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Interview with Mikhail Ilyashev, a senior partner of Ilyashev & Partners Law Firm

 

Ukrainian business develops at a fast pace. Both Ukrainian and foreign businesspersons invest money into Ukrainian industries. However, Ukrainian legislation needs to be improved to encourage more investments.

Mikhail Ilyashev, a senior partner of Ilyashev & Partners Law Firm, has kindly agreed to be interviewed and to explain certain legal matters and legislative problems.

Ilyashev & Partners Law Firm, established in the first years of Ukraine's independence, is one of the leading law firms that provides legal services.

 

Mr. Ilyashev, what are the trends in the development of the Ukrainian market of legal services? Do the foreign law firms show their interest in this market?

The legal services market grows approximately by 3040 percent annually. However, foreign legal companies do not pay too much attention to our market, because of the rather insignificant volume of provided services worth about 100 million US dollars a year. Foreign law firms are not interested in such kind of business, because the energy they spend is not adequate to the results they achieve. It is the same if our firm opens an office in Pridnestrovye, for example. We can occupy the whole market but the annual volume would amount to 100 thousands US dollars. That is why foreign companies prefer to transfer the orders for services they receive abroad to the Ukrainian companies. Among the few foreign firms that entered the market in the first years of Ukraines independence we can mention Baker & McKenzie and DLA Piper, another firm that has recently entered the Ukrainian market. This firm, which went through several mergers, has bought Ernst & Young legal practice in Ukraine.

How does the absence of business competition reflect on the Ukrainian legal market?

Positively. The absence of foreign law firms has given the Ukrainian firms an opportunity to develop and improve in order to meet the international standards without pressure. At the same time, there are no state regulations of the legal service market in Ukraine in contrast to the food market, for example. It is open for all foreigners. In fact, foreign firms that have found their way to the Ukrainian market are called foreign just because their founders are foreigners, but they are staffed with Ukrainian lawyers.

Do foreign firms have problems because of the specific conditions of the Ukrainian market? Bribery and corruption are rampant social vices in Ukraine.

Nepotism is a much greater problem than bribery. If, say, in the United States, a judge would have to resign from his position just because his daughter was seen in a bar with one of the relatives of the accused, here in Ukraine, a person can openly come to the court or call the judge to solve his or her problems in a way suitable for that person. And one of the basic difference between Ukrainian, European and American courts is that a judge in Ukraine works to earn money whereas in the whole world money is not the main motivating factor. The prestige of this occupation and the possibility to administer fair justice are the main principles of this profession. That is why being a judge is a very respected profession in the world. Unfortunately, in this country it is associated only with possibility to earn the money.

Nevertheless, is it possible for Ukrainian lawyers to bring court cases to a successful finish?

In most of the cases, they can do it. I would say that 95 percent of the lawsuits are solved successfully thanks to the lawyers professionalism, and 5 percent of the lawsuits depend on what we call the political will. These are the State cases connected, for instance, with re-privatization. Of course, there are such cases when the result is already known at the beginning of the trial. And if there is the political will to take a decision, legal aspects are pushed into the background. However, the number of such cases is quite low. The decisions in most cases depend on the level of lawyers professionalism. It concerns both the lawyers who represent parties and the judges. By the way, the judges in European and American courts do not always pronounce adequate judgments, but the only reason for that is views or interpretations of the law in their own way.

There is an opinion in this country that a lawyers asset is his ability to come to an agreement with the judge. The more a lawyer is able to reach such agreement, the more money he is paid.

(Laughs) You know, to go to the judge and give him a bag of money is a very primitive approach. Although, unfortunately, some firms practise such an approach. However there are many ways to protect the clients from the dishonest judges. All shady businesses are made in the muddy water. But it is quite another matter if everything happens openly. Journalists and community can follow the case if it is made public. So, the risk of an illegal and unfair decision of the court decreases significantly. That is why a lawyer who deals with the legal proceedings is not only an expert in the field of jurisprudence, but he or she is also a person who can manage the work and communications with the mass media, cover the case, reveal the judges involvement in illegal negations, and find ways of counteracting.

Your firm operates quite actively in the judicial system of the other countries. Is there anything that can be borrowed for the Ukrainian judicial system?

First of all, I should mention judges professionalism and their education. In most countries, the judge is the highest point of the lawyers career. But not in Ukraine. Firstly this fact is connected with an inadequate prestige of the judges profession and with the way judges are hired. In Ukraine, people who do not have enough experience as a lawyer often become judges. Or they work as judges after working as secretaries in the court or as judges assistants. It would be more reasonable to interest top-level specialists (who have long experience of law practice) in the court career. At the same time, surprising as it may seem, the Ukrainian judicial system has some things that can be adopted by the Western judicial system. Many people complain that legal cases drag on for a very long time in Ukraine, but in fact, compared to West European countries they do not take so long to be solved. For example, in Portugal an ordinary civil case can take two years before the first hearing. It happens because of bulk of work for the courts to handle  people in the west go to court much more often than in Ukraine.

Besides, there are special rules in the west which makes it possible only for advocates to visit courts of a particular level. But in Ukraine anyone can do it. For example I cannot come to Hungary or England and have a law practice there but foreign lawyers can provide legal advice services in Ukraine and even represent the parties in court without having any Ukrainian juridical education. In other words, the Ukrainian market of legal services is completely open. However, it did the Ukrainian law firms good. Even not so long ago we were forced to follow the foreign standards which have been forming for centuries, but now the Ukrainian law firms have some advantage over foreign firms because the Ukrainian firms know the specific features of Ukraine better and as a result have strong competitive advantages.

What kind of problems do foreign investors face because of the Ukrainian legislation? Laws are often changed and modified in Ukraine  for example, each newly appointed government introduces changes into the tax legislation and customs duties.

Today the Ukrainian legislation is passing through the time of formation and development. But these changes proceed in an abrupt and revolutionary way rather than in an evolutional manner. Foreign companies do not always understand this. Besides, the Ukrainian legislation has strange norms that defy logic. I can tell you about one case that happened in our practice several years ago. One foreign company imported presents for orphanage in Ukraine to be given out on the first of September, that is when school begins. These presents were puzzles with the companys logo on it. Another foreign company performed the customs registration. The foreign company considered the logos image as an advertisement and paid 30 percent of the custom duty for advertising the product. The Ukrainian customs officials thought that these presents should be taxed as toys, not advertising and as a result these presents were seized by the customs.

But the main point is that custom duty for toys is only 5 percent. So the company overpaid six times! They had to take their case to court. The court pronounced judgment in the foreign companys favour. But the hearings of the case lasted several weeks and the children did not get the toys on time.

Does it mean that foreign businesses should avoid dealing with Ukraine?

No, of course not. If a company works legally and openly and some misunderstanding or a problem arises in connection with the Ukrainian legislation, there are lawyers who will always help find a way out.

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