The 12th Annual Conference on Law Firm Management was held in Moscow

07.12.2018



On December 7, 2018 the International Bar Association (IBA) jointly with the Arbitration Association held the 12th Annual Conference on Law Firm Management in Moscow.

Vassily Rudomino, Senior partner at ALRUD Law Firm, Russia, Member of the Advisory Board of the IBA Law Firm Management Committee, welcomed the participants and expressed gratitude to the Arbitration Association and Conference’s Organizing committee. Mr. Rudomino moderated the the first session, entitled «Status of the Reform of the legal profession» and introduced Denis Novak and Yuri Pilipenko who also were the first speakers. 

Denis Novak, Deputy Minister of Justice of the Russian Federation, noted that 2018 was marked by the discussion of the concept of legal aid. The draft concept was published previously so that all interested parties could speak on it, and the results of this discussion are very valuable. Several dozen debates have already passed, in which not only lawyers and colleagues from branches of foreign law firms, but also representatives of Russian companies took part. The concept is not a complete option. Mr. Novak also pointed out that the draft concept has already fulfilled its role: in the legal community, those unusual constructions that are seen as the outlines of the new legal services market in our country are comprehended.

The Deputy minister also noted that it is necessary to regulate not only the market of paid legal aid. It is also necessary to allow the work of lawyers in such organizational and legal forms as an economic society, said the deputy minister. The concept also reflects the ability of a lawyer to work for a law office under an employment contract. Novak noted that the legal profession is the only profession that has been awarded a separate article of the Russian Constitution, namely Article 48.  

From Mr. Novak’s point of view taxation lawyer should be more favourable. “We focused on the dialogue with the Ministry of Finance and the Federal Tax Service. <...> “I hope that it will be possible to find a common language with the Ministry of Finance on the status and forms of taxation of lawyers in the status of partners and on an employment contract,” he said.

In his speech, Mr. Novak also raised the issue of regulating the activities of foreign law firms in our country. “In the course of extremely heated discussions, we became convinced of the correctness of the approach we have fixed - a uniform standard should be worked out for everyone, a transition to the bar of the Russian law,” the speaker said. Foreign citizens may become (on a minority basis) co-partners of Russian law firms. Novak referred to the "recognized world practice" of creating offices of the international law firms under national law. The Deputy minister said that "the concept will more clearly state the activities of the local offices - no one is going to ban them," but advising clients on Russian law should be in the form of Russian attorney-at-law office. “Working in such a partnership is quite a familiar model for foreign law and order,” said a government official.

Yury Pilipenko, Senior partner at the Law Firm “YUST”, President of the Russian Federal Chamber of Lawyers, continued the presentation of the previous speaker with the words: “A lot of useful things have been found out, correctly noted D.V. Novak. However, people are already tired of discussing the concept, it's time to do something.” Pilipenko dwelled on the shortcomings of the modern Law on Advocacy. The President of the FPA also noted that now the law enforcement agencies have become more attentive to the lawyer’s activities and advised the audience to be vigilant and attentive in the paperwork. In turn, the Russian Federal Chamber of Lawyers should think about amending the law to secure the inviolability of lawyer's fee.
Then Yury Pilipenko talked about the tax aspects of lawyer’s work. The speaker addressed the issue of whether a lawyer is an entrepreneur and the consequences of recognizing this status. 

Moderator of the second session “New products, new directions, new dimensions” LS-Institute’s senior expert Alexander Khvoschinsky asked the speakers to share with the conference participants the most innovative and promising elements of law firms' strategies in the format of short presentations. Co-moderator Denis Kachkin, Managing Partner at the Law Firm «Kachkin & Partners», Vice-Chairman of the IBA Project Finance Subcommittee in Russia, noted that “those who feel the “nerve” of this profession have gathered at the conference.

