Test of strength: how Russian lawyers are in crisis

Every economic crisis somehow changed the Russian market of legal services. To assess the impact of the crisis of recent years is difficult, but the General outlines have been drawn.

Redistribution

The crisis affects all sectors of the economy that depend on natural and physical resources. However, the key resource legal business and intellectual capital. He makes this business sustainable.

Of course, the decline in production affects the amount of instructions for lawyers. Of course, the investment climate is reflected in the number of deals advised on. Nevertheless, the market provides additional opportunities — support processes economic security: corporate and commercial disputes, insolvency and restructuring, administrative and economic criminal cases.

The crisis for the legal profession, the changing vectors and the rules of movement of capital. There is not a vertical reduction in the rate of growth and the redistribution of financial flows between participants. Change requests for certain services, while maintaining our legal service. Part of clients ‘ orders or switching from one suppliers of legal services to others, or confined to domestic legal control.

Therefore, the crisis is a test of the business models of law firms to the test. The key to prosperity is the preservation of their positions in the Wake of demand — formation of the optimal structure, reflecting the range of current challenges.

Foreign law firms are firmly on the long history and traditions. Standards of doing things dictated from headquarters. Human resources around the world is practically unlimited, the largest firms are included in the ratings of the most attractive employers in USA, UK and Europe.

The most flexible to changes, be the Russian national law firm. A sense of the market and lack of barriers to extension practices provide the basis for development. They are almost all managed by the partners who founded the firm, and rarely exceed a hundred state lawyers. However, their rate of development is unprecedented. The best representatives take an active part in the formation of both law enforcement practice and national legislation.

The market for legal services is similar to 3D-chess. On the one hand, it is divided into foreign and domestic firms, is quite significantly different from each other. Other models of specialized firms and provides full range of services. He is not inclined to consolidate, but rather is constantly expanding due to new players.

New players

Almost all participants of the Russian market of legal services is a small structure. The number of professional composition of the largest national firms — lawyer Bureau “Egorov, Puginsky, Afanasiev and partners” in 2015 amounted to 204 lawyer / rating data “Pravogo — 300”). For comparison, a comparable number of lawyers working in the internal legal Department of the Sberbank. And of course, these numbers are not comparable with the state of the American or British firms.

Nevertheless, the Russian market of legal services is growing extensively. New firms are established every year. The most common scenario — the outcome of a group of employees of the law firm to establish his own practice. Less common is the discrepancy between partners, sometimes even the name partners, which makes impossible the preservation of the old brand.

Before writing this column, I interviewed 20 managing partners and law firm partners with a strong position in the market. It’s like the firm, of which officers leave to create their own business, and created according to this model, over the last ten years. They are all, without exception, emphasized the positive aspect of formation of new market players — competition leads to improved quality of services.

The question that is now the primary figures of the particular strengths of lawyers or a strong brand, many said that from the point of view of consumer demand in the first place is the team. New firms do not have time to build a sustainable brand, however, receive mandates to conduct billions of dollars of projects from major customers.

For example, the law Bureau “Intralex” created by people who at the time of launch the company already had partners and senior partners, not lawyers. As a result, on the one hand, a more conservative positioning, the almost complete absence of special PR and marketing activity. On the other — the record for speed of development and expansion of professional staff: nine independent practices, with 60 lawyers in 2014. However, this development hardly related to artificial muscle mass in hopes to return the investment in the future of the Bureau covers a range of legal tasks for large commercial banks and the real estate market.

Most new law firms specialized — they focus on work for one or more practices and do not seek to develop other areas. I invited the representatives of the law firms the thesis that specialized boutique market participants more competitive than the model full circle, providing full range of legal services. Opinions were divided in the ratio of 60 to 40 — the majority agreed with this thesis.

Specialized firms do have some advantages. First, they have carte Blanche to certain positioning in front of customers: “We are doing just that, and this is our advantage”. Secondly, they concentrate internal resources on attracting the best employees in their field. Thirdly, they do not have to maintain practices for which demand has fallen.

One of the most sustainable business models boutique firms — specializing in dispute resolution. In recent years we have seen many large and interesting in its core commercial and corporate conflicts. In wartime, the army depends on food carts, so to protect their own interests clients are trying to attract the best trial lawyers.

Battles of litigators*

Last year already marked by several cases of allowing to draw interesting conclusions about the market for legal services. It is noteworthy that the law firm representing the interests of the parties in these cases are often specialized.

In arbitration courts increased the number of disputes between participants of the telecommunication market regarding copyright, Agency contracts and unfair competition. In particular, record the amount of the claim dispute for a claim of “Coherent” to MTS in over $1 billion (77 billion rubles). The conflict between MTS and the retailer began with the purchase by businessman Oleg Malis controlling stake in Svyaznoy. After the termination of the cooperation with Svyaznoy, MTS has tried to challenge in court the deal by filing a lawsuit against FAS Russia. However, the Moscow Arbitration court upheld the decision of Antimonopoly service, and claims MTS unfounded. Further, “the Messenger” has addressed in court with the claim for recovery of arrears in payment of any interest and penalty amounting to more than RUB 1 billion and recovery of compensation at 77 billion rubles for the violation of trademark rights “Coherent”. The case was settled a few weeks after filing a lawsuit. MTS has made a commitment to pay the company “the Messenger” more than RUB 1 billion Agency fee. The interests of “Coherent” was represented by the law office S&K Vertical”, proven in the field of corporate conflict resolution.

Another interesting example is the case under the claim “VympelCom” against “Tizpribor, the owner of the business center Hermitage Plaza — divided the market into two camps. The dispute centered on a lease agreement concluded in dollar terms. The position of “VimpelCom” support predominantly sympathetic to tenants in a similar situation. On the position of “Tizpribor” those who think it’s inappropriate to use the mechanism of arbitration for the revision of lease agreements between commercial organizations, including the Board of judges of the Ninth appellate arbitration court, which took the issue of the tenant to the sphere of entrepreneurial risks. This case is also interesting clash in the arbitration process several specialized trial law firms. On the side of “VimpelCom” is Delcredere, well known in Moscow a team of effective trial lawyers. Right “Tizpribor” protect the law Bureau “Intralex” and the Moscow Collegium of advocates “melnicki and Zakharov, two powerful Gladiator in the judicial arena.

The participants of the legal services market, quickly adapt to changes in the economy. The process of change like a change of leaders, but rather on the inner inversion — the redistribution of accents in the market in relation to customer demand. Law firms numbering from one hundred lawyers has gained an optimal weight and experience business administration, allowing them to stay is not as susceptible to decline in demand for services to individual practices. However, in the Russian market, such firms are less than ten. In the segment, which is company to one hundred lawyers, the initiative participants with in-demand specializations, including those formed over the last ten years, will attract more business and forming the outlines of the market.

* The litigators — lawyers main job which is to represent the client in court

The authors ‘ point of view, articles which are published in the section “Opinions” may not coincide with ideas of editorial.