St. Petersburg International Legal Forum Digest is an online platform for information and feedback on the Forum and the changes in the legal field we can observe, law initiatives implementation and legal market development. These events are reflected both in the programme of the Forum and on the pages of our digest which allows carrying on a dialogue with everyone interested in the Forum and the issues that are significant for Russian and international legal community.
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“Forum discussions determine the legal outlook for the year ahead” - Yury Lyubimov on St. Petersburg International Legal Forum
Secretary of State, Deputy Minister of Justice of the Russian Federation
— Yury Sergeevitch, in 2014 the SPBILF will take place for the fourth time and year by year it has been bringing together more and more delegates. What are the main aims of the Forum and the key factors of its success?
— First and foremost, the Forum represents the Russian legal system as open, advanced and dynamically developing. The very fact that the Ministry of Justice of the Russian Federation with the support of the President of the Russian Federation organizes one of the world biggest legal events in a certain manner localizes our country in the team of the world leaders in law. Annually we bring together around 3,000 participants who are legal leaders in their countries. In this respect the Forum is a very good investment in our legal system and our image.
Secondly, it is important to note that lawyers are people who are involved in forming political and economic decisions in their own countries. The Forum attracts a large number of such experts, namely, chairmen of courts, public officials, and lawyers from large companies. The impression of Russia they will get in general will have a great impact on their perception of any future acts of Russia as a legal and economic system.
Thirdly, the Forum is a serious method of counteracting negative image which is attributed to the Russian legal system. To form a right impression of the events which take place in our country a direct communication channel with legal community key figures is essential. Within a strictly interstate format it is very difficult to build any relations. That’s why I believe that for us every opinion leader who comes to the Forum is our victory, medals for which we receive in diplomatic and business negotiations. Finally, these communications shape the image of Russia and give an opportunity to receive truthful information on the current legal situation in our country.
Fourthly, participation in the Forum provides professional lawyers, principally from a commercial sector, with a chance to get reliable information on business climate in Russia, make acquaintances with colleagues and flush out issues of interest. Very often the changes which take place in the country are much more widespread and far-reaching than impressions of them resulting from a unilateral data transfer. For this reason when lawyers come to the Forum they get a completely new perspective of the situation.
Fifthly, the Forum extends opportunities and competences of Russian lawyers and contributes to achieving new skills that are indispensable to entering the international markets. It also enables public officials to meet those who execute their regulations in everyday work and hear different opinions that are oftentimes unpleasant.
Sixthly, I think that for many lawyers both from regions and the “capitals” the Forum is the only chance to meet with the world legal stars, look at the people about which they before could only read on the pages of newspapers and ask them questions directly.
Seventhly, being the main legal event of the year Forum sets certain trends. Otherwise speaking, it establishes a kind of a standard-setting vogue of legal ideas and directions and sets lawyers straight on the most urgent law issues. Thus, the Forum forms in a certain way the programme of legal idea for the year ahead. For instance, two Forums before, fight against corruption through prohibitive measure was actively discussed at a great variety of professional forums. At that time, professional lawyers have already understood that the main question in anti-corruption legislation concerned monitoring, labeling, arrests and distraint of assets. Today these anti-corruption methods have become the mainstream. So, a lot of issues we are talking about become a basis for legal regulation.
Finally, we shouldn’t forget that the Forum is a perfect platform for communication and networking. Connections among participants at the Forum lays the groundwork for subsequent business and communication projects. It is highly significant for us to make the social life of the Forum to enhance so that its delegates plan meetings, corporate events, receptions, conferences, roundtables, etc.
— Touching on the theme of trends it should be mentioned that St. Petersburg International Legal Forum has become an information source for legal community. Topics discussed at the Forum attract attention of mass media. In your view, what issues will be the most crucial at the Forum 2014?
