, foreign lawyers’ presence will grow. This is an inevitable outcome of globalization- and it enables to achieve great things, both in Israel and abroad
Adv. Altman added that he believes that for now, nobody can really predict the outcomes of this trend, and that foreign lawyers come to Israel, not nesseseraly due to a great profit estimation, but mainly for fear of missing an opportunity. “In other words”, says adv. Altman, nobody knows where this train is going, but everybody wants to climb aboard
Adv. Amos Konforti from Shenhav Konforti Shavit & Co. summarized, saying that for now, Israeli firms focus their efforts on importing work, and less so on exporting work – till this day, foreign firms collaborated mainly with the five largest Israeli firms and, as chair of a medium-sized firm, I hope to see more diverse collaborations
The panelists were asked whether they thought that the Israeli market is too small for foreign firms to operate alongside local ones
Adv. Sacks picked up the gauntlet, saying many foreign firms lavish compliments on Israeli firms. He says about a quarter of his firms’ revenues are from Israeli clients working abroad. The local legal market provides a lot of business oversea and foreign firms wish to collaborate, not compete, with Israeli lawyers. Future competition will be, if any, marginal and over niches
Are there any clients you think you’ll have to fight for
Adv. Levenfeld: “Generally, firms try not competing – there is a kind of political dance to as how gets a certain client”. He says that when there is, for example, a potential deal with a New-York client, one can divide the labor between Tel-Aviv and New-York
Adv. Levenfeld added that there are many local firms that weren’t ‘in the game’ up until now because their smaller size made the irrelevant for large international firms. He believes that the new amendment will change that. He concluded saying “as it comes to “golden clients” we are not heavily depended on one particular client, and we’re not afraid of other firms stealing our clients; furthermore, I think foreign firms shouldn’t merge with local ones
In contrast, adv. Zellermayer said that a firms’ size generally doesn’t affect its capability to take on international deals. “It’s more about taking initiative and control and not about size” says Zellermayer. On the issue of foreign-local mergers, adv. Zellermayer claims that while local firms are intrigued with the possibilities associated with such a merger, foreign firms have nothing to gain from such a move
Adv. Altman: “we have enough competition now – we don’t need more. When negotiating an international deal there is always the question of how’s the leader. In my experience, if you an open and transparent working environment – it works”. Adv. Altman says it’s hard to predict the future of foreign-local mergers, and he prefers to keep an open mind about the subject
Adv. Konforti confessed that that his firm considered, and eventually rejected the idea of merging with a foreign law firm. “We figured that won’t be a match to the top five Israeli law firms, and so we preferred a strategy in which foreign firms would perceive us as an extension of them in Israel, instead of a full-on merger
Adv. Sacks pointed out that the new amendment could mean a change in human capital flight: currently, Israeli prodigy lawyers are free to seek out working opportunities abroad, as leading international firms are always on the hunt for highly competent young lawyers
“The new amendment could mean that foreign lawyers will now be able to seek working opportunities in Israel”, says adv. Sacks, “though the 5-year-practicing requirement would pose an obstacle since most firm a interested with attracting beginning lawyers, before their career has materialized
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(E) Foreign law firms’ conference- Capital Markets Panel
Moderator: Adv. Manny Gurman, Steinmetz Haring Gurman & Co. (Israel)
Participants:
Adv. Alan Krausz Bitrán, Bitrán & Cia (Chile)
Adv. Gideon Even-Or, Carter Ledyard & Milburn (USA)
Adv. LizabethAnn R. Eisen, Cravath Swaine & Moore (USA)
Adv. Michael Barnea, Barnea & Co. (Israel)
As part of the Foreign Law Firms Conference, one of the interesting panels dealt with the possible influences of the Israel Bar Law reform over the Securities and Capital Market legal branch. Adv. Many Gurman of Steinmetz Haring Gurman & Co. hosted the panel
Adv. Many Gurman: Israeli law firms practicing capital market law, generally have a-lot of hands-on foreign law experience since the bulk of their activity involves cross-border transactions. Probably due to the Israeli economy unique features, foreign securities and capital markets try to gain physical foothold in Israel in order to facilitate the operation of trade with Israel and the region
Some may see foreign law firms entering Israel as a means for reducing costs; others will claim that public offering should be made by local lawyers, proficient with local procedure. Any way you see it, the local Israeli market receives “foreign players” that may have a powerful effect over the conduct of business