Stephen Denyer, Director of Strategic Development, The Law Society of England & Wales, began the discussion with the topic “How can technology affect legal practice?”. “Today, the entire Allen and Overy company in London, where I worked before, is an innovative hub,” the speaker said. Innovations are developed within London law firms, as well as on their behalf by external contractors, said Denyer. The same situation is observed in Singapore. According to Denyer, today the computer is most effective when considering contracts - the computer can quickly analyse the differences in the mass of contracts - as well as when studying judicial practice: the program can predict the outcome of the proceedings. Also, intelligent interfaces allow clients to create legal documents based on questionnaires.

Evgeny Zhilin, Partner at QUORUS GmbH, Switzerland, presented his thoughts on the topic “Legal business abroad. Prerequisites for consolidation. How to create a new market?”
In Russia, the market is stagnating now, Mr. Zhilin noted. Economically active citizens prefer to implement their projects abroad, where a new niche for their services opens. Foreign law firms often do not speak the “language” of Russian clients, and independent Russian-speaking lawyers find it difficult to carry out large projects. 

In the report “Why go across two borders to buy and rent a private plane?” Jan Kaczmarczyk, Partner at KOLS, Poland, presented the client’s case - an airline operator that leases private jets, and outlined some of the legal aspects of this activity.

Yaroslav Kulik, Partner of the law firm ART DE LEX, Russia, made a presentation on "The experience of building a South Korean desk in a Russian law firm." Such a “desk” is a window of sales, as well as infrastructure, methods and methods of work, said Kulik. He listed the categories of employees and specialists necessary for successful work - from lawyers to officers of trade missions and embassies, journalists, communicators with the authorities. In Korea special attention is paid to etiquette and the creation of well-established business relations, that is why different contacts are needed there, Yaroslav noted. Then Mr. Kulik talked about the motives behind the decision to create the desk in South Korea and the specifics of working in this jurisdiction.

Grzegorz E. Woźniak, Managing partner of Woźniak Legal, Poland, spoke on the topic “A new vision of a strong network of law firms based on a common understanding of quality, cooperation and experience.”
Mr. Woźniak discuss in Russian his experience at the international law firm Allen & Overy and presented the network called The New Circle, created by Voznyak's former colleagues. A professional goal in networking is to surround yourself with smart, creative people, the lawyer said. The network already includes representatives of five law firms from different countries.

Tatiana Kamenskaya, Managing partner of Kamenskaya & Partners, made a presentation on “New Drivers for Antimonopoly Practice”. The lawyer spoke about the incentives for the development of antitrust law. New standards are constantly being created in this area, the ideas of the Russian antitrust body are also perceived in Europe. Nowadays, the value of antitrust compliance is increasing.

Daria Konstantinova, Partner, Zabeyda & Partners Law Firm, Russia, presented to the audience her vision of the topic “Development of criminal law specialization. Risks of business and government partnership in infrastructure projects”. The priority now is the development of Private-state-Partnerships. In this area law enforcement practice has not yet been formed. Many clients turn to her law office with requests for assessment of criminal risks. Ms. Konstantinova noted that a new enforcement agent had appeared - the security services of state banks. The number of criminal cases with the presence of a foreign element has increased.

Arina Shulga, Managing Partner of Ross & Shulga PLLC, USA, made a presentation on “Crypto practice – new product that adapts as it advances, changes in legal views, practice areas and interesting cases (crypto funds, tokenized funds, ICO, platforms)”. Is crypto practice more “hype” or a real business? A lawyer from America spoke about her company and new clients related to ICO. She described the Howey test applied to crypto-tokens by US regulators to determine if they are securities. “Neither the definition of legal nature of the tokens, nor the legislation on this issue has yet been developed,” said Shulga.

Anna Grishchenkova, Partner of KIAP Law Firm, made a report “International arbitration is so far, so close.” International arbitration gives access not only to large, but also to medium-sized businesses access to quality justice, Ms. Grishchenkova said. She told about the conflict of interests in large law firms - unlike them, Russian law firms are not “out of conflict” with their offices in other countries. Anna noted that the RAA and other organizations carry out a large number of projects related to changing the attitude of judges to arbitration. Participation in international arbitration gives you the opportunity to look at the quality process and your work from the outside. Now more and more lawyers are coming to arbitration from Russian regions, and the task of the legal community is to prepare regional judges to recognize arbitral awards.

