Konstantin Krutilnikov has been interviewed by Aleksandr Moskovkin, LEXPRO

25 March 2013

“I do not take too seriously a business name that includes only one surname”

“Starting a business with a partner offers more benefits than doing it all by yourself. If companions are willing to come to an arrangement nothing can prevent them from doing that. The legal markets of Moscow and Petersburg are more closely related to each other than they seem to be. The lack of the right market relations is the main problem of the Russian legal market,” Konstantin Krutilnikov, a partner of S&K Vertical, said in an interview to LEXPRO.

- Why did you decide to practice law?

- It just happened. Actually, I planned to become a journalist, however, a year before I left school mom gave me the idea of going to the Faculty of Law, the St.-Petersburg State University, and I did that. And I don't regret it one bit. During the last couple of years at university I worked as lawyer for a supplier of Consultant Plus software, and then worked in-house for fuel-and-energy companies. As I approached 30, I began to understand that I should start my own business.

- Did you start your firm all by yourself?

- Of course not. I've always placed great store on partnership in legal business, that’s why I do not take too seriously a business name that includes only one surname. This points to the fact that the main partner simply has no other partners at all.

- Don’t you mind that in Russia the institute of partnership is still at the embryo stage? And in this context a business name is of quite little importance, isn’t it?

-Where there's a will, there's a way. “Impossible”, “I cannot” are mere runarounds. Any problem can be solved; one should just use one’s head.

- Would you give some specific advice?

- If parties are willing to come to an agreement, there are lots of options, from concluding partner agreements in law office to formalizing partner relations in foreign jurisdictions.

- Okay. You decided to start sailing your own boat. Who kept your company?

- Sergey Slagoda. Together we established OOO “S&K Legal and Investment Services” where S&K means “Slagoda & Krutilnikov”. After a while, Konstantin Dobrynin (currently a senator from the Arkhangelsk region – Aleksandr Moskovkin) and I established a new company named “Zeleny Koridor” on a parity basis (Slagoda’s share was smaller – Aleksandr Moskovkin), which existed for 5 years. In 2009, I split the business with Dobrynin: Sergei (Slagoda) and I returned to the old brand of “S&K”, while Konstantin (Dobrynin) started “PEN & Paper”.

- Did you and Dobrynin have a peaceful parting?

- “Zeleny Koridor” was mainly engaged in protection against corporate raids in a rather tough environment. Despite all troubles, I have fond memories of this period.

- You seem to imply that you have nothing to add to the official release on separation of business partners?

- Yes. Things went smoothly and everyone was happy. In my opinion, it's been a big success. Believe me, splitting with partners is much more difficult that establishing a business.

- When one compares logos and identity of "S&K Vertical" and “Pen & Paper”, their likeness is evident. It is very interesting. Did you make it for a purpose?

- To be honest, I never gave it much thought. Quite probably. New firms were banned from to using everything that was related to “Zeleny Koridor”. Perhaps, we traveled to the same direction.

- Having split with your partner, did you “run onto” him in business affairs?

- No, never. When we split, we agreed upon such situation and came to a conclusion that it would be unwanted.

- Why? You have no formal obligations to each other.

- We know too much about each other, because we worked together in stressful, conflict situations. The fight isn't restricted to rules written on paper.

- What is the current number of staff employed by your firm?

- 30 lawyers and 12 administrative workers. Of course, these people are employed by all our offices (St. Petersburg, Moscow, Beijing – Alexander Moskovkin).

- In China, you run merely an agency, not a real law office?

- Yes, it’s just an agency, but we can solve practically any problems on the spot, any issues of both Chinese and Russian clients. An agency is quite enough for that purpose.

- You use the strategy of “9P” in your work. What does it imply, apart from nice package?

- Some time ago we tried to find key definitions to describe the essence of our ways at all levels. We wrote them on a sheet of paper, and make them look more succinct. All the nouns we used to describe our methods began with “p”. Such visualization, clearness, memorability allow us to make clients better understand what we do.

