Who’s Who Legal interviews a leading in-house lawyer about doing business in the CIS.
The Inditex Group is among the world’s largest and most recognisable fashion distributors. Headquartered in Spain, the group comprises over 100 associated companies devoted variously to textile design, manufacturing and distribution. The group’s most successful brand, Zara, saw its first store open in La Coruña, in Spain, in 1975 and, according to the group’s most recent figures, currently has outlets in 73 countries worldwide and accounts for over 65 per cent of the group’s total sales. Zara opened its first store in Russia in 2003 and established a presence in Ukraine in 2008.
Artyom Podshibyakin was formerly a senior lawyer specialising in property development with IKEA’s Russian subsidiary, but was attracted to Inditex because of his interest in the retail sector. “I felt it was necessary to gain experience in retail,” he says, “and my current position as head of the Russian legal department gives me greater responsibility and satisfaction.”
Podshibyakin began his career in private practice but quickly became interested in the intersection between the business and legal spheres. He says: “It’s very important for companies to foster good relations with outside counsel. We have many connections with law firms and individual lawyers and this helps us to really know the market.
“Working inside a business, one is better equipped to predict, evaluate and eliminate risk,” he continues, “of course the glee of a court win doesn’t go away, but the less court time the company has, the better. It is much harder to deal with court litigation than it is to structure a contract to avoid court.” As Inditex continues to develop its presence in emerging markets such as the CIS in coming years, such skills will be increasingly in demand.
Head of legal department
Number of employees: 5,000 in Russia
Preferred law firms: Goltsblat BLP; Monastyrsky, Zyuba, Stepanov and Partners; DLA Piper, Pepeliaev, Goltsblat and Partners
Where were you previously employed?
IKEA Mos (Retail and Property), Russian subsidiary of IKEA International Group, developing and managing family shopping centres in Russia (more than 10 up-and-running centres in Russia), as a senior lawyer.
How big is Inditex’s legal department?
The Inditex legal department comprises more than 50 lawyers. The legal department for Inditex Russia has four lawyers.
What percentage of your work is performed by in-house lawyers?
I would say that more than 60 per cent of the whole scope of legal work in company is being done by in-house lawyers. The legal tasks outsourced most frequently are litigations and other disputes.
What are the advantages of doing work in-house?
In-house lawyers can focus on one company (client) and study its internal process and the whole business in general very well. This helps an in-house lawyer when dealing with risks specific to certain type of business. Besides, the work of an in-house lawyer costs much less than the work of an external lawyer.
In-house lawyers are more focused on predicting and avoiding risks than on dealing with them. Once a serious problem arises, it can be transferred to external lawyers. In-house lawyers can verify tasks from other departments to split pure legal work from tasks that can be solved much more efficiently businesswise by other means (not by suits and claims, I mean) to avoid legal actions when they are not necessary.
Moreover, in-house lawyers are not just independent lawyers performing tasks for a client. They are a part of the company and its team, influenced by corporate culture and strategy and the company’s mission. For their part they influence the company’s culture, strategy and mission as people qualified in law and its philosophy. So an in-house lawyer is much closer to the company than an external one.
How is life as an in-house counsel different from that of a private practitioner?
A private practitioner, in my view, is more focused on pure law and earning money for the law firm. So the more tasks a private practitioner has, the better it is for him. In-house lawyers are more focused on preventing future problems and decreasing the number of disputes, claims, etc: the fewer disputes an in-house lawyer has, the better. There is also a widely-held perception that private practitioners normally work every day till late night and on weekends and holidays, whereas in-house lawyers normally work from 9 to 6 and that’s it. I do not think this is true. It depends.
What qualities make a good in-house lawyer?
A good in-house lawyer should, first of all be businesswise. They must be flexible; be able to perform in parallel very different legal tasks; understand that many problems that the legal department and company are facing can be resolved much more easily and cheaply not by legal action, but through negotiation; be able to predict, evaluate and minimise legal risks; help other departments to understand their legal problems; and know the sphere of business his company is working in very well. A good in-house lawyer has a very clear understanding that for the most part any court case involving the company (whether it is won or lost) is not a business victory. The best warrior is one who ensures the battle never takes place.
Is the role of the in-house lawyer changing? Is it becoming more specialised?
To a degree, yes. But it should be noted that the role of private practitioners is becoming more and more specialised too. To my mind it reflects the global trend of increased specialisation (and sub-specialisations) in most of the professional jobs in globalised, post-industrial society.
What qualities make a good private practice lawyer?
The ability to work hard and under permanent pressure, to work with different projects in parallel and to overwork for long periods; a kind of adventurousness; strong negotiations skills (both with clients and their counterparties); and the ability to ‘sell’ his services well.
When will you seek the advice of external advisers?
If my department faces a big threat, with the possibility of large losses or of a serious impact on the company’s business, and the elimination of this risk will be time- and labour-consuming, we shall enlist the advice of an external legal firm. We shall do this if the risk we face is untypical, rare or unique. Sometimes we also need a second opinion on certain issues.
In general the role of external adviser to any company greatly depends on the type of legal department the company has: primarily outsourced, primarily in-house, or mixed. Inditex Russia’s legal department is mixed.
Do you see yourself hiring the firm primarily, or the individual?
I will hire individual primarily because, from my point of view, legal firms mostly are just coats for individuals. And these coats are often very similar, I would say.
Do you have a regular external corporate firm?
Yes, we do, but this legal firm undertakes only part of the corporate work we outsource. In general, we are always looking for the best price and best service and are flexible enough to switch from one contractor to another if something goes wrong.
When dealing outside your home jurisdictions, how do you find counsel?
The international legal department performs this search or will undertake this task by itself or by using its usual counsel.
What common behaviour from an external adviser or their firm do you find least acceptable?
Treating the company as just a source of money; attempts to use information received from the client to get something from the counterparty or third parties; the conviction that in-house lawyers are normally poor lawyers, which is not true; and the bad practice of sending documents for review and approval the day before the litigation. Besides, many external advisers prefer to see their role only as giving advice. But the thing is that mostly companies do not need legal advice. They need implementable legal solutions and the resources to implement them. And this is a different matter.
What makes Russia and the CIS “a good place to do business”?
Even in the downturn Russia’s economy has continued its growth. Local customers are still ready to spend a lot of money here. Russia is one of the biggest sales markets in the world. Russia has a low level of competition in many industries, providing opportunities for new entrants. Tax rates here are low. Russia’s economy has high demand, which is increasing. Russia’s markets grow rapidly. The macroeconomic and politic situation in Russia is stable in comparison with many other emerging markets and economies. Western companies with their technological, management and competition advantages have success doing business in Russia.
How has the international economic downturn affected your work?
During the downturn many obligations are not performed in the due manner or are not performed at all. This leads to disputes, which creates work for lawyers. So I cannot say that now we have fewer tasks. But now many new problems have arisen – collection of debts, disputes with landlords, disputes with employees and ex-employees. So the economic downturn changed the type of legal tasks but did not decrease their number. In my humble opinion lawyers will always have enough work to do.
Companies have switched from development and growth to trying to be more efficient and careful with their costs. This had a major influence on legal work, sometimes making companies change their legal strategy and structure of their legal department in general.
What are the most pressing issues facing the legal profession today?
As for Russia today: