Austria is facing a challenging economic landscape marked by rising insolvencies, sectoral struggles, and shifting legislative priorities, according to Schoenherr Partner Markus Piuk, who highlights the resilience of the legal profession and the transformative potential of AI in reshaping it.
“Rarely have I seen as pessimistic of a sentiment in the market overall as I do now,” Piuk begins. “If I were to put a positive spin on it, I’d say things are moving sideways, but the reality feels more like a downward spiral we all will need to work to stop. That said, I try to focus on the positives — while the broader economy is under strain, our legal industry remains busy, which is a silver lining amidst the challenges.”
Piuk reports that there is a significant number of insolvency and restructuring mandates in Austria right now, many with an international angle. “Legislative changes in recent years have given us better tools to keep companies in financial distress alive rather than pushing them straight into bankruptcy, which is a huge improvement. But the scale of insolvencies we’re facing now – particularly among larger groups – is quite challenging,” he says. “I believe we still need further legislative advancements to deal more efficiently with these complex cases in order to maximize creditor value. That said, Austria’s insolvency framework has come a long way over the past two decades – it’s far more effective than it used to be, which is crucial for navigating this aspect of economic life,” he explains.
Piuk says that it is apparent from the news that the automotive sector and heavy industry are particularly under strain these days, in particular as these tend to be labor- and energy-intensive. “Rising labor costs and a scarcity of skilled workers are creating significant challenges, even as unemployment rates across Austria and much of the EU are increasing – a paradoxical situation. These industries are navigating extremely turbulent times, which may still last for a while.”
Taking a step back to assess the broader economic and legal landscape, Piuk expects to see “increased foreign investment flowing into Austria. There are many good companies here that seek investors, and I anticipate that a substantial portion of this funding will come from abroad.”
From a legislative perspective, he says that lawyers are all “waiting to see what the new government will bring and how global political trends will influence domestic policy. Issues like ESG remain important – but I expect the European Commission and governments to fine-tune their approach. It feels like we’re on a highway with roadblocks ahead, and we’ll need a strong navigation system to find the best detours to ultimately reach our goal safely.”
Finally, as for the legal profession itself, Piuk says that AI has been on everyone’s minds. “It’s already making our work easier, and I’m excited to see how it continues to evolve. While I was skeptical at the beginning, I think it will be a real game-changer for the legal industry, particularly when courts and administrative bodies embroil AI more extensively – efficiency will skyrocket. Of course, there’s always the challenge of retaining the human component, which is essential in our work, but the benefits of AI are undeniable.”
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Publish date : 2024-12-19 03:54:00
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