— Forum makes the news because it is attended by a lot of newsmakers which inevitably make important statements. The news is there where there are newsmakers respectively. As for the planned topics, at the Forum we discuss, first of all, the matters that have been pressing throughout the year and are important for businesses. Accordingly, the issues reflecting events that took place during the past year and those forecasting events of the future year will be discussed along with traditional issues of litigation, transactions, antitrust regulation.
I am sure that much attention will be paid to a judicial reform and implementation of roadmaps to progress in the “Doing Business” ranking. For a few years the WTO, EurAsEC, Civil Code and tax administration remain the permanent topics to discuss at the Forum.
I think a part of round tables should be dedicated to special discussions on major sectorial events. For example, in the area of communications the issue of how to change mobile providers and keep your phone number as well as technological neutrality principal and postal service reform will be discussed. In pharmaceutical industry it is quite logical to touch on a topic of GMP standards which is big news of the current year. Hopefully, attention will be also paid to the new internet piracy legislation. In the area of Classical Civilistics there is also a very challenging topic, to wit, inheritance law. Today this issue is especially crucial as the children of people who participated in the first acquisition of property in 90s have grown up. Issues of sports law can become particularly interesting in the light of the Olympic Games held in Sochi.
— Apart from the annual big Forum in St Petersburg you organize the Guest Conferences which have been already held in London, Rome, the Hague and Paris. What are the main aims of these events?
— Organizing the Guest Conferences under the auspices of the Forum we allow professional lawyers from both countries, to wit, Russia and Great Britain, Russia and Italy, Russia and the Netherlands, Russia and France, to know each other better, on the one hand, and to get answers for questions which everyone of us have in respect of the legal system of another country, on the second hand.
If you ask every Russian participant of the Conferences what he or she knows about the foreign law and at the same time pose the same question about the Russian legal system to any foreign colleague you will obtain both a predictable and sad result. Unfortunately, sources of information on the real situation in legal systems of different states are limited.
For this reason we had an idea to bring together legal experts from the two countries and afford them an opportunity to posing all the questions of interest to each other within the framework of the development of St. Petersburg International Legal Forum.
Legal awareness helps to promote economic and cultural relations between countries. Lawyers from both countries seek to get first-hand information on legal system of the country wherein the company invests money or which enters into relations with their compatriots. We hope that communication of experts during the Conference as well as their further fruitful cooperation would contribute markedly to our bilateral goods turnover and the number of cultural and social contacts.
— What format are the Guest Conferences held in?
First and foremost, the Guest Conferences are designed to enable cooperation and exchanging knowledge of legal systems between professionals of two countries. For this reason all our Guest Conferences are based on the same pattern. The Conference is always comprised of two sessions. The first session features presentations of the delegates from the host country while during the second session Russian speakers address changes that have taken place in the Russian legal system over the recent years. Thereby, Russian and foreign participants can ask each other various questions directly in the course of these sessions.
It should be pointed out that both Russian and foreign participants of the Conference are high-level professionals, the so-called keynote business regulators, excellent speakers, skilled experts. In particular, the Russian delegation includes heads of legal departments and vice-presidents for corporate and legal matters of major Russian companies, top-level public officials and representatives of court system. So, it is not a simple Conference; it is rather a high-level discussion provided by the impressive composition of delegations.
We have already held four Guest Conferences under the auspices of St. Petersburg International Legal Forum. The next one will be in Budapest on December
These Conferences are a perfect method to draw attention to issues from the main Forum’s programme which will be in June in St Petersburg. Besides, these events give a unique opportunity for interaction between lawyers from two countries. It is well known that the only luxurious thing in the world is a human contact. In the framework of the Forum and the Guest Conferences under the auspices of the SPBILF we emphasize not only interesting panel discussions but also a fruitful communication during coffee breaks. Experience of the previous Conferences shows that participants highly appreciate this format and we do plan to develop it from this time forth.
— Yury Sergeevitch, many thanks for the interview.
