Chadbourne & Parke's Moscow Office: Ready For The Future

Tuesday, May 1, 2007 - 01:00

Editor: Ms. Brank, would you tell our readers something about your background and professional experience?

Brank: Following high school, I joined the U.S. Army, where I learned Russian and served in Germany as a linguist/analyst. While I was in the U.S. Army, I pursued an undergraduate degree in Germany in East European Studies. When I left the U.S Army, I attended Georgetown University, where I received a J.D. and a Masters of Science in Foreign Service in 1991. Following law school I joined Winthrop Stimson in Washington DC. In 1995, I moved to Chadbourne & Parke, where I became a partner in 1998.

Editor: What were the things that attracted you to Chadbourne & Parke?

Brank: One of the principal attractions was Chadbourne's Moscow office. In addition, the firm possessed a very collegial and inclusive culture, something very important to me.

Editor: Please tell us about your practice. How has it evolved over the course of your career?

Brank: When I first joined the Moscow office, we would do just about anything that came through the door, including joint ventures, M&A transactions, IPO and financing work, and so on. Over the years the practice has become increasingly sophisticated. We handle a variety of very complex transactions - principally financings and M&A work - throughout the region, which includes the CIS countries and Eastern Europe.

As the legal systems in the CIS have developed, so have the transactions. We are starting to see our Russian clients going abroad to access the international capital markets and enter into very sophisticated acquisitions or project finance transactions.

Editor: You are the head of the firm's Russia and CIS practice. For starters, what is the origin of this practice?

Brank: It started in 1990. In the beginning it was a joint venture with a couple of other firms to explore opportunities in Russia. We were one of the first firms in this market, and it was extremely helpful that we had a close affiliation with the Union of Advocates, which is like being in a joint venture with the ABA.

Editor: What practice groups reside in the Moscow office?

Brank: Between our Moscow and St. Petersburg offices, we have a full-service operation. We cover all of the usual practice areas, including corporate, banking and finance - which includes project finance - litigation, real estate, oil & gas, mining, telecommunications, employment and general commercial law.

Editor: And the lawyers? Russian as well as American?

Brank: Most of our lawyers are Russian, but a number of them are qualified in the UK or the U.S. as well.

Let me add, there is no formal bar exam requirement in Russia. Only litigators need to pass an exam to be afforded certain protections when representing a client in court. A law degree is sufficient for everyone else to hold themselves out as lawyers.

Editor: Who are the clients?

Brank: At the moment, it is a combination of foreign corporations, such as Boeing, Citibank and General Motors, international development agencies, such as the International Finance Corporation and the European Bank for Reconstruction and Development and a number of major Russian enterprises. The latter include Gazprom, Rosneft, Norilsk Nickel, Kinross Gold and the mobile phone service provider VimpelCom. The extractive industries are well represented among our Russian clients.

Editor: At a time when many American law firms with global aspirations have focused on East Asia, and China in particular, Chadbourne & Parke has made a very significant investment in the former Soviet Union. Would you share with us the strategy here?

Brank: We were fortunate in having the foresight to open an office in Moscow in 1990. That enabled us to take a significant market share and develop a strong reputation early on in the market. As a result, when the economic crisis hit Russia in 1998 - which caused other Western firms to downsize or pull out altogether - we were able to expand our operations. Because of the success of the Moscow office, we opened offices in Kiev, then in Tashkent, followed by Almaty and, most recently, St. Petersburg.

Russia's economy has been booming, and because of the country's natural resources, particularly oil, gas and minerals, this is only going to continue. Having been here for 17 years, we have name recognition with both Russian clients and with the law graduates we need to support our work in these offices. At this point, that would be something very difficult to replicate for a firm seeking first-time entry into this market.

One of the mistakes Western firms have made - and we have been down this path as well in other countries - is to enter a foreign market with a single practice group. If the practice is in a hot area, the strategy works for a time, but inevitably the work dries up and the firm has nothing to fall back on. What we have attempted to do is build a full-service operation and grow it organically. When we opened our Kiev office, we initially took 13 lawyers and moved entire practice groups to the office, which enabled us to integrate it with our operations in Moscow and London. This has been a very successful strategy.

Editor: How do the various offices relate to one another? Does Moscow, for example, have certain specialized areas of expertise that are shared with the other offices?

