. Last Updated: 07/27/2016

Navigating the Choppy Waters of Russian Law

MTSanders founded Linklaters` Moscow office in 1992 in daunting economic conditions.
Dominic Sanders, 35, the founder and head of the Linklaters and Alliance law firm's Moscow office, says his interest in Russia began when, out of curiosity, he picked up a novel by Dostoevsky.

"It probably had something to do with the title -- 'The Idiot,'" he says.

He was captivated by the work, and by the time he was sent to the Soviet Union in September 1991, in his mid-20s, recently graduated from Bristol University and just six-months qualified as a lawyer, he had immersed himself in Russian culture.

"I'd watched every program, every film there was about the country. I'd read everything I could. But it was like landing on Mars ... there was so little of what I had thought I understood."

As the nascent Russian Federation clambered from the rubble of the Soviet Union, Sanders set about appraising the local business opportunities.

Linklaters' work with the Soviet Union had been understandably low key. "One or two of our clients were looking at doing joint ventures, someone was doing a bit of work with Gazprom, which was then the Ministry of Gas ... and it was mostly at a consulting level," Sanders said. "But there was an awful lot bubbling under the surface."

Sanders lived at the Academy of the National Economy, formerly a training establishment for party officials directed by Mikhail Gorbachev's main economic adviser, Abel Aganbegyan.

The academy had reinvented itself at the start of the 1990s as a business school oriented toward Western markets. By the time Sanders arrived in the fall of 1991, it was a hotbed of economic activity.

Reporting to his seniors back at Linklaters' head office in London, Sander's feet barely had time to touch the ground before he was sent once again to Moscow. Other foreign law firms were starting to pour in, and his firm was hungry for a piece of the action. Linklaters' Moscow office was founded at the end of 1992.

Back at the academy again in the fall, but this time with a secretary and office of his own, Sanders began piecing together a local practice against the daunting economic backdrop. Prices had been freed, financial chaos was the norm and legislative voids meant that the early deals were demanding, to say the least.

Legislation came out haphazardly. One day the currency control regime would be overhauled; the next day, company law was changed; the day after, a new anti-monopoly law would appear.

Often new laws were hard to get hold of. "You had to snip it out of the newspapers," Sanders recalls.

As he took on more Russian lawyers and support staff, the academy became a bit of a squeeze. The company began to bring in resources from the London office. One summer morning in 1993, a second British lawyer cycled in to work. "He came over from London by bike," Sanders recalls.

In those days Moscow had "great charm," he says. "It retained all the stariye dobriye privichky of the Soviet era, when people didn't have the responsibilities ... always had the time and were always very, very friendly."

Little could exemplify this atmosphere better than the cricket match Sanders and a friend organized in Luzhniki Stadium in the summer of 1993. "There was even a press conference; basically we just wanted to get on the telly."

While the match never quite made it on the BBC's "Grandstand" sports program, it attracted a great deal of attention from the local press.

Meanwhile, work was picking up.

The firm had gotten considerable kudos for its law-writing projects -- penning draft securities legislation in 1993 and a draft joint stock companies law in 1994. As foreign banks piled in to ride the wild but lucrative securities market, the firm saw its business surge.

Despite a low period around the 1996 presidential elections, Linklaters emerged to take part in a landmark deal advising on the first federal Eurobond, worth $1 billion and launched on Nov. 22.

"It was one of the deals of the year in Euromoney ... and everybody wanted to come and do Eurobonds," Sanders says. "There was a lot of foreign direct invest investment, a lot of banking work going on. The market just went crazy through '96 to '97."

Partners were brought out from London to help manage the huge flow of work. What had started as a one-man operation now occupied two floors of class A office space on Tsvetnoi Bulvar, where the firm had moved in May 1994. Including support staff, Linklaters CIS employed more than 100 people before August 1998.

The crisis hit Linklaters hard, as it did all foreign firms. And while Sanders points out that the company never made a loss, there were layoffs. Its St. Petersburg office shut down in October 2000.

Sanders is philosophical about the crisis. A harsh lesson it certainly was, he says, but he argues that in the long term it strengthened the economy. "I think there are some much better Russian companies emerging as a result."

Today work is "perking up across the board," he says. "We are seeing an increased interest from international investors and our real estate group ... is seeing the first signs of international money coming in."

However, the business climate is far from perfect. "There are other things that need to be done: the way the court system works, the red tape, bureaucracy, the reform of the banking system," Sanders says. "There are a lot of old chestnuts, and the proof of the pudding is in the eating."

And his verdict on the reforms of the past 10 years?

"With the benefit of hindsight, of course you could have done things better. ... I think the only thing you could have predicted was that it would be very complicated and difficult. I think it has lived up to that in every sense."