In which way might the reform influence the local securities and capital market practice
Adv. Michael Barnea of Barnea & Co.: I think the reform will have marginal effect, if any. Lawyers are naturally less effective outside their native country due to their unfamiliarity with local customs and language. Also, I have noticed that the best way to practice cross border transaction, IPO etc’ is for local and foreign lawyers to work together, each in their own native stock exchange. I believe that foreign firms operating in Israel will only serve as a link between a local Israeli firm and the foreign firm
Adv. Gideon Even-or, of Carter Ledyard & Milburn: I agree. I believe that these kinds of services should be done by the best in their field. I doubt that small branches of large foreign firms will be able to outperform the local Israeli firms, versed in the details of the local practice
Our goal is to maintain a close working relationship with top-notch local law firms, using physical presence just for guiding local firms, not competing with them. We believe this to be a sensible approach
So where might the reform make a significant effect
Adv. Michael Barnea: It is possible that we will see a split-market phenomenon on the issue of fees: on the one hand the competition will cause fees rates to drop; and on the other hand, areas in which foreign firms will operate might see a rise in fee rates. This might cause a “division of labor” in which large and small law firms, in which firms of different size will focus on different fields of law
Are there any similarities between the Israeli capital market and your country’s capital market
Adv. Alan Krausz of Bitran & Cia (Chile): Like Israel, Chile has a free and open market that is generally not bound by regulatory restrictions. Chile, like Israel, is also a “nice house in a bad neighborhood” and its political stability and growing economy stand out in the region. This makes Chile a platform for business throughout South America and even the U.S (due to tax considerations). Israel also draws political hostility, but Israel and Chile are pretty much on even terms
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Q: Adv. Alan Krausz, how would you say Chilean law firms differ from Israeli firms
There is a major difference in the organizational culture: Chilean law firms operate to the beat of South American lifestyle, and workplace environment tends to be relaxed and easy-going. Israeli law firms tend to be more like North American firms: everything is done by the book with emphasize on details and timetables. Our firm though, is more like the North American firms
Q: what are the main practice fields in which Chilean and Israeli firms do business? What is the contemporary trend in the business between the two states
business between the two states is defiantly growing! The prominent common practice fields are clean-tech and advanced water technology. Chile has a shortage of water and our firm represents the Israeli AYALA company in its operation of a water harvesting and storage project. Likewise, local firms are interested in high-tech solutions provided by Israeli companies
Q: what kind of marketing activity are you undertaking in order to attract clients in Chile
The Chilean code of ethics is quit restrictive, and similar to the Israeli ones: you can’t publicize on T.V, radio or billboards. Much of our marketing is based on referrals, and by our partners giving lectures and talks
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(F) The Middle East – threats and opportunities / Adv. Gilead Sher
Adv. Gilead Sher is the founding partner of Gilead Sher & Co., a senior research fellow at the Institute for National Security Studies (INSS) and co-founder of ‘Blue White Future’ initiative. Adv. Sher was Israel’s head of negotiation team at the Camp David peace summit with the Palestinians – 2000 – and the subsequent Taba peace talks – 2001
Winning the prize for the original and thought-provoking lecture of the conference was “The Middle East – threats and opportunities” lecture, given by Adv. Gilead Sher
Among the various legal disciplines and commercial issues dissected in the conference, Adv. Sher shared with the crowd his insights and observations regarding the geopolitical status of the region, which is always behind the scenes of Israel’s business sector, in times of crisis as in peaceful times
Here is a small ‘taste’ from the interesting words of Adv. Gilead Sher
In light of Secretary of State Kerry’s ongoing efforts to promote negotiation between Israel and the Palestinians, it is worth mentioning that the solution to this conflict has been roughly known for about 15 years. As a person who worked elbow to elbow with Bill Clinton and Ehud Barak in his former capacity as head of Israel’s negotiation team in 2000 and 2001, Adv. Sher claims that little has changed since then, except the deep mistrust which is currently prevailing between Israelis and Palestinians
Nevertheless, Adv. Sher emphasized that the two-state-solution is just as vital as before, and is the only guarantee for Israel’s future as a Jewish and democratic country