Aku Sorainen, Senior partner of Sorainen, Estonia, in the framework of the report “Creating a practice of risk management and corporate crime”, spoke about the practice of corporate investigations, its differences from criminal protection in Estonia. Sorainen talked about how, thanks to the expansion of the range of services, his company attracted the City of Tallinn as a client. 

The third session of the conference was entitled “What will the next generation of partners look like?” How do law firms find, develop and promote the next generation of leaders? These questions are confronted by every law firm, but the answers to them are especially important for “first generation” law firms that want to remain sustainable enterprises even after their founders resign. 

Introducing the speakers, the session moderator Vassily Rudomino, noted that four partners are involved in managing IT, accounting and other aspects of activity at ALRUD. Rudomino agreed with the speaker Andrey Gorodissky in that he needed to give a “road to the young”, although he made the reservation that Russia has more opportunities for growth rather than, for example, the Anglo-Saxon countries. Vassily spoke about the perception of Russian law firms by international clients, based on his own experience.

Gerhard Wegen, partner of Gleiss Lutz, Germany, noted that today there are 89 partners in his firm, which has existed since 1948. Of these, 20-25% of partners in his company have leadership potential. The most important mission of his company is to maintain a high level of jurisprudence. In Germany, the legal profession has changed a lot in recent years, Wegen said. Now 60% of German lawyers are women, and the company must take into account the requirements for maintaining work-life balance. “Millennials” as a category of workers also require support - if millennials are not encouraged, they will leave to in-house legal work, or to state bodies. Wegen also spoke about the process of screening and interviewing lawyers in Germany.

Andrey Gorodissky, managing partner of the law firm “Andrey Gorodissky and Partners”, divided the law firms into 2 groups - firms working for the interests of the current group of partners and “long-playing” companies. In his opinion, the first and fundamental step in attracting a partner is the signing of a partnership agreement, a detailed and serious document. Now his company has collective management, 4 associates with the status of an attorney. According to Gorodissky, young partners need to know the IT industry market very well, have management skills and be excellent law professionals. The managing partner spends 60-70% of the time on management, and only 30-40% on legal work, he noted.

Andrei Dontsov, White & Case partner, noted that for senior partners one of the main KPIs is the number of partners that he has attracted to the company over the past 5 years. If the influx of partners does not occur, firms die, said Dontsov. In their second year, White & Case employees are taught how to report, network, and manage in a law firm. Partners will not accept a person as their leader if he is not “one of them” - although the picture of the submission of partners to the general director ideally falls on the management schemes, Dontsov said. At the same time, it is impossible to make a person become a partner if he is not ready for this role.


Session 4 “Law Firm as an Employer: Reputation Management in Legal Talent Markets” was held in the form of a confidential “conversation by the fireplace” - with images of fire on digital screens behind the speakers.

Moderators Artem Doudko, partner of Osborne Clarke, UK, and Alexander Ermolenko, partner of FBK Legal, Russia, asked the speakers to answer the question “What are the key factors for developing and maintaining leadership reputation in your company?”

Vladislav Zabrodin, Managing partner of Capital Legal Services, Russia, said that now the most important quality of a successful partnership is the ability to constantly adapt to new conditions. Self-realization of a person in several areas is also important so that a lawyer himself can avoid burnout and be interesting to clients. In building a company’s relationship with employees, the salary level is, of course, important, however, the employee must also take into account the company's costs of supporting his activities. Access to clients, as well as the “stress system”, methods of criticism, management decision-making systems, are all important parameters for employer choice. And finally, the “level of responsibility”, that is, the ability of the company to respond to the interests and ambitions of employees, is taken into account.

Tatyana Goncharova, Managing partner of LexProf, Russia, thought about why we need specialists without experience or young professionals. Their hiring is associated with an increase in the load or expansion of the team. This and concern for the future of the company. The source of talent for her company is the Siberian Legal Week, the practice of students in the company. Youth should be interested in work, Goncharova said. In her opinion, an anonymous survey of employees about the level of comfort in the company is very useful. In her company, for employees, the “sense of responsibility for the result” and “the sense of responsibility of the company” are important.

