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“Delovoy Peterburg" published Sergey Slagoda's comments on the future reform of Bar in Russia

21 May 2013
Advocates versus lawyers

The Ministry of Justice prepares a reform of the Russian bar that may deprive individuals and businessmen of the opportunity to independently represent their interests in courts. This job will be entrusted only to professional advocates.

The draft law stipulating the new role of the Bar in Russia should be elaborated by the Ministry of Justice before the year is out. Basic provisions of this draft law are the most debated topics in legal community, because legal market game rules will change dramatically. The Ministry of Justice supports the concept related to introduction of the so-called advocates’ monopoly for court representation. It means that corporate and private lawyers having no status of the advocate (as well as citizens unwilling to hire a lawyer) can be divested of their right to participate in legal proceedings.

Advocates in their own right

Common citizens’ right to independently defend their interests in courts is actively discussed at present. Chances are, Russian citizens will be allowed to do that. “Actually, the Federal Arbitration court does not object as to limiting court representation to advocates only. However, we should have regard to low-income people: they can only afford hire a student or ask their grandchildren to defend their interests in court”, said Igor Artemyev, Head of the Federal Antimonopoly Service.

As to private lawyers, they are bound to take the bar exam. According to estimates made by “DP”, in St. Petersburg and Leningrad region, the market of legal services related to representation of companies and businessmen in arbitration courts (where the most part of business disputes is resolved) can be estimated as 7 - 8 billion rubles per year. (If our estimates are based on the number of cases in courts and on the average cost of legal services.)

Should the advocate’ monopoly become reality, many lawyers having no advocate’s status shall fall out of the race. Actually, up to 40% candidates are eliminated as a result of bar exam (involving the necessity to confirm industry-specific education, and a challenging qualification exam).

“The legal services market will grow because individuals and entities will hire legal professionals, and that will result in increased quality of legal system and legal procedures credibility. This, issues will be more often resolved by legal methods. Random “experts” (many of whom have no legal education at all) will no long muddy the waters”, said Ilya Nikiforov, managing partner of the law office “Egorov, Puginsky, Afanasyev & Partners”.

Everyone to their trade

As early as in 2002, the Supreme arbitration court made a first shot at limiting participation of privately practicing lawyers in processes. Subject to the law passed at that time, only advocates or in-house lawyers can represent interests of companies. But this idea flopped: outside lawyers could easily make phony employment contracts with customers; in 2004 the Constitutional Court of the Russian Federation declared such contentious restrictions to be illegal.

The question of whether or not in-house lawyers and directors can participate in legal proceedings remains undetermined, in the context of the new reform. Ilya Nikiforov believes that “It would be impractical to curtail the right of a director general to represent company’s interests in court. Directors of large-size enterprises are just too busy and small-sized businesses oftentimes adhere to a strict economy policy. Chances are, a limited advocate’s monopoly will be introduced, to cover separate categories of disputes or separate stages of legal proceedings”. According to lawyer Natalia Sibgatulina, it would be impossible to prohibit in-house lawyers from representing companies’ interests in courts. “Or else the concept of representation should be deleted from the civil laws, which is quite absurd”, said the advocate.

Elena Borisenko, Deputy Minister of Justice believes, that “Lawyers being receptive of professional standards is the essential condition for actual competition on the free market. That said, standards should not be imposed by higher-ups. We are willing to participate, however, members of the bar should independently formulate rules and conditions of the game on the market, based on priorities set by the government”.

The Ministry of Justice is convinced that it is necessary to create public demand for knowledgeable legal assistance. People should be aware that it makes good sense to seek help from lawyers having guaranteed status and qualification rather than charlatans.

Anton Ivanov, Chairman of the RF Supreme Arbitration Court is also supportive of the revival of advocate’s monopoly. As he said to the “DP” reporter, “It can be done provided that we’ll make the bar accessible for a broad spectrum of lawyers, including those employed by state-owned companies or private businesses, and also to large-sized law firms”.

There is such party

The most of interviewed lawyers proved supportive of the idea of advocates’ monopoly. “However, many people will have to raise their game if they want to pass this “natural selection test” and really qualify for the advocate’s status”, said Valery Zinchenko, managing partner of the law firm Pen&Paper.

“Reform will help domestic law firms to compete successfully with foreign companies, which, in some areas of expertise, traditionally have strong market position in Russia,” said Sergei Slagoda, managing partner of the Attorneys at Law S&K Vertical.

However, corporate lawyers tend to take it with a pinch of salt. They believe that advocates' interests are being pushed through (see comments).

Natalia Sibgatulina, too, doubts that complete monopoly does make any sense: “From what I can see, forcing all lawyers into the bar is just useless. For instance, an expert in criminal procedure who is a former criminal investigator will hardly be more useful as legal representative in arbitration court, than, for example, a lawyer specializing in similar cases who is not an advocate”.

American way

Currently, 3678 lawyers are registered in the St. Petersburg Advocates' Chamber. Mikhail Gerasimov (Member of Council, Advocates' Chamber) was not sure how many legal practitioners are there in the North capital of Russia; however, he assured us that the Chamber is willing to admit them to membership.

He pointed out that the proposed system is close to the American model where all lawyers (including prosecutors, judges, investigators, etc.) have to be associates (members of the American Bar Association) and licensed by the Bar of the state where they intend to operate. The Republic of Belarus is the only CIS country that adheres to principles of advocates’ monopoly and has recently created conditions for transition of in-house lawyers into the status of advocates.



COMMENTS

Advocates' interests are being pushed through


NADEZHDA HVOSHCHEVSKAYA, Head of Legal Affairs, O2 Development Company

Advocates' interests are being pushed through. Business leaders are eager to have an in-house advocate admitted to deal with commercial secrets, aware of background of the issues, and able to provide an integrated assessment of legal matters. That said, an outside advocate shall spend an extra time to go into the matter.


ELENA KONDRATYUK, manager of the Saint Petersburg Branch of Transcreditbank

“Advocate’s lawyer monopoly” should not extend to lawyers of companies. Otherwise in-house lawyers should be confined to paper work. The expected impact of such developments includes the rise in the cost of legal representation due to decrease in market supply.


ALEXANDER KONOVALOV, Minister of Justice of the Russian Federation

Since business consulting sector includes many highly qualified lawyers, they need comfortable conditions for transition into the status of advocates. The reform should aim for protecting business against the so-called street works, i. e. lawyers selling their services at give-away prices and finding clients on the streets, in coffee shops, and at every turn.


INFORMATION

Bar admission process

- Any individual with higher legal education, a period of service in a speciality no less than 2 years or an internship with a law firm can acquire advocate status.
- The candidate takes examinations to be conducted by qualifications commission of the Chamber.


INFORMATION

Grounds for divesting an advocate of his status

- Condemnatory judgment which implies finding an advocate willfully guilty of an offence.
- Non-fulfillment or improper fulfillment of professional obligations to a client
- Violation of Advocates' Code of Professional Ethics
- Failure to execute or improper execution of decisions made by the Advocates' Chamber


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