That being the case, how can we surmount the deep mistrust between the parties, and move the process forward? Sher’s first advice is to abandon the “all or nothing” negotiating formula. Instead, the parties should identify the least controversial issues between them, agree on them, and then proceed gradually
In addition, it is recommended to conduct the talks on several channels which supplement the American one, like the Saudi initiative for example. This way, claims Adv. Sher, a failure in one channel would not necessarily put an end to the whole process, and an alternative platform can be used. In addition, the final goal of this negotiation should also be carefully considered, as chances for success might be higher aiming for an intermediate agreement, rather than an end of the conflict
And what about the Middle East turmoil
Indeed, many countries are undergoing profound changes, and regional transformations are evident in terms of freedom of expression, Sunni-Shiite relationship etc. However, it is precisely in times like this that Israel needs to be proactive and seek alliances and opportunities to cooperate, given the change in some paradigms we have become accustomed to. A fickle region does not justify sitting on the fence, claims Adv. Sher, and recommends that Israel takes a proactive approach and seize positive opportunities that come its way
As for its inbound efforts, there are several steps Israel can take in its home front in order to promote an agreement with the Palestinians. Unilateral steps need still to be considered, even in light of the disengagements from Gaza and Southern Lebanon. For example, it is recommended that Israel promotes evacuation-compensation legislation regarding the settlements which will not be in Israeli territory under any final agreement
In any case, striving for an agreement with the Palestinians in a proactive manner should be central to Israel’s policy, as it is the only guarantee for its Jewish-Democratic character in the years to come
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(G) Foreign Lawyers Conference – High-Tech Panel
Moderator: Adv. Eran Yaniv, Fischer Behar Chen Well Orion & Co. (Israel)
Participants:
Adv. Idan Netser, Fenwick & West (USA)
Adv. Marcus Cohen, Sandler Travis & Rosenberg (USA)
Adv. David Martin, Weksler Bregman & Co. (Israel)
Adv. Amir Zolty, Yingke Israel – Eyal Khayat Zolty Neiger & Co. (Israel- China)
The panel discussed Israel’s ever-growing high-tech industry and the fact that many Israeli companies attract the attention of notable oversea investors. The panel consisted of local and foreign lawyers alike, sharing their views of the Israeli companies’ attractiveness to foreign markets, and the possibility for future collaboration in light of the new Israel Bar Law Amendment
It’s worth mentioning that panelist Adv. Amir Zolty’s firm (Yingke Israel – Eyal Khayat Zolty Neiger & Co.) has recently merged with Yingke; China’s second largest firm. Adv. Zolty shared his insights of this fascinating merger with the rest of the panel
Adv. David Martin from Weksler Bregman offered his opinion that there is a need to carefully define the work interface of local-foreign lawyers; whereas his take of the ideal collaboration is when the foreign lawyer act the ‘foreigner role’, and the local lawyer acts as the ‘local’ one. This would enable each side to fulfill its role while avoiding conflicts of interests
In Adv. Martin’s opinion, foreign-local collaboration is a way of making the legal process foolproof. A foreign lawyer how is trained abroad is not competent in working in the Israeli legal market; a key example being the differences in writing style and understanding of courts’ interpretations. Adv. Martin added that the Israeli courts’ judicial activism trend is a prime example of a pitfall that can be avoided when foreign lawyers team up with local ones
Adv. Idan Netser from Fenwick & West, an Israeli lawyer working for a US Silicon Valley law firm, said that most of his clients are high-tech companies and their investors. He says that whenever his firm has a need of specialized knowledge of a country’s local laws they collaborate with local law firms on the basis of inter-personal relations and professional relationships, and have been doing so long before the Israel bar law amendment. Adv. Netser doesn’t expect a merger in his firm since he does not see any justification for it
Adv. Netser mentioned that his firm collaborates if one of Israel’s largest firms, which regularly send its lawyers for internships at Fenwick. In addition, he said that Fenwick regularly refers clients to Israel, but stressed that his firm doesn’t intend to establish an Israeli branch and that they are very pleased with the current method for collaboration
Adv. Marcus Cohen from Sandler Travis & Rosenberg pointed out the importance of working with foreign lawyers for the Israeli high-tech community: foreign lawyers are far better equipped to handle the intricate of foreign law practice and can minimize the risks for oversea ventures. Adv. Cohen thinks that many Israeli firms lack crucial understanding of the US law system and need to consult with foreign experts to avoid risks and costly mishaps
