For the first time, CEE Legal Matters turns its spotlight on Georgia, examining a market that has changed dramatically over the past three decades. From the early days of small local offices to today’s mix of international and domestic players, we look at what has shaped Georgia’s legal landscape.
Impact of International Networks on Early Development: 1990s-2000s
“In Georgia, law firms, as we commonly understand them, began to emerge in the second half of the 1990s and took a more defined shape in the early 2000s,” BDO Legal Partner Davit Gelashvili begins.
“Law firms in Georgia have evolved alongside the country’s political and economic environment,” BGI Legal Senior Partner Zaza Bibilashvili adds. “In the early 1990s, Georgia faced significant turmoil and widespread violence, making foreign investment nearly impossible. From the mid-1990s, however, the situation began to stabilize as crime rates declined and civil unrest gave way to a more peaceful development. The Constitution was adopted in 1995, and the Civil Code followed in 1997. During this period, modern law firms started to emerge, though the industry was still in its early stages.”
An important milestone in the development of the professional services sector, according to Bibilashvili, “was the establishment of the Georgian Consulting Group (GCG) in 1995, followed by the creation of its legal branch, GCG Law Office in 1996.” He adds that “GCG’s subsequent affiliation with Arthur Andersen gave us access to a major international network, providing a significant competitive edge for the years to come. However, when Arthur Andersen collapsed in the wake of the Enron scandal, its affiliated firms worldwide were compelled to seek new alliances, and we subsequently joined forces with EY, which extended its network to Georgia.” In 2005, “EY decided to withdraw from global legal practice, as its primary focus remained audit, with tax and legal services contributing only a small portion of overall revenues,” Bibilashvili emphasizes. “This development led to the establishment of BGI Legal in June 2005, which retained much of the former practice’s structure.”
Andersen Georgia Senior Partner George Svanadze shares a similar viewpoint. “Initially, the market saw the emergence of the GCG group, which was later affiliated with Arthur Andersen in 1999,” he notes. “Arthur Andersen, a major player at the time, faced significant challenges due to the Enron case. This led to the dissolution of Andersen in 2002, and by 2013, Andersen Global was rebranded and established.” The legal landscape evolved with GCG’s rebranding as EY, Svanadze says, “the law practice of which was later acquired mainly by DLA Piper. The entry of Dechert in 2012 disrupted the market, leading to the formation of new firms and significant changes in the competitive landscape. Dechert made a notable impact with successful transactions and representations in international and local disputes and became a key player alongside leading firms in Georgia.”
“Starting from the early 2000s, as far as I know, there was a relatively strong legal practice associated with Arthur Andersen before the Enron scandal,” PwC Georgia Head of Legal Practice Vano Gogelia agrees. “After the scandal, the legal practice was split into multiple firms, which eventually formed Tier 1 and Tier 2 firms.”
“In 2001-2002, the Georgian Bar Association was formed, which elevated the role of lawyers,” Nomos Founding Partner Lika Tsintsabadze adds. “Additionally, most of the current laws were enacted in the early 90s and remain in effect today.”
A Rather Saturated Market
In terms of firm profiles, given the reality of the Georgian market, which is relatively small, it is rare for firms to specialize narrowly, J&T Consulting Partner Otar Machaidze notes. “For example, our firm focuses on business law – a broad field in itself – and we do not have a narrow specialization. Due to the limited size of the market, most law firms need to be versatile.”
“One notable trend is that many firms try to work with new tech start-ups and offer innovative services tailored to their needs,” Machaidze continues. “For newly established firms, especially those without strong networks, it can be challenging to gain the trust of larger clients and secure their business. The market is saturated with firms with over 20 years of practice, and it can take substantial time for a new firm to build a strong presence and reputation in the market.”
Recently, Machaidze adds, “there has been a trend where new lawyers, often those with a fresh master’s degree, are starting their own firms. I have encountered a few such firms recently, and they tend to operate in different segments or areas of law.”
“Many law firms in Georgia strive to establish themselves by representing one of the top 20 companies in the country,” PB Services Managing Partner Rati Abashmadze agrees. However, he notes that he found this model less appealing, especially for new law firms, as nearly every major company already has established legal representation. “As a result, we decided to focus on working with relatively smaller companies. Since 2017, our primary focus has been on non-resident clients.”
