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Page 8


Cont. from page 06


referral relationship with Mumbai-based Talwar Thakore & Associates, while Allen & Overy has a ‘best friend’ relationship with Trilegal, and Jones Day has a similar relationship with P & A Law Offices.


Pushing for change


The UK has also set up a number of initiatives to improve the chance of allowing UK firms to operate in the Indian market. In November the Solicitors Regulation Authority (SRA) published new proposals to ‘cut through the regulatory maze’ inhibiting London-based international law firms and help them develop more unified global businesses. The SRA wants to give big cross-border practices more flexibility to operate in any form allowed in other countries, and also to incentivise foreign firms to make London their headquarters.


The proposals, set out in the consultation document The Regulation of International Practice, include allowing partnership in English law firms for lawyers in key emerging markets such as China and India who have not ­previously been ­allowed to become partners in solicitors' firms here. In 2010 the SRA paved the way by opening a new requalification track in English law for foreign lawyers – the Qualified Lawyers Transfer Scheme (QLTS).


The SRA is also seeking views on whether to allow foreign (in particular European) firms more flexibility to choose whether to be regulated as foreign law firms or as English firms, depending on the services they wish to offer. ‘This would provide an attractive incentive for firms to be headquartered in London,’ the regulator said. ‘SRA recognition would provide the hallmark representing high professional standards and compliance, and this could be attractive to clients and other parties such as insurers.’


Furthermore, in August former UK attorney general Lord Goldsmith moderated a roundtable for 11 of India’s leading law firms to discuss how to develop a pro bono culture. The roundtable – the first of its kind in India – was co-hosted by UK-based i-Probono, a non-profit organisation that connects lawyers and law students with pro bono projects, and the Ashoka Foundation, an India-based body that supports social entrepreneurs. Goldsmith said: ‘I believe lawyers have a professional duty to undertake pro bono work. You cannot believe in the legal system without recognising the need for the law to be accessible to everyone.’


 


Price wars


While many emerging markets are still proving attractive for international law firms, some of those closest to the UK are proving trickier to make a profit from. In the past few years several large firms have left central and eastern Europe as local firms grew in size, experience and expertise, and began to successfully undercut them. But now locally based firms are feeling the pinch as clients take advantage of the economic downturn to dictate fee structures and service requirements.


Dace Silava-Tomsone, partner in the Riga, Latvia office of Raidla Lejins & Norcous, says that ‘firms are trying to maintain the usual hourly rates business model but clients want to opt for capped fees, which means that the standard hourly rate has gone down tremendously as a result. This can’t continue in the long term as the quality of work will begin to fall off.’


Throughout the Baltic States, the economic downturn has made the market for legal services ‘aggressively competitive’ with firms be- (Cont. on page 10)


 


International Markets


Russia Confidence in the national legal system is increasing


The Russian market is set to become more attractive, and could well become


a magnet for international law firms – ­particularly as companies doing business within Russia prefer to use UK jurisdiction clauses. The CIS is one of the fastest ­developing regions in the world, and M&A activity – often regarded as a bellwether for financial outlook – is very strong: ­according to Dealogic and mergermarket, total deal volume in Russia reached $60bn between January through to September – the second-highest figure over the last 10 years.


Presently, Russian lawyers feel that the local market is still under-developed. ‘Russian law firms have never been confident competing with the international firms,’ says Vassily Rudomino, senior partner at law firm Alrud. ‘You need strong language capabilities, specialist legal skills and the ability to attract key talent – all of which costs money. For instance, sourcing someone with good language skills can increase their salary by 30%, which means that international firms have a serious advantage,’ he says.


The fact that so many companies – including Russian – prefer to use other jurisdictions to resolve disputes may also be holding back confidence in the Russian legal system. Dimitry Afanasiev, chairman of Russia’s largest law firm, Egorov Puginsky Afanasiev & Partners, says that ‘currently, we have the bizarre situation whereby English law is effectively the operative law in Russian business transactions’.


 In the mid- to long-term this is not good for Russia, says Afanasiev. ‘Unless Russian law is going to apply to business transactions here, Russian lawyers and judges are not going to gain the experience and sophistication. English courts are going to be overloaded with essentially domestic Russian disputes on matters so alien to any English judge that he or she is not going to know how to do away with the case, and there is not going to be any rule of law in Russia,’ he says.


 But Rudomino believes that the tide is beginning to turn. ‘The Moscow Commercial Court hears a lot of dispute litigation cases now and there are hardly any reports of unfair trials or corruption, which is welcome news. This is creating greater confidence in the Russian legal system and there is some evidence to suggest that Russian companies want to resolve disputes in Russia now instead of England.’

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