Brank: Yes. Moscow is our largest office in the CIS. Because of the volume of deals in the Russian market and the quicker development of the market generally, our lawyers generally have had more transactional experience. The other offices, particularly Ukraine and Kazakhstan, had not historically had this type of orientation, so we tended to support their larger transactions from London and Moscow. This is changing as the lawyers now have more major deal experience.

In light of the need for English law expertise in our Russian transactional work, the London office has a particularly strong role to play. There is considerable interaction and cross-selling across all our offices, and we find our team approach renders the entire operation much more profitable and successful than the sum of its constituent parts. Concerning London in particular, we rely extensively on our M&A and financing resources. In litigation - and as the economies in this region have evolved, arbitration and litigation are increasingly important in these transactions - English litigation support is essential.

Editor: One of the principal themes of our publication concerns the rule of law. Would you share with us your thoughts on how the rule of law discussion is proceeding in Russia?

Brank: Since 1990 Russia has seen massive changes. Many have been very favorable, but along the way there have been some bumps in the road. Russia is predominantly governed by the rule of law. Many of the positive changes have to do with how the judicial process operates, how judges are trained, how judicial corruption is addressed, and so on, and the progress toward an independent judiciary has been significant.

However, there continue to be notable instances when the rule of law has given way to external considerations. After a burst of activity following the economic crisis in 1998, when concerns about minority shareholder rights and the stripping of corporate assets were addressed relatively quickly by new legislation, the pace of reform has slowed. Particularly since 2002 there has been less of a focus on correcting problems in the legal system than was the case earlier.

And, speaking of external considerations, unfortunately, there have been political and human rights cases in recent years that have made it clear that the rule of law is not always accorded the same level of respect as elsewhere in the world, and this has caused the Russian government to lose some credibility in this area.

Editor: Speaking of an independent judiciary - at least in the commercial sphere - have you had recourse to the Russian court system?

Brank: Our litigators are in court every day and I have been involved as the commercial lawyer advising the clients about the process and strategizing with our litigators on tactics. For example, several years ago we represented one of our clients in court proceedings in the Far East of Russia where the other side was a local government authority trying to apply a financial squeeze on our client, an international gold mining company. When the judge in the case ruled in our favor and against the government, the opposing counsel stood up and reminded the judge who controlled the heat in her building. She refused to back down. A few years earlier such intimidation might well have worked.

Another good example of an independent judiciary at work has to do with the government's pursuit of tax cases. In almost all of the cases in which we have been involved we have won against the government and for our clients, both foreign and Russian. In fact, statistically the Russian tax authorities lose more cases than they win.

Editor: What role does arbitration and mediation play in the resolution of disputes?

Brank: Arbitration is very popular. At present, mediation is still not trusted in Russia. The popularity of arbitration derives from the fact that Russia, while not a party to the convention on the mutual enforcement of court decisions, is a party to the New York Convention - the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. In most contracts, even when two Russian parties are involved, foreign law governs, and the reason for this is that the idea of representations, warranties, indemnities, and the like, and the enforceability of such provisions, is not fully developed in Russian law. If parties are buying shares in an enterprise, they are anxious to have their contractual undertakings governed by a law that is familiar with these concepts and provides a predictable outcome, and, in the event of a dispute, arbitrated in a forum equally conversant with English or New York law. For us, the LCIA is a frequent destination.

Editor: Many of your dealings are with instrumentalities of the Russian government. How would you rate their compliance with their contractual undertakings?

Brank: Excellent. It is quite rare for a Russian governmental entity to disregard its contractual undertakings. The government takes a great deal of care in negotiating its contracts, and it is my experience that this care reflects a strong commitment to fulfilling the obligations under contract.

Editor: What about the future? What are the hot areas? What types of project do you anticipate handling over, say, the next five years?

Brank: There will continue to be significant consolidation in the markets. Russian companies will continue to expand overseas, and foreign enterprises will continue to establish operations in Russia. The continuing inflow of foreign investment reflects, I think, the fact that companies that were privatized in the mid-90s have probably gone as far as they can without the liquidity that financial infusions from abroad provide.

Over the next five years there will be increasing activity in the power sector, which is currently being spun off into separate territorial legal entities.

Major infrastructure projects are also going to be very important over the next few years. Pipelines, roads, port facilities, and the like, are absolutely essential to the expanding Russian economy.

And, yes, Chadbourne & Parke, with a CIS practice about double in size to what it is today, will be present in all of these undertakings.

Please email the interviewee at lbrank@chadbourne.com with questions about this interview.