Zoya Ilyenka, lawyer, 1961 Abogados y Economistas, noted the difference in the generation of lawyers - the new generation is focused on quick results. This tendency is dictated by a different perception of time than that of the older generation, says Ilyenka. The new generation has no fear of changing their environment, country, office, no connection to the family. It is very important for young people to feel that every step that this generation makes growth, progress. From the point of view of the speaker, the firm should be a platform for development.

Alexey Kasatkin, senior partner of the law office of ZKS, Russia, said that in reality the law office can only be employed by a person who has the status of a lawyer, that is, is quite mature. Such people need to be adapted to the new working environment. “Young” partners are sent to various events - this is how we teach them networking. This is both difficult and very useful,” said Kasatkin. Self-realization is important, and in any case ,it will bring money, the lawyer confirmed the words of Alexei Zabrodin.
The fifth session of the Conference was devoted entirely to the attorney’s difficulties and was entitled “The attack on lawyers. Management of high risks of law practice in the conditions of aan ggressive external environment ”.

The session was moderated by Vadim Klyuvgant, PhD, Vice President of the Moscow Bar, Deputy Chairman of the Committee for the Protection of Lawyers’ Rights of the Russian Federal Chamber of Lawyers, Partner of Pen & Paper, Attorneys at Law, IBA Council Member, Russia. He urged to get acquainted with the document in which the Federal Chamber of Attorneys of the Russian Federation stated: “... practicing as an attorney in Russia is very dangerous. State policy in the field of advocacy can hardly be called benevolent. It seems that the authorities are doing everything to make the bar institution unattractive for a practicing lawyer ...”. According to Klyuvgant, the state leads the attack on the legal profession, intrudes into the relationship between attorney and principal. This attack requires a response, and therefore the speaker called for the legal community to unite. 

Then, Alexander Ivanov, Deputy Chairman of the Commission of the Council of the Bar of Moscow to Protect the Rights of Attorneys, Chairman of Astrea attorneys-at-law, spoke on the topic “Criminal Prosecution of Lawyers and Other Forms of Countering the Defence”. Ivanov called inconsistent equality of the parties to the defence and the prosecution enshrined in Art. 16 Code of Criminal Procedure with the real state of affairs. The tendency to accusatory bias in the last 5-7 years is increasing, he noted. defence actions are often presented as assistance to the accused. The most significant obstacles to legitimate protection in criminal proceedings are the imperfection of the law, the diminishing of the independence of investigators, violent acts and threats against attorneys. The latest example is the violent actions of Interior Ministry officers against attorney Podkolzina in Moscow. The speaker listed other cases of disruptions to the work of lawyers. Ivanov also drew the attention of the audience to the fact that the Federal Enforcement Service system creates intolerable conditions for lawyers to communicate with their defendants. Huge queues, time limits, the impossibility of transferring and signing procedural documents without the consent of the administration of jails are all part of the obstacles to the work of attorneys today.

Dmitry Kravchenko, Head of practice at «Asnis and Partners», Attorneys-at-law, Chairman of the Council of Young Lawyers of the Moscow Law Office, confirmed that advocacy is increasingly subject to systemic risks. Often, sectoral legislation, for example, the RosFinMonitoring standards, begins to be applied unreasonably to lawyers. He expressed the opinion that the way of dealing with challenges is a constitutional methodology and an international approach. It is important to appeal to the basic, fundamental rights, said Kravchenko.

Denis Puchkov, Ph.D. in History, Managing Partner, Puchkov and Partners Law Office, Senior Lecturer of the Ural State Law University, drew attention to the fact that cyberspace today is a very aggressive environment for lawyers. Lawyers are monitored via instant messengers, geolocation, and hacked into the work time tracking programs. How to protect against these challenges is yet not decided. Destroying the reputation of a lawyer today is worth nothing using social networks, Puchkov said. He cited tragic statistics - since 2001, 45 lawyers have been killed in Russia. And while in Kazakhstan and Ukraine responsibility for interfering in the activities of a lawyer is established, in Russia the provision of the law (art. 294 of the Criminal Code) - protects only judges, prosecutors, investigators, inquiry officers, but not for lawyers. “We are not in the line of the justice system! We need to stand in it,” the speaker called.