- But don’t you feel that all the companies should adhere to principles formulated by you?

- Of course, but people just declare these principles. I was always inclined to believe lawyer’s specific activities need to be well structured and packed, so as to make everything clear for the customers.

- Historically, you worked in St. Petersburg most part of the time. Your first office is located St. Petersburg, too. Currently, after having started an office in Moscow and some agencies in China, do you feel you are still a St. Petersburg or Moscow firm, or do you believe that you outgrew these limitations?

- Let’s say: I’d like to build a global company with no limits that can successfully operate where our clients need its presence.

- My question meant whom do you believe you are now.

- Frankly speaking, everything depends on the situation; however, the issue of geographical location arises not very often. Sometimes we like to highlight our Petersburg background, because in our country it makes sense to make allusions to one’s closeness to power structures. That said, strategically, we are just a Russian company practicing throughout the country.

- What is your financial position?

- I am not prepared to disclose this information. I just can tell that, in recent years, our revenue tends to grow. This trend is especially pleasant in the context of economic crisis.

- Do you have the biggest revenue, as compared to other St. Petersburg “rulfs”?

- I know precisely, for example, that S&K Vertical makes bigger profits than many leaders of the “” rating

- But less, than St.-Petersburg office of Epam, for instance?

- I think, yes.

- Do you believe that a successful law firm should specialize in some field?

- Specialization is very important. One just cannot be good at everything.

- Still, there are other examples as well. For instance, the “Big Four”.

- At last, they return to what they once began from – to specialization. They are unwilling to become huge conglomerations ready to do any type of work. At least, they do that to be different, not like the others.

- What factors especially hinder lawyers’ activities?

- The lack of right market relations. For instance, excessive reliance on administrative resource and the lack of equal access to judicial and law-enforcement protection negatively affects business processes, market and market players. As a consequence, neither business, nor citizens have confidence in courts and government. And lawyers have no trust in these institutions, too.

- And the much-talked about flaws in legislation?

- That is a secondary phenomenon in relation to what I said first.

- Does the high level of corruption result from the wrong market relations, too?

- Of course.

- Some experts just seem to believe that nowadays no issue can be settled without a suitcase full of cash.

- Of course, it is wrong. However more specific speculations on this matter require expert knowledge which I certainly lack. Moreover, no authentic studies are available on the subject of corruption.

- Your firm is particularly famous for its corporate practice and protection against corporate raids. The main part of your business’ revenue comes from these activities. Why did you get involved in China and the art market?

- Our firm is mainly famous for the ability to resolve conflict situations, whether it be judicial disputes or corporate conflicts.

- When it comes to China, it is quite simple: China is an unoccupied niche, a huge market not only to occupy but to create. There is a great demand for high-quality legal expertise in both directions, that’s why Chinese companies in Russia and Russian companies in China are in need of legal advice. So we strive to satisfy this demand.

As for the art market, everything began with the needs of clients, and then a personal interest arose. Many business leaders are interested in art and art investments, and such activities also require legal support. When all is said, every field of activity involves the same legal instruments irrespective of specific issue. The only key distinction between the art market and the other markets is the much lesser transparency of the former.

- Is the price policy of your firm the same irrespective of geographical location of an office?

- Prices are the same everywhere. We are not a low-price company. Actually, we never were.

- Still, overhead costs in St. Petersburg are lower than in Moscow, and many of your competitors make profit of this situation transferring the Moscow orders to St. Petersburg.

- We do not adopt such way of doing business. Good work is always costly irrespective of location.

- Have you ever considered the possibility of joining some major company?

- I suppose, such hints have been made to every successful firm in the market. However, nothing more than hints were made in our case. Actually, I doubt that we’ll find a firm to safely join in without sacrifying our values and approach to work.

- Did you mean“rulfs", or just firms in the broadest sense of the word?

- What I mean is the Russian law firms.

Interview conducted by Aleksandr Moskovkin


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