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The Managing Partner of the law firm S&K Vertical considers as regards the work of the lawyers in the state of crisis

2 February 2009

The lawyers for the most part benefit from the crisis, but this means that not all of them are the gainers and their profits differ.

The lawyers will not lose in the state of crisis. The representatives of the leading law firms interviewed by Fontanka are firmly convinced that there will be enough work for everyone. However, as regards the subject of the clients’ expectations the opinions of the primary merchants on the legal services marketplace divided. In some cases the divisions of the law firms took a sensu stricto turn. Thus, Andrey Goltsblat being one of the founders of the well-known Russian law firm Pepeliaev, Goltsblat & Partners retired from the company. He accepted an offer of the English law firm Berwin Leighton Paisner LLP to establish the representative office in Russia. Moreover, on February 2, 2009 Green Corridor, a widely reputed law firm of Saint-Petersburg, unexpectedly announced the discontinuance of its activity, having as recently as couple of weeks before the announcement published the research work, the edition of which was partly ordered by the Investigating Committee. As for now, the authors of the research work –Konstantin Dobrynin and Konstantin Krutilnikov are starting to work separately.

“Everything depends on the legal services rendered. Within the near future the insolvency officers leading the insolvency procedures won’t suffer from unemployment. The issues regarding failure to pay in the sphere of construction and supply have to be resolved. At that, the clients won’t reduce the expenses on arbitral litigation, as they will rather retrench the expenditure on legal support of the enterprise activity under subscription. The market of the legal services connected with the repulse of the raider attacks and hostile takeovers will decrease. This will rather happen not for the reason that all the raiders be confined, but because of the fact that this activity may become unprofitable. It is unlikely that raiders recover the takeover losses by gained as a result of the attack assets as it is complicated to sell the latters off during the crisis time. Moreover, it’s not a secret that many raider forces work under the certain financial and industrial groups, but the latters have not enough financial resources to sponsor the hostile takeovers. On the other hand, the increase of the legal support of the fair mergers can be observed nowadays. Many companies have no other alternatives but two - to sell the business or to make an attempt to join the efforts for survival. Furthermore, the Government has given a present to the law firms engaged in registration services by imposing all the limited liability companies an obligation to bring their constituent documents into conformity the with the requirements of the new Act before 2010/01/01”- such was the position of Andrey Tsvetkov, the Managing Partner and General Director of President Consult LLC in his interview to Fontanka.

Konstantin Dobrynin, one of the law firm Green Corridor founders, confirmed to Fontanka the effect of the company’s division by the removal of the hostile takeovers issue from nowadays agenda. “The Green Corridor Project faced its logical termination. The company was focused on antiraider activity and struggle against hostile takeovers, but this phenomenon and the correspondent section of the legal services market are mostly exhausted as for now. It is reasonable to satisfy the requirements of the financial crisis that has not reached its peak in Russia yet, by adapting the legal services activity and as a consequence the one of the law firm Green Corridor to the new reality. The division of our business was of amicable and transparent nature” - was his comment on the issue.

As for Konstantin Krutilnikov, he confirms that “the both new companies will proceed with working on the common sections of market, though their points of view as regards the business strategy and the management will differ”. “During the crisis the amount of the legal support required is considerably larger, but there appear the issues concerning the clients’ insolvency and the influence of the crisis on their business. We observe the considerable increase in the amount of orders placed to us, as we offer the exclusive legal solutions. However, law experts in the particular spheres - corporate finance, construction or banking - will suffer the predicament with their work for a certain period of time. Still, this process is temporal: either the market will be rehabilitated or the lawyers will change their specialization. Highly qualified lawyers are of no less rarity than the reliable law firms, both are in popular demand. Though there is a plenty of law firms in Saint-Petersburg, it is fair to mention that there is almost no competition among them. There are no substantial players on the legal services market in Russia except for foreign and a couple of prominent Russian ones’ – expressed his confidence Konstantin Krutilnikov.

“Our major task as for now is to contribute to the business survival. There is an opinion that the worth the state of affairs during the crisis is, the larger is the amount of work for the lawyers. But it is wrong to think so. The lawyers occupying such a position will lose the prospect. In case the client’s business prospers we pose new objectives of science intensive nature, and we are not focused on legal support in the typical projects, such, for example, as transactions, debts collection or tax payment. The live is going on. And we should not aggravate the situation. The more one repeats the word “crisis” the harder are the damages– in that case the inner outburst and victory will be lost. Better work contributes to the absence of crisis. As for the new challenges, the banks face new risks, so trust management upon financial market is urgent. Upon the market prosperity nobody paid due attention to the contract terms as regards the reports of the trustees, but during the financial crisis new conflict situations arise, that have not been elaborated properly. Now there is an opportunity to develop the corporate law, as the large and successful companies will be focused on mergers and acquisitions of the small enterprises. There always is enough work in the scope of commercial law - in case the client has a lack of money, it applies a more thorough approach in drawing up the contracts and the terms of remuneration. There is no decrease of orders niether from public authority bodies nor from their claimants. Such cases constitute the strong units our work mechanism, and this is applicable not only to tax cases. Public authorities do not present any indulgence to business, and the amount of tax complaints does not reduce’ – such were the comments of Sergey Pepeliaev, a single managing partner of the law firm Pepeliaev, Goltsblat and Partners to the reporter of Fontanka.

The majority of Saint-Petersburg legal services market analytics are unanimous in the following: there are enough law firms in the city, though the market may accept new participants; the rates of the legal services are various, and the specialty of the legal services satisfy the requirements of the potential clients; the diversity of the rates constitutes the firm footing for dumping; today as never before the level of the law firm may be determined by the following formula - the value of the contracts. As for the de facto income of lawyers, it will hardly grow. Moreover, everyone agree in views that about 10 percent of personnel will be dismissed, and the salaries will reduce by 20-30 percent.

“The capacity of the market will increase. The competition among the law firms is anyway high. It is necessary to keep vigilant watch over the strong business rivals of the capital.

Among them is the Moscow law firm “The line of law”. Neither crisis and colleagues, nor the clients will easily share their benefit with us. The bargains are not any more stricken with the help of the white collar workers. The lawyers who can work in extremely hard crisis conditions will be the only survivors. And everyone should adapt to such conditions” – resumed the head of the law firm Pen & Paper Konstantin Dobrynin.

Fontanka.ru


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