Sergei Soloviev, a member of the Council of the Moscow Chamber of Attorneys, has titled his presentation “A look at the problems of the legal profession in Russia through a curved mirror of state power”. Soloviev quoted from the book of Hesse "The history of the legal profession." At all times, the bar was considered by the state as “tolerable evil”, but the author did not tie this “evil” to a particular country, Soloviev said. The higher the level of arbitrariness, the higher the intolerance to the legal profession, he said.

Mr. Soloviev gave examples of negative attitudes towards lawyers by the state authorities from his practice and read out the arguments of the court of the subject of the federation, which critically analysed the defence counsel's complaint. Compared the approach to the arguments of the defender in Russia and the United States. In the USA, the judge was dismissed from the case for the unreasonable and tendentious criticism of the defence counsel and was criticized by his colleagues, the speaker said.

Yuliy Tay, Ph.D. in History, a member of the Council of the Bar of Moscow, managing partner of Bartolius, associate professor at MGIMO, drew attention to the trends of the past two years - there have been massive cases of attempts to take away money from attorney when bankruptcy trustees of bankrupt organizations try to return the fee paid to a lawyer. Now an attorney should immediately think about whether his client will become bankrupt, which is generally not insured by anyone, said Tai. The “success fee” also can be taken back - by the efforts of the General Prosecutor’s Office, it is clarified whether the business entity should (and on what matters) contact an attorney. The problem is systemic in nature, appeals to the Supreme Court of the Russian Federation do not produce results. Art. 46 and 48 of the Constitution are thus being violated. Soon it will be impossible to find a lawyer, Tay said. There may be a rollback in the protection of ordinary citizens, not only lawyers, the speaker concluded alarmingly.

The final part of the conference was the sixth session "New ideas about the financial results of the law firm: how lawyers will make money in the future."

The transparency of the legal market in combination with the competitive environment threatens the traditional model of the company, where hourly rates are applied for settlement with the client and the total budget is not limited. At the same time, lawyers become entrepreneurs: they need a reasonable approach to budgets, look for areas in which they are profitable, have a strategy, a strong brand and stand out among competitors. As a result, it becomes harder to earn good money in the legal business.
Moderators Glen Kolleeny, Partner of Dentons, Russia - and Herman Knott, partner of Andersen Tax & Legal, member of the SPPI Council, Germany, discussed with experts what lawyers and law firms should do to make their business profitable.

Oxana Balayan, managing partner of Hogan Lovells (CIS), made a presentation on “How to balance growing customer expectations?” She spoke about the details of applying the KYC principle. Mrs. Balayan stressed that it is important to rebuild our reputation after successfully completing the task. It is important to know the industry in which the client works, to conduct client-relationship management, emotional intelligence, to conduct legal project management. 

Dmitry Grits, managing partner of the law firm Grits & Partners, dynamically addressed the audience with the topic “How to avoid losing money on technology.” Information technology is necessary for lawyers because the user actively uses Internet products, from Internet banking to cryptocurrencies. At the same time, it is impossible to avoid losses on technologies, Grits said. The development of IT products is distinguished by a very high degree of uncertainty. The correctness of the idea is confirmed only a with few iterations of user interaction. The “create – evaluate – learn” cycle works here, and success can be achieved only by repeatedly passing this cycle.

Speaking with a final presentation, “Requirements for investment in law firms - from a “cash cow” to a “piggy bank?”, Evaldas Rapolas, partner of Magnusson, Lithuania, stressed the importance of investing and the availability of cash reserves for lawyers. Clients pay with a delay, and funds are needed to attract new partners, and new partners do not immediately attract money to the law firm. To get income, you need to invest in your business, the speaker concluded.

Concluding the conference, the moderators thanked the Arbitration Association and IBA for the excellent organization of the event and wished the guests happy upcoming holidays.

Then the conference participants continued to discuss issues at the evening reception.

You may find the photos of the event here