Adv. Amir Zoltys’ firm has recently merged with a Chinese mega-firm has shared some of his insights: He is confident that in the near future, Chinese will be he lingua franca of foreign law firms conferences. Beijing is hard pressed to collaborate with Israeli firms and it has incentivized firms to join forces with Israeli firms specializing in clean-tech and IT
To summarize the panel; panelists were asked whether they believe Israeli and foreign lawyers could collaborate, without stepping on each other’s toes
Adv. Idan Netser: we want to provide our clients with the best possible service; therefore we don’t compete with Israeli firms. We work in full collaboration with our Israeli colleagues to achieve optimum result and avoid pitfalls, especially with regards to tax issues. I don’t see the potential for a competition
Adv. Marcus Cohen: In my opinion, if we’ll all meet again five years from now, adv. Zoltys’ will still be the sole example of a true foreign-local merger
Adv. Amir Zloty surprisingly concurred with Adv. Cohens’ observation; saying that while most big Israeli law firms won’t seek a foreign merger, smaller firms have a lot more to gain from an international merger, and hinted that several more mergers are in the works. Adv. Zolty predicts that we will see many more mergers in the future, even though they might not be a game-changing phenomenon
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(H) Foreign law firms’ conference- Intellectual property Panel
Moderator: Adv. Eyal Sage, Amar Reiter Jeanne Shochatovitch & Co.
Participants:
Adv. Naomi Assia, Naomi Assia & Co.
Adv. Gerson Panitch, Finnegan, Henderson, Farabow, Garrett & Dunner
Adv. Joseph Bach, Nixon Peabody
“How is the future of the IP practice going to look like, given entries of foreign law firms to Israel?”, this was the underlying question of the IP panel, as each member provided his own set of answers
The plot thickened in light of the unique characteristics of the IP practice in Israel, as elaborated by the panel’s moderator, Adv. Eyal Sage from Amar Reiter Jeanne Sochatovitch & Co. – On the one hand, the IP practice is very much governed by boutique law firms who make the rules of the game; on the other hand, IP can be also seen as a decentralized practice which begins to acquire the features of a commodity, as we frequently see law firms selling patent drafting or trademark registration on an ad-hoc basis
First to tackle the issue was Adv. Naomi Assia, Founding partner of Naomi Assia & Co. who predicted that foreign and Israeli law firms will mainly cooperate, seeing that large US law firms are not in the position of providing IP services to small Israeli start-ups. Israeli law firms have the knowledge and expertise in IP, some even employ American lawyers, she added. Therefore, cooperation, sharing of clients and mutual assistance are a win-win situation for both Israelis and foreigners, concluded Adv. Assia
Following this line was Adv. Gerson Panitch from the US law firm Finnegan, who assessed that the IP practice in Israel is growing and expanding, which in turn will facilitate the penetration of foreign law firms and provide all IP law firms with opportunities in abundance
Adv. Panitch picked up on Adv. Sage’s opening remark on the nature this legal niche, and distinguished between two market segments in this respect: the first are companies and bodies that consider IP a commodity; the second are sophisticated companies that understand IP and demand precise and tailored legal services
Both market segments, the commodity and sophisticated, are expected to continue growing according to Adv. Panitch, hence no real competition is expected between Israeli and foreign law firms, and even if one appears it will not have a serious effect on any of them
Will this new legislation indeed bring cooperation and synergies between foreign and Israeli law firms? Addressing this issue was Adv. Joseph Bach from the US law firm of Nixon Peabody, who presented a slightly different perspective than his colleagues – Patents, he claimed, are not a profitable service for US law firms, who consider them a preliminary step towards a more comprehensive service package, i.e. in the fields of litigation and corporate law
When comparing foreign and Israeli IP law firms, one discovers that the latter lack a systematic IP approach, added Adv. Bach. Therefore, in the event that Israeli companies will turn to US law firms that specialize in IP, they are likely to receive better and more comprehensive service
As for the Israeli IP lawyers, Adv. Panitch and Adv. Bach shared a similar view that they are quite different than their American colleagues. Israeli IP lawyers lack, for the most part, experience in the US or in-depth professional knowledge in areas such as engineering, unlike the Americans
As for patents, the development of this segment in Israel requires an adoption of a new approach, under which patents are written not for the patent registrar but for the litigation proceedings and the future judge
Smalltalk…
We asked Adv. Naomi Assia, founding partner at Naomi Assia & Co.
