Ukraine: Interaction of Law Companies with Public Authorities

A social interaction can be defined, in a wide sense of this word, as activities of two or more parties to social relations through which they exert influence on each other. Representatives of law companies usually face such interaction hundreds of times a day in their routine operations: when they go to work and interact with other people on the road, when they phone to and meet with clients in business of their legal services and when they carry on casual and/or professional conversations with colleagues during or after work.

Certainly one cannot imagine a law company without such interaction. In terms of its social infrastructure, such interaction is rather complicated and includes interacting between various groups of lawyers within the firm, between lawyers and clients, and between lawyers (in-house lawyers or law firm associates) and public authorities for the purpose of protecting clients' interests, including participation in drafting normative documents intended to balance interests of the business and of the State. This article is to explore and unify to certain extent the experience of professional interaction between lawyers of law companies and officers of public authorities.

Said interaction may be classified as follows:

By the level of formality: formal, being the interaction which takes place within the scope of law, and informal. Informal interaction, which long since has become a disaster for Ukrainian society and more dreadfully known as "corruption" will, for some clear reasons, be out of the subject of this article.

By the content interaction may be distinguished as conflict and non-conflict interaction. The conflict interaction is understood to be the interaction, which occurs once cases are tried by courts; while non-conflict interaction is understood as interaction of lawyers with non-judicial public authorities.

Notwithstanding which public authority will be interacted with, there are general principles adhering to which ensures best results. The most important thing to remember when interacting with public authorities is that the state apparatus is, in the first place, a set of people and not a separated "machine" as it is seen by many, but rather a total of individuals who are members of our society. Whether the facts stated below are already known to many of us or not, the very understanding that to communicate with public authorities is to communicate with people will help to see given principles in a new light.

Morality Principle. The most important principle of interaction with public authorities is morality. Morality here is defined as a general system of lawyer's views and opinions, a set of general human and professional guidelines that govern our behavior This principle might be easier to understand if we quote some provisions from the legal ethical rules: "An attorney-at-law shall be honest and decent both in his professional activities or private life; make no attempts to mislead, threaten, intimidate, solicit, benefit from third parties' grave material or personal situation or resort to other illegal means for attaining his professional or private goals; respect rights, legitimate interests, honor, dignity, reputation and feelings of persons whom he/she communes with in various relations" (article 11 of the Legal Ethical Rules approved by the Higher Bar Qualifications Commission at the Cabinet of Ministers of Ukraine on October 1, 1999); "An attorney-at-law shall, both in his professional activities or private life, and with due care of the attorneyship prestige, ensure high cultural level of his/her conduct, bear himself with dignity, politely, delicately, and wherever possible control himself and hold his own, and have a decent appearance when he discharges his official duties" (article 13 of the Rules). It is difficult to deny that should a lawyer be rude demanding a public officer to do something, such lawyer will not be successful with it. It is again essential not to forget that a public officer is another human being with his or her own problems and concerns.

Persistence. The next interaction principle to be named is persistence. Thus, adhering to the first mentioned morality principle, one should not forget to be persistent in attaining the set goal and fulfilling client's instructions. Persistence is the will to proceed when nothing hints at the possibility of achieving our goal. The most appropriate description of this principle was definitely given by Winston Churchill who in his older age was invited to give a speech to students in his native town. People throughout the Great Britain came to hear the speech as they believed that such speech would become an apotheosis of their famous compatriot's life experience. Winston Churchill mounted the rostrum, looked at the students and said "Never give up!" and after that he was standing there for about half an hour scrutinizing astonished audience and declared again "Never, never give up!" and left the room. This speech, basically, illustrates the rule of being persistent: lawyers should never give up when they protect their clients' interests, and even more so, when they communicate with representatives of public authorities whose decisions may affect either positively or adversely clients' business. Even when there is nothing that indicates that the problem can be solved one should go on trying.

Attentiveness. And, at last, the third principle of interaction to be distinguished is attentiveness. If a lawyer gets used to doing everything attentively, then the attentiveness becomes one of lawyer's traits. An attentive lawyer is faster to react to the surrounding developments and is quicker to take in new material and as a result he works more efficiently.

When observing these three principles it will be easier to have the most important effect of interaction which is a mutually beneficial interaction positively affecting all those involved in the process: client, its legal counsel and the state.

As a lawyer learns new techniques and methods, in the course of their operation representatives of public authorities as well may change some attitudes in view of such practice. Taking into account the prevalence of judicial practice, many articles deal with the interaction between judges and legal community members, as well as tax authorities and other bodies being in charge of meeting financial and tax requirements.