The One-Stop-Shop Pitch
An interesting trend in Georgia, Gelashvili highlights, “is that audit firms frequently offer legal services as well.” Abashmadze reports the same thing: “Most firms are full-service and, in addition to legal, offer a range of services like audit, digital transformation, and consultancy. Audit services are particularly profitable and often drive the success of large firms.” This, Gelashvili explains, “is driven by several factors, including the absence of initial restrictions on providing both audit and legal services under the same firm, though there are now limitations to prevent conflicts of interest between financial auditing and specific legal services.” Another reason is the preference of clients and businesses to receive a comprehensive package of services from a single entity, Gelashvili notes, “ranging from company registration and handling ongoing legal matters to managing accounting services. Consequently, this trend has led to a situation where nearly all auditing firms, whether international or local, also provide legal services, either directly or through a related or subsidiary firm that operates within their structure.” However, from the perspective of “developed countries, these entities remain primarily audit companies and are not positioned globally as law firms,” Gelashvili adds. “In countries without restrictions, these brands often extend their reach into legal markets.”
International Toes in the Georgian Pond
In terms of who’s present, Machaidze says that “at this stage, local firms are the dominant players in the market,” with the only purely legal international firm operating in Georgia being Dentons. “The Big 4 accounting firms do offer some legal services, but they are primarily focused on broader professional services and are not considered dedicated legal firms.”
“Regarding traditional international law firms, DLA was initially active in Georgia but later exited the market,” Gelashvili agrees. “The lawyers who operated under DLA then introduced Dentons, which remains the only representative of the top 15 international law firms in the country. Despite this, there are several strong and reputable local law firms in Georgia with a long-standing history, such as BGI, BLC, MKD, GLCC, VBAT, BLB, and Kordzadze Law Office, among others.”
“The absence of major Western law firms in Georgia (save for Dentons) means that when these firms express interest in specific transactions or cases in Georgia, often they act in partnership with BGI, as maintaining direct presence is not always economically viable to the largest international law firms due to the size of our market,” Bibilashvili highlights.
“DLA Piper left the market around 7-8 years ago, while Dentons acquired its team and remains the only major international law firm as of today,” Gogelia adds. “Previously, Dechert, an American firm, and prior to that Dewey & LeBoeuf, were also present for a short period of time, but they have since exited the market, and new firms have taken their place. Additionally, there is a Central Asian regional firm – Grata International that also has a presence in Georgia.”
“Starting around 2010-2011, the Big 4 professional services firms began to expand more aggressively into legal services, further changing the landscape,” Gogelia continues. “As of now, all four have established their legal practices and have quite varied team sizes, market positions, and profiles.”
Svanadze emphasizes that there has been notable movement in the legal market since the Russia-Ukraine war. “Specifically, some Russian and Belarusian law firms have emerged, primarily focusing on the IT and technology sectors,” he says. “These firms are trying to establish a presence in Georgia to serve their clients, despite the geopolitical tensions and sanctions that complicate their operations.” Svanadze continues to say that “many established global legal groups have distanced themselves from Russian clients due to these sanctions and ethical considerations. As a result, new Russian-Belarusian legal entities have entered the market, although they often operate in a more subdued manner rather than aggressive positioning.”
“Historically, most prominent foreign investors and corporations active in Georgia have been European and American, although in recent years, with the Georgian government’s accelerated slide toward authoritarianism and its marked shift in foreign policy priorities, we are seeing a growing presence of Chinese and Middle Eastern actors. Also, we are frequently approached by Russian law firms, including some that were formerly part of international networks; however, as a matter of firm policy, we have declined all such engagements since the beginning of Russia’s full-scale war on Ukraine,” Bibilashvili notes.
Firm Size and Structure
In terms of the size of Georgian firms, “on a global scale, Georgian firms are relatively small, especially when compared to those in countries like Germany or the United States,” Tsintsabadze emphasizes. “However, within the region, they are considered medium or large in size.”
Several parameters can be used to estimate the size of a law firm, Gelashvili notes, “including income from professional services, the number of professional staff, and the number of clients or cases. However, there is no official rating or source that consolidates this information, which means law firms have been informally assessing each other for years. This is often based on publicly available information, such as the number of employees listed on websites or financial statements submitted to the SARAS portal in recent years.”
Based on general observations, Gelashvili reports that “the largest law firms in Georgia have incomes ranging from GEL 2-4 million (approximately EUR 600,000 – EUR 1.3 million), with perhaps only one or two firms falling into this category. Next, there are firms with revenues between GEL 1-2 million, which might include up to 10 law firms. In terms of professional staff, the average size is around 8-15 people, although some firms have teams of 20-25 professionals. It is important to note that these numbers refer specifically to professional staff, excluding support personnel like accountants or office managers. However, these observations are very general, and as mentioned, there is no standardized system or source to provide a definitive measurement.”
This article was originally published in Issue 12.8 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
