The lawyer did not hurt to be a businessman

On the Island of Bali, where I like to go on vacation, you will find many people practicing a religion, which proclaims that man should develop in both vertical and horizontal worlds. Development in the horizontal world implies leading a good life: earn a good salary and do not play the fool or beg. Development in the vertical world means developing spiritually. For example, you are a banker five days a week and a painter, writer or something else in that vein for the remaining two days. For me, the profession of an attorney provides me with an opportunity to develop in both the vertical and horizontal worlds, without having to divide my life into two parts.

Ten years ago I simply handled cases and visited courts, whereas now I am the managing attorney who organises the work of his colleagues. This is what I understand by development. I think that I will still be an attorney in 30 years’ time; however, I hope that the meaning we attribute to this word will change substantially.

I take offence when people say that attorneys and prosecutors line up on “opposite sides of the barricades”. Why do we employ military terms if we all live in the same country? Law unites us. On the other hand, it is the case in Russia historically that if a candidate for judge has an attorney certificate, this is considered even worse than a criminal conviction. We need to change this stereotype.

Recently two American judges visited us: one judge practices at the US Tax Court, while the other judge practices at the Columbia County Court of Appeals. The first judge told us that 19 judges work for the Tax Court. They are appointed on a parity basis: 50% fr om the business community and 50% fr om the state executive authorities. I think that this is a very healthy practice, as it makes it possible to consider any issue from all angles. In principle we should aspire to this in Russia.

I am convinced that it won’t hurt any attorney to be a businessman too: to organise and expand his/her practice and earn money. For some reason many people forget or feel ashamed to talk about this. In addition, in the public consciousness an attorney is, first and foremost, someone who handles criminal cases. Owing to this stereotype, all attorney activities in Russia are tailored for loners or small working groups and clients tend to choose a star attorney.

The organisation of the Russian attorney business has certain specifics: an office (wh ere one star attorney works), a panel (several stars linked by commercial interests) and a bureau (a more stable structure; however, all attorneys are formally equal). What are the consequences of these specifics? The bar of attorneys is falling behind market requirements and has stopped meeting business needs.

For example, when a major transaction is concluded, the client needs a large disciplined group of lawyers specialising in various spheres of law. The bar of attorneys cannot meet these requirements. Various attorney bureaus have appeared that try to compensate for this shortcoming. This is not enough, however. I think that we need to create attorney firms that would operate like economic entities; in other words, you would have owners and employees (at present an attorney cannot be an employee). Only such a business form would make it possible to create vertically integrated groups and meet today’s challenges, thereby transforming attorney activities into a large-scale sustainable business.

My most successful case, which also happened to be my first case, dates back to the 1990s. I represented at the time a Finnish company that had been accused of not paying VAT. The Finnish company acted in Russia through a permanent establishment. At the time I was on my postgraduate course and used to read a number of books on tax legislation. By virtue of this fact I noted that the law on VAT lacked certain details, in particular, it failed to specify a deadline for paying tax and failed to indicate the place wh ere the taxpayer had to register for tax purposes. Proceeding from purely theoretical knowledge I prepared a statement of claim, which was granted by the court. This was when I realised that pure theory had the right to exist in purely practical activities.

I cannot imagine my attorney activity without teaching. Discussions with students make me reconsider my experience all the time and search for unconventional approaches to standard issues. Students make me “sweat a little”: today everybody has access to any information and can also work in the sphere of law while a student. Such young people pose extremely specific, and on occasion awkward, questions. I always have to be on form to comply with expectations.

I believe that a good attorney cannot have unsuccessful cases: they are simply cases that were lost. If a case has been lost, but the right conclusions were drawn from the case, such experience can be considered positive. An attorney needs to think positively and understand that life is not always made up of victories.

I think that an attorney should receive a combined fee for work: only hourly fees or a success fee simply don’t work. For example, today, when a tax inspectorate decides to charge a fine and default interest to a company, the latter files an appeal with the superior tax authority and the case only goes to court after this has been done. Not long ago we concluded a contract with a major power company. We drafted the appeal so well that the superior tax inspectorate overturned its decision and the client did not have to go to court. Our contract specified hourly fees. What can be done in this situation? The case was won without “blood, sweat and tears”. In my opinion, in such cases hourly fees should be combined with a success fee, as such a structure is beneficial for the client and provides an incentive for the attorney to close the case as soon as possible.

Modern Russia lacks two laws: on the procedure for paying compensation for damage attributable to state actions and on local government. The first law would provide people with an incentive to make demands on public officials. It should be economically beneficial for citizens to litigate with the state, which is violating their rights. The Supreme Arbitration Court is gradually implementing this practice. This is absolutely correct. This practice disciplines the Russian tax authorities and eases the burden on the courts. The second law should give Russian citizens a real opportunity to dispose of money in local communities. At present the executive authorities are detached from the day-to-day requirements of the people and citizens are completely politically inactive.

The political component plays an extremely important role in some tax cases. There is no point in expanding on this topic: everybody understands the cases that I am referring to here.

When I was a student, I participated at the theatre studio of Moscow State University. Its director, Alexander Chetverkin, once said to us: “Do you think that the Bolshoi Theatre is so famous because its ballerinas dance best? No, simply the ballet skirts of ballerinas are always well ironed”. I believe that this is the best professional advice: everything is made out of little things. These little things make a man a true professional.