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. Last Updated: 07/27/2016

Local Firms Finding Their Niche

Though a core handful of international law firms take the bulk of legal work generated by multinationals and big Russian companies, industry insiders predict the market will become more specialized as more work is spun off to Russian firms and smaller foreign firms.

Though the local legal services market is fairly disparate, players generally agree that the legal field is dominated by a small group of international firms that have formed around leading law firms based in the United States and Europe.

Western law firms lag behind consultancies, accounting firms and banking groups in their international expansion by about 10 years.

Foreign corporations and banks, as well as the larger domestic companies involved in international deals, give the lion's share of their business to Western law firms like Clifford Chance Punder, Freshfields Bruckhaus Deringer, Allen & Overy, Linklaters, White & Case, Baker & McKenzie and Salans.

"What you'll find is that there is a client base among the big firms which is pretty established. ... There is a high level of loyalty to you as lawyers," said Max Gutbrod of Baker & McKenzie. "It's like a doctor-patient relationship -- they get the impression that the lawyers they have been using know their character, know how to deal with them and, therefore, they don't want to change."

All have their core clients, which they retain from country to country, as well as practice areas in which they have been traditionally strong. For example, Cleary Gottlieb has always focused on capital markets; Allen and Overy and Clifford Chance emphasize banking and finance. Linklaters and Freshfields come from a corporate and mergers and acquisitions background.

In addition to the global powerhouses, branches of smaller firms with an international presence such as Denton Wilde Sapte, Norton Rose, Lovell's, CMC Cameron McKenna, Coudert Brothers LLP, Latham & Watkins LLP and Chadbourne & Parke have also jumped into the Moscow market.

The big Wall Street firms like Cravath, Swaine & Moore, Wachtell, Lipton, Rozen & Katz and Davis Polk & Wardwell -- considered leaders in certain practice areas in the United States -- have not strayed from the U.S. market.

"Why would they want to?" said Dominic Sanders, managing partner at Linklaters. "It's the biggest market, and it's the most lucrative market. They are excellent at what they do, but they have no international aspirations."

The firms in Moscow offer a full range of services outside the big practice areas of capital markets, project finance, banking and finance and corporate law.

Maryann Gashi-Butler, managing partner with Phoenix Law Associates, agreed multinationals often stick with particular law firms but said the market is becoming more specialized and that a considerable amount of work is going to Russian firms.

"Multinationals are trying to break work off," Gashi-Butler said. "So they might pass on their IT work, or something else that involves a specialized industry, to Russian firms."

Sanders of Linklaters agreed. "The buyers of legal services will differentiate between firms more."

Pepeliaev, Goltsblat & Partners, which has tax, corporate and intellectual property practices, said it finds work with multinationals and local companies.

Consolidation between Russian and multinational firms will have a positive effect on the market, Gashi-Butler said.

The reason is simple. "Russian lawyers are more effective at doing what they do. Western firms will get a real shot of Russian legal culture," she said.