The IV SPBILF will take place on June
“Russian law firms should be very serious about strategy”
Founding partner, Walker Clark, USA
— Norman, you know the Russian legal market very well. For several years you have been advising law firms in the region and speaking at various events. How do you see the market has developed over the past years?
— One of the things that is very interesting about the Russian legal market is that it has developed very quickly, in 20 years, from not existing to becoming a very dynamic and growing legal market. It is very interesting how fast the change has taken place: in the past 5 years we have seen the emergence of national Russian law firms that have been able to compete with foreign law firms very well. This development happened due to the maturation of the leading Russian law firms. We are also seeing a greater range of Russian law firms in the international practice, particularly representing foreign clients in the Russian Federation, and also advising Russian clients with investments outside. I think it’s extraordinarily that by now the Russian law firms are much more mature and much better than they were five years ago and many of them have grown significantly in size. But still like all firms from all over the world they are trying to figure out how to make it work better, do it effectively. Therefore we see great interest in career management, development of business skills in law firms and a more disciplined approach to strategy. And a very few of these things were presented 5 years ago, 4 years ago... I think that a big difference is the change that is taking place so rapidly.
The growth of the Russian economy is also contributing to the growth of the firms and to the expansion of their international practice. But from our perspective being outside of the Russian Federation we find that the country’s law firms are not well known. At least once a week I receive a call — sometimes it’s a general counsel, most often it’s a law firm in the United States, or Latin America, or Asia — asking if we know a good law firm in Russia that can handle certain type of the project. In this type of environment the major challenge for Russian law firms is to become better known outside Russia. There are absolutely excellent law firms in this country that would certainly stand up in terms of their potential, the expertise of the lawyers, their ability to handle new types of projects and different issues but many of them are not well known. In fact, about a year ago we did a little informal survey in which we asked general counsel and management departments of law firms in the US what, in their opinion, the best Russian law firm was. And no surprise: about 70% couldn’t even name at least one Russian law firm! Most of the others mentioned the Moscow offices of foreign law firms. Russian law firms should get better known, and build their reputation through international organizations like the International Bar Association or international events like St. Petersburg International Legal Forum, to demonstrate that they are very serious and they have very strong features.
— Is the Russian legal market similar to the legal markets in other emerging countries like BRICS for example?
— We practice in a number of the other BRICS countries. For example, we have done some work in China, and we are very active in Brazil. Our firm also specializes in other rapidly emerging economies such as Colombia, South Korea, and Nigeria, to name a few.
Russian law firms are not as well-developed as, for example, the leading law firms in Brazil because leading law firms in Brazil had been around a much longer time. A similar situation is in South Korea where there is a group of 5 or 6 law firms that have dominated in the market, some of them for many years. The Russian law firms are not there yet, because they have not been in practice for as long; but it is interesting to see the higher speed with which the Russian law firms are developing.
In the next five to ten years, the Russian law firms become better known, and some of them will become much larger. We are going to see the competition among the Russian law firms, and with the foreign firms, become much more intense; and one of the natural products of this will be consolidation. On the other hand, we are also going to see the development of some very sophisticated small firms with expert legal practices in only certain areas — niche type of law firms.
— From your consultancy practice, what do you see now are the main challenges of the law firms in the emerging economies? What advise do they usually ask for from management consulting firms like yours?
— In the emerging and recently emerged countries there is a great interest in international practice, and in the development of international business relationships. This is a major part of our firm’s work right now. We are doing a lot of work, for example, with clients in Latin America who are interested in development of practice in Asia because an increasing share of the investment now is not going through the United States or London, but directly between Asian and Latin America. This trend is going to continue.
Our clients are very interested in building strategic relationships, rather than opening offices in new countries. Nowadays we are introducing firms to each other for strategic relationships. This is a great opportunity for national law firms in Russia.
In emerging countries work is strategy, strategy, strategy. The other issues that are high-interest items — worldwide and not just in the emerging markets — are profitability and partner performance.