Moreover, the Antimonopoly Committee of Ukraine (hereinafter – "the AMC") has become more and more important for business and its legal experts over the last years. It is the cooperation of Vasil Kisil & Partners' lawyers with AMC's representatives that may soundly demonstrate effects of the reciprocal influence between the legal community and public authorities.

For instance, considering relatively low threshold values of economic concentration, established by applicable laws, a lot of transactions (even if there is no impact on the competition in Ukraine) require AMC permits. At the same time, client key priorities, especially at the time of crisis, include an expedite procedure for considering applications with minimal time, financial, information and human labor expenditures and obtaining best results, that is obtaining a permit containing no Client's obligations.

Applicable laws, unfortunately, have a lot of gaps hindering the achievement of the above results, including the lack of simplified procedures for considering applications, a considerable amount of information to be disclosed (irrespective of whether there is or no impact on the competition in Ukraine), no possibility to complete a transaction before respective permits are obtained, even in the case of transferring the control over Ukrainian assets.

At the same time, it is the readiness of AMC's employees to provide open discussions, a dialogue, and consultations with the parties to the concentration and their representatives that enables achieving the best results for clients' purposes, irrespective of the above gaps.

Thus, AMC's executives that work directly with documents submitted to them at initial stages and interact constantly with executive lawyers are affected most of all. It is their responsibility to convey the positiona of a business entity to the authorities and to facilitate the resolution of an issue accordingly. It should be noted that the AMC is a body that really "hears ordinary businessmen" and may meet them half way or even all the way (for instance, agree to the accelerated consideration of a case, exemption from disclosing some information, etc.). Lawyers, in their turn, by now are fully aware what issues to focus on in their work and what information to obtain from the client to get the desired result.

In this regard, following the above principles in communicating with public authorities is also a precondition for achieving best results for a Client.

Thus, for instance, pursuant to Clause 4.3, Regulations on the procedure for submission upon the Antimonopoly Committee of Ukraine of the application for prior receipt of the concentration permit, as approved by the Resolution of the Antimonopoly Committee of Ukraine No 33-p as of February 19, 2002 , Committee's bodies may request from an applicant (applicants) and other persons any additional information, if the lack thereof hinders a case consideration.

Applying the above principles to the interaction with the AMC based on the above regulation may be as follows:

Negotiations with the AMC in establishing rates of fines to be imposed for violating antitrust laws may be one more example of interaction. It should be noted that, regardless of the increased fines trends, the AMC defers to arguments from key market players and takes into account cases of admitted mistakes, when companies themselves notify the Committee of any violated laws. What is more, lawyers, considering such practical experience and finding out any violations while analyzing a case, recommend their clients not to hold back such facts, but to report them to the AMC.

The interaction with the AMC in disputed matters is interesting as well (for instance, in cases regarding unfair competition and anticompetitive concerted actions). A lawyer's task in such cases is sometimes rather difficult because of a client not willing to yield and the AMC having its mind really set. However, morality, persistence and attentiveness help to persuade the AMC and the client to achieve a compromise and make certain concessions.

AMC's recent operation trends include its intention to introduce an electronic database of economic concentrations. We think that such step is also a result of the interaction with the legal community. Due to the fact that the procedure for filing documents with the AMC is rather time-consuming and deals with considerable amounts of information to be processed by the AMC each time separately, it was resolved to facilitate the simplification of the procedure for submitting information to the AMC. Introducing electronic operations is a positive step, which further will result in cutting time both for documents preparation by lawyers and their consideration by AMC's executives.

And, the final point to be highlighted is the interaction with the AMC in terms of law making. It is well known that lawyers may influence the wording of any provisions in draft laws. The AMC shall be praised for continuous efforts in this regard and the result of such joint lawmaking activities is very productive.

Summarizing the above, we would like to note that, despite great many negative aspects related to corruption in the state, the cooperation of lawyers with public authorities, using the interaction with the AMC as an example, may be quite official and efficient for all who are involved in such cooperation.

Vasil Kisil & Partners

Through relentless focus on client success, the Vasil Kisil & Partners team delivers integrated legal solutions to complex business issues. In Ukraine, the Vasil Kisil & Partners brand is synonymous with great depth and breadth of legal expertise and experience, which has created superior value for our clients since 1992.

Vasil Kisil & Partners is a Ukrainian law firm that delivers integrated business law, dispute resolution services, tax law, energy and natural resources law, intellectual property law, international trade law, labour and employment law, real estate and construction law, as well as public private partnership, concessions & infrastructure law.

The firm serves international and domestic companies, as well as private individuals, dealing in agriculture, banking, chemical, construction, financial, energy, high-tech, general commodities, insurance, IT, media, metallurgy, pharmaceutical, real estate, shipbuilding, telecommunication, trading, transport, and other industries and economy sectors.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.