Yury Pilipenko: “The advocate’s monopoly is a natural one”

Speaking on the perspective of the advocate’s monopoly in our country, the advocates’ community strives to establish civilized rules of rendering legal services. The state becomes an active participant of the economic relations, creating huge legal staff with unbelievably high salaries in every structure. Large law firms take many cases gratuitously, feeling their responsibility towards the society. Yury Pilipenko, Managing Partner of the Law Firm "YUST", spoke on these as well as other problems in an interview for the Russian Law and Judicial Information Agency.

- You promote the idea of the advocate’s monopoly. This undertaking is quite debatable. On one side, such monopoly may improve the legal sphere, bring more order to the practice and thus contribute to the reform of the sphere of rendering legal assistance in general. On the other side, you may be suspected of creation of privileged conditions for your firm “YUST” and similar large corporations. The advocate’s monopoly will surely lead to the rearrangement of the advocacy services’ market, which will result in that small bar associations and bureaus will be forced to leave the market, and the large ones will stay. And this will cause the increase of the advocate’s fees.

- A good question. I will start with the personal issue: the absence of the advocate’s monopoly does not in any way affect me or my colleagues from “YUST”. The market is mostly formed already, and everyone who is able to earn, does. Nowadays, not being an advocate is somehow even more profitable – there are certain financial, disciplinary and other benefits. Even though it is not reputable.

And I, being the Vice President of the FCA, promote the idea of the advocate’s monopoly, because I understand that the current outrageous situation will not go on forever. The state cannot keep allowing triple standards in such a delicate sphere as rendering qualified legal assistance –changes are inevitable. And I would like that everything that will happen were closer to common sense and not to recklessness.

All European countries, except Sweden, I think, and Finland, have the advocate’s monopoly – either practically absolute (like in Great Britain, Germany, Portugal, Poland) or relative (like in Denmark). When the advocacy community insists on the idea of monopoly, it does so aiming at the establishment of civilized rules of rendering legal services, rules for all participants, which, you should agree, is fair, to say the least.

How can an advocate buy a “Maybach”?

- But one commonly thinks that any monopoly leads to no competition on the market?

- The term “advocate’s monopoly” by itself does not sound very nice, since the average man, even one wearing the prosecutor’s insignia, believes that monopoly is bad, that monopoly is no competition, increase of prices and, as a result, insufficient quality of the services. This is the common situation – take the gas sphere, for instance.

But in our case such reasoning is wrong. There is the term “natural monopoly”. And the advocate’s monopoly is a natural one, just like the medic’s. When people are sick, they go to a medic. And no one is in any discomfort. Moreover, one should understand that competition among advocates is unparalleled. If one does not like an advocate, he goes to another, and yet another. There are 70 thousand of us, and each one is a competitor of every other one.

- You are speaking on behalf of the advocacy, and I – for the simple citizens. For example, a grandmother needs to put together a most simple of claims, or even a simple consultation. An advocate will surely charge more than a common lawyer. And the grandmother has a grandson with legal education…

- True, a situation when a grandson or a brother-in-law is more competent and honest than an advocate is possible. Still, the modern society should orientate itself by institutions, not by personalities. If an advocate cheats, renders low-quality services, he, unlike the grandson, may be brought to responsibility – disciplinary responsibility under the Code of Professional Ethics.

Also, we are not speaking of the monopoly on any consultations, drawing up papers etc. In our case, the monopoly on court representation is viewed as optimal. We may follow Germany’s example: they have certain types of disputes, on which the citizens go to courts on their own, and if a claim’s amount exceeds a certain sum, or if a board of judges takes the claim, the case is considered with the participation of an advocate only.

- So the implementation of the advocate’s monopoly on court representation will push those lawyers who go to court nowadays out of the market?

- No. Our concept fixes a transition period, during which all lawyers who so wish will be able to become advocates. Therefore, practically all the same people will stay in the market of legal services, with the possible exception of some “miscreants”, who, for example, have no legal education. That is why the services will not become more expensive.

