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How to select a law firm in Russia?
Every manager in his or her work has to deal with lawyers, and the manager undoubtedly already has a general idea of lawyers before applying for their assistance when a company is in urgent need of a law firm's services. This is usually connected with a great significance attached to having a point at issue resolved in the company's own favour, or with the need to have a third, independent party make a conclusion on the issue (for instance, for the board of directors, shareholders, investors, or a bank, etc.), or with the unavailability of the company's own experts specialising in specific areas (for instance, in international arbitration, tax or customs conflicts), or with a great volume of work, etc.
Although it happens that your legal adviser simply thinks it is his responsibility to tell you that you cannot do this and that, and therefore it is better to drop this and not even to begin doing that. But you need to find a way of doing what you want.
It is difficult even for an expert to be familiar with the whole variety of law firms; there are about 1000 law firms and legal advice companies in Moscow alone. To get true and reliable information from the firms themselves is actually impossible. Your friends or acquaintances suggest that you hire this lawyer or that law firm. But you want to make sure that your choice is right because too much can depend on it.
How to find the right law firm?
 The legal business services market is represented by approximately 300 legal consulting companies which are part of associations of attorneys and 680 law firms some of which are part of the associations of attorneys and which co-operate with members of the associations of attorneys. We will try to make this clear by graphically presenting all law firms as a pyramid.
The part of the pyramid at the vertex stands for a few leading foreign consulting firms which provide auditing, consulting, legal advice services, for instance, such firms as Allen & Overy, Clifford Chance, Freshfields, Linklaters & Slaughter, Andersen Legal, etc. They have offices in most of the world's capitals; their clients are transnational corporations and a very small number of the largest Russian companies. The fees paid for their services amount to hundreds of thousands of dollars. The average employment in the legal departments of these firms runs to 5 to 20 lawyers who work on a full-time basis and receive a fixed remuneration in the form of salaries and bonuses. Under such firms' internal regulations a lawyer's workday lasts from 6 to 8 hours a day, i.e. the time paid for. As evidenced by legal officers of such firms one lawyer has to work on 5 to 30 cases simultaneously. Legal advice and conclusions take up 60% of their time. 90% of their clients are very large foreign companies. The work done by the firm's employees is structurally arranged so that at least two lawyers (as a rule, one legal adviser and one paralegal adviser take on one client; any further work on the case is performed by several legal advisers in which case the decision is at the discretion of their senior managers and partners. The client cannot in any way have influence on the amount of time spent by lawyers of different qualification (to control the fees to be paid for legal services). The need to have several specialists work on a project is decided by a firm's partner (head of the firm).
It is obligatory that the invoice drawn for the customer to pay should specify the partner's time as well which he or she spent to study and supervise the case. The partner's time is rated at to an hour. The paralegal adviser's time is rated at an hour; the specialist's time is rated on the average at an hour. The fees for a moderately complex arbitration case are ,000 to ,000. The conditions of payment for Russian customers are strict, and those for foreign clients are upon actual completion of services. You can expect a discount, for instance Ernst & Young will deduct 5% from the next invoice after payment of 200 thousand dollars. As a matter of fact, participation in tenders involves some serious dumping, but this relates rather to marketing expenses.
The quality of legal services is ensured by collective work on a case, lawyer's specialisation, leading specialists control. However, the firm will not assume responsibility for the outcome of the case. Of course, even leading law firms are subject to serious mistakes, this for the main part results from the fact that lawyers are overworked. There is yet another negative point connected with this: you and other customers may be rated on a priority basis, i.e. those who pay more get more.
If you get consulting services from paralegal, legal and senior legal advisers, then during consulting sessions mistakes might be made which you are more than likely fail to see unless you are an experienced lawyer. In fact, lawyers at the level of partners and senior partners make no mistakes if only because they have enough courage to admit that they do not have a ready answer to some question at the moment and that they need some time to work it out.
The attitude to the issues of a court's interest in passing a judgement on the case in your favour is different - some firms try to convince you that they ensure only expert support of the legal aspects of the case, but... can recommend a judge to whom you can apply on your own, whereas some other firms make a straightforward suggestion that for these purposes you should transfer an X amount of money to the account of an offshore company.
The red section is characterised by long-term planning, strong marketing strategies, though not always successful, which can be proved by the fact that many offices in Moscow and other cities of the former USSR are either closed down or their staff is reduced. These failures may be due to the fact that the strategies are imposed or forced from the companies' headquarters, for instance Allen & Overy in its London office employs 100 experts specialised in marketing, but in its Moscow office only 2. Some of the firms do not even have advertisement materials in the Russian language. Their own conferences and presentations are held for their own and potential customers in first class hotels.
In the age of electronic technologies law firms, being conservative in nature, are trying to keep pace with the times: you may be offered communication and provision of some services through the Internet. You will have a webpage on the company's site where you can adjust your appointments schedule, or you can see your accounts accruing hour-dollars earned by the lawyers, or you can view documents worked out for you, etc.
