Is the legal market ready to change the rules of the game

The issues of the future of the Russian legal services market have become one of the most discussed issues at the St. Petersburg International Legal Forum this year. A whole parade of sessions was devoted to legal competencies, education, requirements for the profession and restrictions on the provision of certain services, such as representing clients in courts. Based on the results of the discussions, it can be stated that the idea of ​​“lawyer monopoly” – the exclusive right of lawyers (and not, for example, employees of law firms or “free lawyers”) to represent parties in courts, that has died down for many years – has not only been returned, but it has flourished , and its opponents were in the minority.

However, everything has its price.

If the bar gets a monopoly on judicial representation (now it exists only in criminal cases), then the state will in return expand its powers to control this community, up to the right to exclude individual members from it.

This was stated on Thursday by the Minister of Justice of the Russian Federation Konstantin Chuichenko at a panel on the right to represent interests in Russian courts. “We do not agree that only self-regulation should operate in the bar,” the minister stressed, adding that “the independence of the bar should not be unlimited.” In his opinion, the state should have the right to demand the removal or replacement of a lawyer, “if he behaves incorrectly, abuses his procedural rights.” “If we strengthen the bar’s monopoly right to representation, I think it’s fair to say that we could strengthen the powers of the Ministry of Justice as a regulator,” Mr. Chuychenko explained his thought.

It is curious that the phrase “lawyer monopoly” in relation to judicial representation was uttered by the minister, who supported this idea as a way of combating “leftist lawyers.”

By them we mean those persons who provide legal services, but behave in bad faith, giving unrealistic guarantees of one hundred percent winnings to their clients, making unreasonable claims against corporations, while being legally illiterate and sometimes not even having a legal education. Representatives of the legal community insist that “free lawyers” are guilty of this. Although there are cases of unprofessional and even fraudulent behavior on the part of individual lawyers, Elena Krupskaya, director of legal affairs at X5 Group, noted. She doubted that solving the problem through strict regulation and the creation of a monopoly would only give a positive result, noting the risks of growing corruption in this area.

However, on the whole, the discussion of the issue proceeded without a tough confrontation. Numerous lawyers in the room strongly supported the idea, and the heads of law firms seemed to be more concerned about the possibility of applying reduced tax rates if they were forced to become lawyers.

Corporate lawyers at this session reacted to the initiative with restraint and did not express serious objections, which is not surprising, since they themselves are not planned to be “driven into the bar”: they will retain the right to represent the interests of their employer, though only him.

However, the next day, on Friday, already at another session, it was corporate lawyers who suddenly returned to the topic of “lawyer monopoly” and the need to introduce restrictions on entry into the legal profession. Recognizing that the foreign law firms that came to the Russian market in the 1990s, which was “in its infancy”, taught local lawyers many useful things, the “corporates” turned to rather harsh criticism of the “ilfs” (from ILF, International Legal Firm). Representatives of Rusatom (a structure of Rosatom), SIBUR, Uralchem ​​told how in the spring and summer of 2022, foreign consultants suddenly terminated contracts with them, some of them in the midst of lawsuits in which they represented the interests of the Russian side.

The shock of such an “unethical rupture” of relations served as an incentive to think about how to prevent dependence on foreign lawyers in the future, especially for large Russian businesses. Representatives of corporations expressed the idea of ​​restricting the access of foreigners to the Russian market of legal services, and not only in terms of judicial representation. They were supported by colleagues from law firms. According to Grigory Zhdanov, a partner at Zhdanov, Koida, Rubalsky & Partners, the arrival and departure of Ilfs “highlighted a common problem in the Russian legal market” — the absence of any threshold and qualification requirements for access to it. As a result, a number of corporate lawyers, together with representatives of domestic law firms, agreed that this could not continue and that Russian citizens and businesses should be protected from foreign legal interference, up to a total ban on foreigners consulting on Russian law.

A significant turn has taken place in the minds of lawyers. Even last year, everyone was only concerned about which of the foreign colleagues they could still turn to for help and how to continue working without them.

A year has passed – and now Russian lawyers are concerned about how to protect themselves from foreigners.

Representatives of corporations vying with each other told how, after the Ilfs left, they coped with the problems on their own, expanded their teams to include specialists in foreign (English, Chinese, etc.) law, and now they have expertise in many foreign jurisdictions.

And only two speakers expressed much more cautious assessments. Nikolai Feoktistov, ex-partner of the law firm White & Case, who left the Russian Federation, and now the general director of the Russian law firm Voskhod, does not see the departure of the Ilfs as “such a positive factor in the long term,” since “Russian customers are losing access to global legal expertise,” and in general, in his opinion, there is a “risk of degradation” of the Russian legal services market, including due to problems with the exchange of legal experience and knowledge. And a member of the board, head of department 104 of Gazprom, Sergei Kuznets, expressed doubts about the advisability of closing the domestic legal services market from foreigners. Assessing the idea of ​​limiting the access of foreign law firms to the market or introducing qualification requirements for foreign lawyers, explained by the need to protect Russian clients, Mr. Kuznets noted: “We need to understand for whom we are doing this. After all, ordinary citizens have never used the services of foreign consultants, and large firms themselves can distinguish good from bad.”