By the way, I would like to disprove the myth of the advocates’ incalculable riches. There are approximately 70 thousand advocates in Russia. There are advocates of the capital, those who have their own clients and who do not have to think of “every day’s bread”. The FCA estimates their numbers at 25-30% of the total. All others make their living by taking the work of assignments to criminal cases. One court day costs 298 roubles. This is a humiliating rate which destroys the advocacy, the law enforcing system, and justice. And one certainly cannot save up enough to buy a “Maybach”.

“Whales” and “sharks” remain in the market

- Have you estimated the share of the market which large advocacy companies like your own will keep after the monopoly is implemented?

- All serious players in the market are long known, and can be counted on the fingers of two hands. Everyone will keep his share, only the lawyers working in small business ventures will gain advocate’s statuses – those who do not yet have one. I assure you that there will be no crucial changes.

- And how will the number of advocates grow in our country?

- No one can tell exactly. An opinion used to be voiced that a million freelancer lawyers with many billions’ worth of turnover were present in our country. Studying the statistics, it became evident that many LLCs mention among their charter objectives “rendering legal services”, while in fact they do not do this. Freelancer lawyers’ guessed numbers are equal to the advocates’, or slightly more. If this is really so, there will be two times more of advocates – up to 140 thousand. Another evidence of that the prices for legal services cannot grow. There is no reason for this.

- Can you remember how you came to the idea of the advocate’s monopoly? Has some case, maybe, directed you towards it?

- I often hear that advocates lack professionalism. I cannot answer for all of them, but I am convinced that the people who have nothing to do with advocacy have contributed the most to this myth. Granted, the advocates sometimes are far from immaculate. The judges say at times: court licensing should be implemented, since practice shows, for instance, that the attorney does not know, which article is applicable to the case. There is a lack of regulation of the persons “around the court”, and I am sure that this lack is a source of many problems of the justice.

- But you have said that an advocate, who renders services of low quality, risks disciplinary liability.

- That is right, and he may even be stripped of the status. For life. But you see, an unprofessional advocate does not especially value his status, since he may go to courts even without the advocate’s status, under a power of attorney. And we currently have no means to fight this. But we will be able to be more exacting on the colleagues, if they understand that, losing the status, they will be unable to work in the court. In our opinion, such requirement would improve the quality of the legal services.

- Nowadays, in Orel region, for example, advocates request termination of their status to avoid being assigned to work on criminal cases. They say that they can earn more as non-advocates. Now that is a problem. To think that we should have lived to that people are leaving advocacy at a run.

- Do you think it is at all possible to give a financial estimation of the advocacy services market?

- It is possible, but it is difficult. I would not dare to. For example, our company is currently dealing with claims and contracts of the total amount of 30 billion dollars approximately. This is not the Firm’s income, but the sum of the cases. It is quite a lot. And if we were paid 10% of this amount, as some may think and as it is customary in the US and Great Britain, we would live in Sochi. It’s a joke.

- And how much exactly are you paid?

- Cases differ, but much. Sometimes it is a fixed amount, sometimes – hourly rates, which foreign clients are more accustomed to. The Russian businessmen dislike such approach, preferring to know at once the price of the result. So we have to agree on a fixed sum. When the amount of a hypothetical claim exceeds one billion, nobody will pay even 5%, unless there are some special circumstances. At times, the payment for the services is fixed at 0.5 per cent of the claim amount or project price.

- Are there enough clients for all large companies?

- The situation has become more problematic lately. There is a cause for that – the state is becoming an active participant of the economic relations. Over 50% of the economy is controlled by the state. And every structure with state participation has a huge lawyer staff with enormous salaries. 10 years ago all law firms had many clients with 10, 20, 30 million dollars’ worth of assets, and nowadays such clients are practically nonexistent, having either been absorbed or “sold themselves”. Today we deal with “large whales” or with “sharks”. Therefore, we may state that the market tends to shrink. But we do not complain.

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