* What does the future has in store for boutique IP law firms, given the consolidation and M&A trends in the Israeli law firm industry
Adv. Assia suggested we distinguish between different IP segments. As for trademark registration, patent registration and litigation, she predicts that boutique law firms will continue being dominant in these respects. As for the segment of licensing, however, it is gradually being absorbed by big law firms
* To what extent are Israeli companies knowledgeable in IP matters, and aware of the different risks and opportunities
The awareness is certainly on the rise, stated Adv. Assia, especially given the fact that they are required to take care of these matters before they start the funding phase and turn to the Chief Scientist or VP funds
In addition, nowadays patents are traded, which adds to the awareness. Nevertheless, the overall awareness of the deeper levels of IP is still far from optimal. For example, patents are still considered to be a purely defensive instrument, while their offensive aspects are often ignored
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(I) Foreign law firms’ conference: Tax panel
Moderator: Adv. Yaron Mehulal, Eitan Mehulal & Sadot (Israel)
Participants:
Adv. Lyat Eyal, Alon Kaplan & Co. (Israel)
Adv. Richard Kaufman, Fladgate (UK)
Adv. Yaniv Rog, S. Friedman & Co. (Israel)
Adv. Zvi Hahn, Katten Muchin Rosenman (USA)
What are the tax considerations for opening an Israeli branch of an international firm? That was the main subject discussed on the tax panel led by Adv. Yaron Mehulal, senior partner at Eitan Mehulal & Sadot
Adv. Yaron Mehulal of Eitan Mehulal & Sadot: sometimes, it is not easy for an Israeli client to turn to an oversea law firm for legal counsel due to cultural gaps, communication gaps and time zone differences. High-profile foreign tax law firms entering Israel and establishing practice “on the ground”, might be the right way to bridge this kind of gap
What are the preconditions for a foreign lawyer to provide legal counsel
Adv. Liat Eyal of Alon Kaplan & Co.: the candidate would have to be a certified lawyer in his home country, to have at least 5 years of experience practicing law, will have to pass an ethics exam issued by the Israel Bar and purchase an appropriate professional insurance. It should be emphasized that foreign lawyers are only allowed to provide legal counsel on matters concerning the law of their own country, and are not allowed to practice Israeli law
An international law firm which want to open an Israeli branch can do so, provided that at least one lawyer certified to work in Israel is a permanent member of the branch
Do you see any Israeli legal standards that might present obstacles for an interested foreign law firm
Adv. Zvi Hahn of Katten Munchin Rosenman: I see two possible difficulties: First, lawyers in Israel are forbidden from sharing their profits with individuals who are not lawyer by profession- accountants, lobbyists
Second and in contrast to UK and U.S laws, lawyer in Israel are not allowed to incorporate in a way that limits their legal liability (for example by becoming an Ltd. company). I think this will mean that only a small number of law firms would seek to establish a permanent practice in Israel. In order to establish such a practice, partners will have to agree to work on a heightened liability rule
What are the typical organizational models for multinational law firms, and what are their implications on tax issues
Adv. Zvi Hahn of Katten Munchin Rosenman: First, you have the “Large Family Model”. Under this model the firm is a single international legal entity, and all the partners are directly affiliated with the entity. According to the model, each and every one of the firms’ branches is considered a “permanent establishment” under international tax treaties. The result is that each of the partners is exposed to taxation in all of the jurisdictions where the firm is present
This kind of organizational model requires extremely complex tax information reporting, as the firm must report with respect to the different tax laws and tax considerations of each and every country in which it is present. There is always the possibility for filing uniform tax report for the entire firm, but this will result in higher tax liabilities
To sum thing up, the large family model might be easy to manage, but it is inefficient tax-wise
The second model would be the “network model”. In this model each of the worldwide branches is an individual legal entity. This can be seen as a kind of “confederation” of firms, with the firms acting under the same name, and there is no separate legal entity that serves as a parent company. This model leaves each branch to manage its own tax policy; making this model tax-efficient, but also poses management difficulties
* Firms managed as separate entities might act as a very loosely-knit partnership, or worse
* It might be difficult to accommodate each of the firms’ policies with the grand strategy of the multinational firm
* When each branch is an autonomous firm, it might be difficult to decide about profit sharing. What would be the standard for sharing profits? Should it be efficiency, rain making etc…for instance, on a global perspective it might be strategically sound to establish a branch in a less profitable location and allocate an un-proportionally large part of the international firms’ profits
Lastly, the middle ground is to operate as a global partnership, with local tax solutions: under this model the firm is run as an international legal entity on the one hand; but on the other hand, each local branch is also treated as an independent entity. Partners are partners of their local branches, with some of them being also partners of the international entity. The international entity is the one to decide how the profits are to be divided. This model is challenging with respect of management, but very elegant tax-wise
Adv. Yaron Mehulal: to sum it all up, the larger and more “international” a firm is, the harder it is to balance its tax interests with management requirements
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(J) Foreign law firms’ conference- Energy Panel
Moderator: Adv. Dan Hacohen, Agmon & Co. Rosenberg Hacohen & Co.
