Elias Neocleous: Stagnancy is no longer an option for the legal industry

Elias Neocleous, Managing Partner, Elias Neocleous & Co LLC shares his thoughts on the future of the legal industry in Cyprus.

Among other things, he also notes that reforms to regulations and legislation in Cyprus and at the European level will also continue to mould the legal domain resulting in the the legal sector in its entirety being prompted to adapt and evolve.

How would you describe the current state of the legal services market in Cyprus? What major changes, if any, do you expect to see by the end of the decade?

The legal services market in Cyprus is evolving rapidly, largely in response to an increasingly digital landscape and the adoption and use of artificial intelligence, which is set to significantly disrupt legal service delivery. By the end of the decade, I see the integration of new legal technologies and advanced systems becoming paramount for transforming traditional industry business models in order to survive in a more digitally friendly and sustainable future. This will see the legal profession adopting more innovative practices to achieve higher standards of client service. Beyond this, the digital transformation of the Government will be required to streamline and modernize legal processes and enhance judicial efficiencies. Additionally, reforms to regulations and legislation in Cyprus and at the European level will also continue to mould the legal domain. As a result, the legal sector in its entirety will be prompted to adapt and evolve.

Compliance with anti-money laundering (AML) and anti-corruption regulations continues to be a much-discussed topic. Where does Cyprus stand on this and what is the role of law firms in maintaining and improving the country’s international image and reputation?

In terms of AML compliance, Cyprus has adopted legislation that aims to combat money laundering and terrorist financing, aligning it with the European Union’s AML directives. The country’s laws require financial institutions, designated non-financial businesses and professionals to implement robust risk-based AML measures. However, while there have been notable improvements, challenges remain, particularly in maintaining and elevating Cyprus’ image and reputation worldwide. The role of law firms in this regard is pivotal but it requires two fundamental approaches to be successful. Firstly, law firms must be equipped with in-depth knowledge of laws and regulations to be able to properly advise clients on best practices and regulatory requirements related to AML and anti-corruption. This extends to conducting proper due diligence on clients, carrying out risk assessments, implementing robust compliance programmes and providing ongoing legal support to prevent and detect any potential money laundering or corruption activities and to ensure transparency. By upholding ethical standards, promoting compliance and assisting clients in adhering to the highest levels of financial integrity, law firms will contribute to the overall positive perception of Cyprus as a trustworthy and reputable jurisdiction for conducting business. Secondly, law firms must embrace technology and innovative solutions to increase efficiency, streamline processes and enhance the client experience. Stagnancy is no longer an option. The industry must embrace innovation and explore avant-garde methods to remain at the forefront of cutting-edge legal service delivery. This extends to optimized AML and anti-corruption efforts.

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What are the main challenges facing Cyprus’ legal sector today and what do you expect from the long-awaited reforms to the judicial system? How do our procedures and mechanisms compare with overall EU standards?

One of the most pressing challenges that Cyprus’ legal sector contends with is the lack of modernisation of both the courts’ infrastructure and their work processes, and the consequent backlog of cases and delays in administering justice. However, the drive is currently underway for some of the largest reforms to the country’s judicial system, which aim to optimize capacities, tackle inefficiencies and accelerate the speed for resolving disputes. This is a welcome step in the right direction and one that we hope will yield positive outcomes. Compared to overall EU standards, Cyprus’ legal procedures and mechanisms generally conform to EU norms. 

Nevertheless, we anticipate that the move towards broader reforms of Cyprus’ justice system will further align the country with European legal best practices, enhancing the island’s position as a stable jurisdiction for foreign and domestic investments. These reforms must, however, include a more modern and responsive legal system, continued smart and effective incentives to attract global investors, and accelerated development across all industries.

Cyprus’ consistent efforts to attract foreign direct investment (FDI) and become a recognised international business centre appear to be bearing fruit. How is the legal profession assisting Cyprus in this endeavour?

The legal profession plays a pivotal role in supporting Cyprus’ efforts to attract foreign direct investment and to grow the country’s worldwide reputation as a competitive business centre for all industries and as a sought-after investment hub. More specifically, Cyprus’ legal sector is instrumental in helping foreign investors navigate regulatory requirements, ensuring compliance with local legislation and in delivering the highest-quality advice and legal insights on business structuring and tax optimisation to meet critical client needs. Lawyers and legal advisors are actively involved in establishing international companies in Cyprus, facilitating complex transactions (domestic or cross-border) and providing integrated client solutions. Additionally, their expertise and jurisdictional knowledge across all practice areas (corporate, commercial, and tax) contribute to creating an attractive business environment for international corporations looking to expand into Europe, Africa, the Middle East and other popular destinations.

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What, in your opinion, needs to be done to minimize the adverse impact on Cyprus of the imposition of international economic sanctions on Russia and rising inflationary pressures? How do you view the short-term future of the local professional services sector?

The adverse impact of global economic sanctions on Russia and fluctuating inflationary pressures are challenges that require thought and practical consideration. To mitigate any potential fallout from this situation, the diversification of Cyprus’ economy and attracting investment from other countries and industries worldwide is critical. The legal profession can complement these steps through the ongoing delivery of top-tier multidisciplinary services that attract foreign investors and facilitate international investments and business operations. Moving forward, the survival of the local professional services sector will depend on its ability to innovate and its willingness to adapt to what is a rapidly changing legal landscape. As world economies evolve and technological advances redefine service delivery, professional service providers will need to stay informed on changes to legislation, regulations and cross-border trade and tax treaties, while leveraging new technologies to provide added value to clients. Only through resilience, exceptional standards of service, strategic legal reforms and the merging of technology with law – by harnessing the power of AI capacities to boost efficiencies – can our professional services sector be future-ready, remain competitive and play an integral role in growing Cyprus’ economy.

This interview first appeared in the August edition of GOLD magazine. Click here to view it.