— At the IV St Petersburg International Legal Forum in June 2014 there will be several discussion panels devoted to the law firm management and the legal department management. If you had to choose only one topic among all that are related to the legal business management, which one would you choose for the Russian speaking audience?
Change management. I think that it is probably the biggest challenge right now because change is going to happen. If a law firm decides to do nothing, to take a “wait and see” attitude, it will have much greater difficulty and fewer options to respond when the change takes place. Therefore, in our firm’s work with our clients we are looking ahead to the year 2020 and 2030. What would the legal market look like then? Where would be the opportunities when a change comes? Understanding the possible shape of the future helps our clients to make practical, realistic plans to take actions over the next three to five years that will position them to be ready for the future.
One of the problems with traditional strategic planning, as we did it 20 years ago is that strategic planning traditionally does not handle change very well. It often assumes that clients today would be the same as clients five years from now.
I have a very good example of this idea. We work with a law firm in the United States that specializes in serving clients from Japan with business interests in North America. One of their partners had a very interesting observation that the amount of work in Japan has remained fairly constant over the past 10 years maybe even longer but the nature of work has dramatically changed. 10 or 15 years ago the Japanese clients would come to them for assistance in buying a factory in North America, And they were very good in doing that type of legal work. But today the Japanese are not buying factories in North America as they used to do. Instead, they are coming to them with new type of projects. A Japanese investor may come and say “I have a computer program to do 3D printing of automobile parts, and we are looking for funding in the United States to set this up. And the way the businesses work is that we will just e-mail the design to somebody, who could be in Romania, could be in Russia, or could be in Brazil, — somebody with a 3D printer who will make this part for us”. And all the things the law firms learned from helping their clients to buy factories might not help very much in this. “We need to change,” the partner concluded.
This is a great example of the type of forward thinking and anticipation that law firms need to do. This partner and his colleagues are able to see a change that is just beginning, but that is going to be very important in five years from now or maybe sooner. They are working now to take a series of high-priority actions to be ready for those changes, as well as other probable developments in the legal market over the next few years.
So if I were to choose only one topic I would stress the topic of how to manage change — that is going to be a good challenge for Russian law firms.
Change can happen without people really noticing it. We saw that in Latin America for the past 15 years, in places like Chile, Argentina, Brazil, and Peru. Law firms have grown much larger very fast. Often they never have really had the opportunity to change the way they do business and the way they organize themselves internally. A law firm might have grown from five to 30 partners or more in as little as 15 years, but the firm is still doing things the way they did back they had only 10 partners. They find that the ways in which they made decisions and operated their practices 15 years ago are no longer reliable guides for making decisions today.
Russian law firms now have a great opportunity now to think ahead. This involves more than just writing a strategic plan. Instead, it involves a serious, realistic consideration of what the firm must do now to anticipate the changes that are inevitable in the Russian legal market and to be ready to respond to them. Russian law firms have a bright future, I believe. But only those firms that manage change effectively will succeed.
“There have been some dramatic shifts in opinion about the business of law over the last few years, but a lot less tangible action,” - says Altman Weil principal and survey author, Tom Clay.
Thomas S. Clay
New Industry Survey Examines Changing Legal Market. Altman Weil, Inc., Newtown Square, PA, USA, www.altmanweil.com.
New Industry Survey Examines Changing Legal Market
Since 2009 the US legal consulting firm Altman Weil Inc. has been conducting a survey on the main trends shaping the legal market in the crisis times. We present you the key findings of the survey and invite you to download the full report on the firm’s web page. The report includes sections on industry trends, pricing and alternative fee arrangements, economic performance, law firm growth, lawyer staffing levels, succession planning, and the future of the profession. Conducted in March and April 2013, the survey polled Managing Partners and Chairs at 791 US law firms with 50 or more lawyers. Completed surveys were received from 238 firms, including 37% of the 250 largest US law firms.
