Reforms to Russia’s currently unregulated legal services market could spark an exodus of international firms, a local lawyer has predicted. Delegates at the Russia Law Week conference taking place in London this week discussed proposals by Russia’s Ministry of Justice called ‘Draft concept of regulation of the market of professional legal assistance’.
One of the draft proposals, published in October last year, would require all law firms to receive the status of a firm of ‘advocates’. Only firms registered under Russian law as firms of advocates will be permitted to offer legal services relating to the Russian law. As it stands, unless someone is a qualified ‘advocate’, Russia’s legal services market is unregulated - allowing anyone, including those with no qualifications, to give legal advice.
Another change in the draft regulations is a provision that would prohibit direct control of Russian firms by non-advocates, including foreigners. However, this provision is reportedly being reviewed.
Rustam Kurmaev, managing partner at Moscow firm Rustam Kurmaev and Partners, and a former lawyer at an international firm, said the changes would result in more local firms being set-up and an ‘exodus’ of international firms. ‘Foreign firms will struggle and will instead become representative offices or branches of their companies,’ he told delegates. He added that the proposed changes would create more opportunities for smaller boutique Russian firms.
Elena Avakyan, adviser to president of the Russian Federal Chamber of Lawyers, said the objective of the reform was not to ‘push out’ firms but to control the ‘116,000 sole traders’ who can currently provide legal services.
Oxana Balayan, managing partner at international law firm Hogan Lovells’ Moscow office, said the provision requiring ‘advocate’ status was one five areas the firm was ’keeping an eye on’. Around 20 international firms, including a host of major City players, have a presence in Russia.
Balayan likened international lawyers’ reaction to the proposals as like ’going through the five stages of grief’. ‘We moved from denial and anger to depression and bargaining before eventually coming to accept the changes,’ she said. However, she called for firms to be given longer to implement the proposed changes – within five years rather than one to two.