Participants:
Adv. David L. Ronn, McGuirewoods LLP (USA)
Adv. Stéphanie Benmoussa-Molkhou, Bersay Associés (France)
Adv. Dirk von dem Knesebeck, Heussen (Germany)
For discussing the future of Israel’s dynamic energy sector, we gathered leading lawyers from the US, France, Germany and Israel, who provided diverse and surprising insights which are relevant to all practitioners and affiliates of the local energy sector
“Where would the flourishing gas industry turn, and what role plays renewable energy in this sector?” – This was the question which the panel’s moderator, Adv. Dan Hacohen from Agmon & Co. Rosenberg Hacohen & Co. directed to the participants. By addressing these issues and providing their own original answers, the foreign lawyers provided a rare glance on the way foreign countries perceive Israel’s energy sector
Adv. David Ronn from the US law firm of McGuirewoods, stated that Israel is gradually acknowledging its need of greater expertise on energy issues, as the local sector lacks expert energy lawyers, technicians, engineers etc
Energy is a dynamic and fast-growing field that needs to be closely accompanied throughout the entire process from drilling to export, stated Adv. Ronn. The US can serve as an example it this respect, after discovering that gas and oil require advanced industrial technologies like fracking. Israel also needs these kinds of technologies, if it wishes to develop the local energy sector to its full potential
How is the local energy sector perceived in foreign eyes? Adv. Stéphanie Benmoussa-Molkhou from the French law firm Bersay Associés said that many French energy companies operate in Israel, such as EDF. However, much like the rest of Europe, France also associates Israel with geopolitical problems, and CEOs will often take these kinds of considerations in mind, in addition to the business ones, when deciding on operations in Israel
As for the French energy sector, Adv. Benmoussa-Molkhou said that renewable energy has been booming in recent years, especially with regards to clean-tech, which includes printing on recycled paper or using ‘smart’ public transportation, as well as many other technological developments
The rising star of renewable energy, however, is not only a French phenomenon, as was illustrated by Adv. Dirk von dem Knesebeck from the German law firm Heussen. According to him, Germany has made renewable energy a strategic choice several years ago, as currently 22% of German electricity comes from renewable sources, a figure which is expected to keep on rising. Solar and windmill energy are expected to replace the so-called old sources of gas, oil and nuclear energy
From a financial point of view, explained Adv. Knesebeck, renewable energy projects should be seen as a business opportunity, as they require funding, yet can provide a steady income for 20 years. Germany too is seeking for advanced technologies, mainly of solar energy, given the understanding that coal, gas and oil reserve will not last forever
Following this line was Adv. Ronn who stated that there are a growing number of windmills also in Texas (USA), who understands that the future belongs to renewable energy. Nevertheless, in light of recent developments in its local energy sector, the US is expected to become a major gas and oil exporter, which may undermine a few Middle Eastern oil exporters and have a serious geopolitical affect
In any case, claims Adv. Ronn, gas and oil will continue to be consumed and demanded, seen that they are instrumental to the plastic industry. The challenge we face is finding a cleaner and more eco-friendly way of extracting these resources, concluded Adv. Ronn
