RUSSIA GEARS UP FOR LAW REFORM
While Russian law firms have taken off on the back of big transactions over the last ten years, Russian law has been notably less successful. A presidentially-mandated decree will try to bolster the domestic legal frameworks with the help of some of Russia’s leading commercial firms including Egorov Puginsky Afanasiev & Partners, the Pepeliaev Group, Andrey Gorodissky & Partners, Alrud and YUST.
Until now, Russian businesses have relied on English law for transactions involving foreign companies, and are increasingly relying on it for deals with other Russian companies. According to Dmitry Stepanov, a partner at Egorov Puginsky Afanasiev, “Russian companies are going offshore to avoid applying Russian law to an otherwise Russian transaction.”
Reforms have been attempted in the past, most recently in late 2010, but their inadequacy led to a special committee created by the president Dmitri Medvedev.
Prominent reformer and businessman Alexander Voloshin has been tasked by Russian president Medvedev to spearhead reform as part of an effort to make Moscow an international financial centre.
Commercial firms such as Egorov are working with Voloshin as frequently as two to three days a week on a “council for codification” to reform corporate law, general civil issues, the infrastructure of capital markers, and tax law, according to Mr Stepanov (pictured). The council, he says, will be a “translator between the business community and legislative bodies”
Mr Stepanov admits that legislative reform is only the tip of the iceberg in the Russian market, noting that judges often see between 20 and 30 cases a day.
“What can you expect in terms of quality? We need more judges, and to develop the quality of judges. Reform is a way to make things civilised and adjusted for foreign investments.”
He predicts a stop to off-shoring practices in as little as two to three years, if the reforms are successful. Russia’s elections in December, he says, “will not change the movement of the reform.”
Despite the planned overhaul to Russian law, Egorov is pressing ahead with its decision to hire up to fifteen English-qualified solicitors. The move is unique; not even magic circle and US firms in Moscow have thus far employed UK law specialists.
Mr Stepanov points to the continuing importance of English law as Russia winds its way through what could be a long reform process. The move, he insists, is based in the centrality of English law to Russian transactions rather than an attempt to compete with the established magic circle firms in Moscow.
“UK law dominates, so they’re here,” he says of magic circle firms, “and it’s difficult to compete with them, but we don’t want to be outside.” Egorov firm has non-exclusive arrangements with Slaughter & May and Ashurst in the UK.
Egorov, with more than 190 fee-earners, has just 13 partners. Sources estimate that average profit per equity partner is in excess of €5.7m a year.