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Law Firm Management News February 2013 - Attorney-client privilege aspect in managing law firms in Russia.


IBAWhile talking about law firm management we would like to pay some attention to the following problem existing in Russia.

There are some differences existing between different types of law firms in Russia with two types of law firms predominant in Russia now.The first are the law firms which are commercial companies (commercial law firms ('CLFs')), usually limited liability companies providing legal assistance where the lawyers are have graduated from law schools as lawyers.  

They are not members of any Russian bar associations or advocate chambers. It often happens that these lawyers are good professionals but, as a rule, they are not officially binded by any advocate professional liabilities. As a rule, commercial corporate legislation is the main law ruling their business.The other type of lawyer is the advocate partnership. Under the Russian legislation, an advocate business is not a commercial activity. The definition of the advocate activity given by the Russian law is like legal help, that is, legal assistance provided by advocates and it is not a commercial activity, but the activity is prescribed by the Constitution of the Russian Federation for the purpose of guaranteeing the constitutional rights of everybody to be protected by the law. The main goal of such legal assistance is to help individuals or legal entities to be protected by the law, but it has no commercial goal. For this purpose, there are some basic positions which mark the differences between CLFs and advocate entities ('AEs') in Russia. For example, the main act ruling advocate activity is the Federal Advocacy Act No 63 FZ. Also, the behaviour of advocates in Russia is binded by the Professional Advocate Ethics Code.Talking about the differences between CLFs and AEs, one of the main positions which is characterising AEs is attorney-client privilege. CLFs do not have this. So, in cases of a police investigation against a client of a CLF, or against this CLF itself, both the client and the CLF are not protected by the rule of attorney-client privilege. It means that the lawyers of the CLF are obliged to bear witness against their client. The refusal of lawyers of these CLFs to bear witness will be recognised as a criminal offence. This is why clients of CLFs can not feel that they are protected. This is why many CLFs, both Russian and foreign CLFs in Russia, are trying to create AEs under the name of these CLFs.One of the main ideas of a guarantee of attorney-client privilege is the independence of advocates. This means independence from state authorities, third parties, political situations in the country and corporate ideas. It is not a secret that state investigation authorities will sometimes try to push even independent AEs into breaching the rule of attorney-client privilege. Often it is not so easy for independent AEs to protect their attorney-client privilege. But as a rule, they do manage to do it because of their independent advocate status.In cases of advocate entities having the same names as their parent CLF, it is much more difficult to protect attorney-client privilege. The reason for this is that in this case the state investigation authorities do not see the difference between AEs and CLFs; they simply see the same name. Having the power of the state behind these investigation authorities can lead to breaches of attorney-client privilege. Of course advocates of these AEs finally prove that they are protected, but often it is too late. The unfortunate result is often the loss of the client's information which can lead to unpleasant results.This is why many CLFs are trying to create AEs in separate offices. But unfortunately in Russia, it may make no difference for the reasons mentioned before – the same names.Taking into consideration the ideas mentioned previously, some international law firms which may have their business in Russia only as a CLF do not create AEs under their own name, but instead use independent AEs as partners. For the purpose of protecting clients' interests, it is evident that this way is much more reliable for both the CLF and their clients. Of course some may say that from a commercial point of view international law firms acting in Russia as CLFs, or local Russian CLFs themselves, may lose some of their profits. It is difficult to agree with this opinion as everything depends on the terms of the cooperation agreement between the CLF and AE.The main goal of any legal firm is to protect their clients' interests so when managing a law firm in Russia, it is important to take all of the above into consideration.


 

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Mikael Porokhov


Gary Mirzoyan & Partners, Moscow

m.porokhov@law-ms.com

 

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