If you are head of a very large corporation which needs to have its legal problems resolved in different countries and the legal fees are not a decisive factor, then the red section is for you.
The blue section of the pyramid represents foreign firms of "the second level": Lovells, Norton Rose, SJ Berwin and May, etc. For instance, Norton Rose has 3 partners and 9 lawyers; legal fees are rated at to an hour; the average fee for conducting an arbitration case, as evidenced by the firm's employees, is 30 to 40 thousand dollars. Bargaining for a cutdown is appropriate, but not for a substantial one. Lawyers' work is also structurally organised as in the firms above. The legal fees for services vary from several dozens to hundreds of thousands of dollars. The main clients are foreign companies.
Offices in several countries of the world, a strategy of following the market leaders; attempts to merge with other large foreign competitors to catch up with the "Big Five" firms. A little less aggressive marketing policy, image-based advertising. No direct advertising as in the case of the previous group.
The orange section may be characterised as being only in the making. To fill the gap existing between the market leaders - foreign firms - and Russian law firms the process of forming strong Russian companies has started by way of setting up associations of the most successful lawyers practising in this business. In addition to traditional services - arbitration, international arbitration, consulting, subscribers legal assistance - Whales Legal, for instance, offers services which are new for the Russian market - mediation, due diligence, business projects support. Electronic projects are being developed similar to those described in the "red" section. Requirements set for employees are high - education background both in Russia and in the West, business support experience, a period of probation in foreign law companies and courts, proficiency in several foreign languages. Personnel training: corporation culture along the lines of a Western pattern - employee code, experience sharing and development at intracorporate conferences, etc.; work based on the market leaders' technology which ensures acceptable performance quality.
The marketing strategies aim at informing a narrow circle of people about the qualification level of the firm's expert teams: proposals of developed specialised projects, publication of articles in reputed press media, presentation of papers at conferences and appearance in TV programs. The firm's customers are large and medium-size Russian and foreign enterprises.
Whales' Legal consulting fees are from to an hour. The fees for a moderately complex arbitration case is about 10 thousand dollars. Bargaining is possible within reasonable limits. If you cannot afford to pay much but the responsibility for the project is high, then you are a client for this group.
The gap between the market leaders, i.e. foreign companies, and Russian law firms is reflected in their legal fees, technology, performance quality, marketing support, position in the rating on the market. A very large number of Russian law firms and consulting companies may be considered to belong to this section, including "Inyurkollegia" once the vanguard of the Soviet Bar.
The average legal fees charged by a Moscow law firm for an arbitration case is to ,000; the consultant's fee is to an hour.
These firms have their main clients among private persons, businessmen and small businesses which do not have lawyers on their staff or if they do, their legal departments are rather weak.
They have direct advertising in newspapers like "Iz Ruk v Ruki", or "Extra M", or classifieds in large publications.
They are characterised by the absence of strict specialisation, structural arrangement of work inside the firm, planning, fee uncertainty, almost total independence and virtually no control over some specialists. With that approach it is very hard to ensure the quality of services, the proper level of working out and processing documents. They may take the liberty to turn out a most complicated equipment purchase contract on 10 pages instead of a proper 100 page document which might later result in multimillion losses for the customer. There is no work specialisation: lawyers undertake to conduct all kinds of cases - arbitration, criminal, family conflicts, inheritance, etc. - whatever a client may request. Yet one can surely find in such a firm an experienced, knoWGedgeable expert proficient in the area of law you need. However the criterion for the quality of your choice is likely to be a lawyer's expensive briefcase or gold-rimmed spectacles. Besides, there is no guarantee that even a top-notch expert is not subject to mistakes, so risks may increase manyfold especially when there is no control or performance technology.
The fees for such services are minimal - from several hundred dollars to about a couple of thousand dollars. This brown section is likely to be acceptable for you if your case is simple, not of fundamental importance, there are no lawyers on your staff and you have a minimum budget.
It also seems possible to single out a little more successful Russian law firms having, however, the same quality features as the previous group: the absence of technology of working on a case, quality control, strict specialisation. The principle they use to set fees for their services is "get as much as you can manage to get", although one might say that their fee for conducting a middle-of-the-road case may run to about 7 thousand dollars. To this group belong such notorious firms known for their sporadic marketing (mainly in the area of criminal proceedings) as "Reznik, Gagarin & Partners", "Barshchevsky & Partners", etc. These are different from the previous group in that their marketing budget is slightly larger, they resort to module advertising. This group's clients are companies which cannot afford or identify at the right time a higher qualifications group.
One cannot say that the classification described above is very much different from that in developed countries except that the firms in the middle (orange) section have just started to shape up and that western lawyers originally claim to be legal advisers specialising in a specifically narrow margin of legal areas, not more than 5 to 7 areas, whereas Russian firms are far too often ready to take on any case and try to persuade the customer that that case is just right for the services they specialise in.
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