“There have been some dramatic shifts in opinion about the business of law over the last few years, but a lot less tangible action,” said Altman Weil principal and survey author, Tom Clay. ‘Most firms seem to be operating in a short-term, defensive mode driven by market threats rather than opportunities.
Ninety-six percent of law firm leaders say they believe ‘more price competition’ is a permanent change in the legal market in 2013, according to the survey. Additionally, eight out of ten firm leaders think ‘more non-hourly billing’ is here to stay. In contrast, only 29% of leaders report that their firms have significantly changed their strategic approach to pricing since the recession.
Law firms’ primary response to pricing pressure appears to be discounts. The survey found that a median of 21% to 30% of legal fees are discounted. In firms with 250 or more lawyers, the median amount of fees discounted goes up to 31% to 40%.
“Discounting is not a strategy,” said Clay. “In fact, it undermines the idea of value and it’s a margin killer.”
Ninety-six percent of survey respondents also believe that a ‘focus on improved practice efficiency’ is a permanent change in the legal market. Ninety percent of leaders say there will be ‘more commoditization of legal work;’ and 79% expect ‘more competition from non-traditional service providers.’
Despite this broad consensus, only 45% of leaders report their firms have made significant changes in strategic approach to efficient legal service delivery.
Law Firm Growth
This year for the first time the survey asked if law firm leaders believe growth, in terms of lawyer headcount, is a requirement for their firms’ continued success. Fifty-six percent of survey respondents said ‘Yes;’ 36% said ‘No;’ and the rest were not sure.
In this area, opinion and action appear to be more aligned. When asked about net change in lawyer headcount in 2012, 54% of survey respondents reported an increase in equity partners in their law firms last year; 65% of firms said the number of non-equity partners grew; and 59% said they had a net increase in partner-track associates.
“Growth is not dead, but size alone is not a safety net,” said Clay. “Firms are beginning to think more strategically about growth — trading up to improve profitability, rather than bulking up to drive gross revenues.”
The survey asked firm leaders about their greatest challenges over the next two years.
Increasing revenue was their number one answer, followed by generating new business, firm growth, and profitability. The top four answers, all focusing on internal priorities, constituted 53% of total responses.
Delivering value to clients appears at number eight on the list of challenges, mentioned by just 5.6% of law firm leaders. Improving efficiency is eleventh on the list, cited by only 2.8% of respondents.
“This is very troubling,” according to Clay. “Law firms that do not put client needs at the top of their priority lists and align themselves with those needs misunderstand what is driving the forces of change in the legal market in 2013.”
It is available to download at: www.altmanweil.com/LFiT2013.
The programme of the IV St. Petersburg International Legal Forum is published! The Plenary Session is followed by more than 50 discussion sessions organized into 9 tracks on a broad range of issues in law, business, politics, and culture. You can see the list of tracks, as well as the discussion sessions, in the Programme.
Interested in participation? Application procedure, Registration Fee and Accreditation are mentioned in the Conditions of participation section. We are also happy to present you a list of official Forum hotels where you can stay during your sojourn in St. Petersburg.
Looking forward to welcoming you soon in St. Petersburg on June 2014!
In the next issue of Digest, launching on January 14, 2014, we will present you the interview with Maria Melnikova, Counsel of the Minister of Justice of the Russian Federation, who will tell about the future electronic technologies for notaries and topics to discuss at the Forum 2014; the interview with Jean Tarrade, President of the High Council of French Notariat, on the profession of a notary; and the interview with Philippe Armengau, President of the Regional Council of Notaries of the Appeal Court in Aix-en-Provence, on the cooperation between the Notary Chamber of the Voronezh Region and the Regional Council of Notaries of the Appeal Court in Aix-en-Provence. Among the Articles you will find unique materials on the online marketing for notarial offices, law bureaus and start-up law firms.