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There have been discussions and different projects pending about regulating the legal services in Russia for a long time. None of those projects has led to major changes, until now. It seems that now there is a real will for actual changes in the Russian legal services system. A new reform project is pending.
The need for change
The current situation is quite disorganised and uncontrolled. Legal services are offered and conducted by a number of different parties, namely (i) advocates with a special status of advocate provided by the law; (ii) non-advocate lawyers rendering legal services to Russian/international law firms; (iii) lawyers practising individually; and (iv) in-house lawyers.
The professional legal services market is currently dominated by foreign legal firms. This situation has become an issue for different sectors, including legislators, and thus created a pressure to provide tighten regulations.
The reform aims to unite the legal professional community, improve the quality of legal services, protect the domestic market from foreign players and harmonise regulation with the legal systems of other countries.
What will change?
According to the reform, “Proposal concept of regulation of the market of professional legal aid”, from January 1, 2023 only advocates will be able to represent interests in judicial matters and provide paid legal services. Exceptions are employees of legal services of enterprises and representatives of non-profit organisations, which provide legal services free of charge.
"Foreign law firms doing business in Russia via their branch offices, representative offices of subsidiaries will not be able to operate through the existing business arrangement."
The proposal imposes significant restrictions on foreign law firms operating in Russia. It is proposed that foreign lawyers are allowed to work in the Russian Federation only on the principle of reciprocity: a foreign state will grant Russian lawyers on its territory a status that allows them to provide legal assistance only on issues of the law of a foreign state.
Accordingly, if the proposal is approved, foreign law firms doing business in Russia via their branch offices, representative offices or subsidiaries will not be able to operate through the existing business arrangement and will have to consider restructuring.
The procedure for obtaining advocate status during the transitional period (until 2023) will be simplified. The applicants will be tested only on their knowledge of the Law on Advocacy. Those who meet the requirements of the Law on Advocacy and some other criteria will be eligible for the simplified test.
The existing procedure for obtaining advocate status requires passing a full-scale qualification exam, which additionally tests knowledge of the history of Russian advocacy, civil, criminal, labour, family, international and tax laws.
When will this happen?
The reform should be introduced in three stages:
Starting from 2018 changes to the regulatory framework are introduced: the Law on Advocacy, the Civil Code, the Labor Code and the Tax Code, as well as procedural legislation and legislation on public procurement, will be amended. Up to now no changes have been introduced.
During 2019 a temporary simplified procedure for the transfer of practising lawyers to the status of advocate will be introduced.
As from January 1, 2023 advocates will have exclusive rights to legal representation and the provision of paid legal services.
This timetable for the changes may be unrealistic, as the first stage has not yet been completed.
Pros and cons
Supporters of the proposal are happy and see that the changes will improve the quality of the legal services provided and ensure the market will be open for Russian lawyers.
Opponents claim that the proposal violates articles 45 and 46 of the Constitution of the Russian Federation, which provide, among other things, that: “Everyone shall be free to protect his rights and freedoms by all means not prohibited by law.”
Further, opponents are afraid that the reform leads to unnecessary control over lawyers. The new regulations force the lawyers to stay under the control of Advocates Chamber and follow their rules.
Some also see that the monopoly status of advocates may not be the best solution for clients. The lack of different players in the field and freedom of choice isn’t the ideal situation in the current business world.
Another major concern is the proposed simplified procedure to obtain advocate status: will this actually reduce the quality standards of advocates? Finally, monopoly tends to increase the price of the services provided—and that’s something clients do not like.
Annikki Hämäläinen is a trademark attorney at Papula-Nevinpat. She can be contacted at: annikki.hamalainen@papula-nevinpat.com
Riikka Palmos is a European trademark attorney at Papula-Nevinpat. She can be contacted at: riikka.palmos@papula-nevinpat.com
Papula-Nevinpat, legal services, advocates, non-advocate lawyers, foreign law firms, subsidiaries, domestic market, restrictions
