Category: Uncategorized

Natalia Belova is the recently-appointed Head of Legal (see page 16) at Food City in Moscow – the largest European wholesale food distribution center. Prior to joining Food City Belova worked for more than 10 years in international FMCG companies such as Heinz, British American Tobacco, and EFES.

N.B.: You know I have a joke I use when talking about my experience: “I have a very strong and precise career path: first food (Heinz), then tobacco (BAT), then alcohol (EFES) – now all that’s left is hard medicine.”

In all seriousness, over the last 10 years I have worked mostly in heavily regulated areas. Recently Russia became an open market for tobacco, alcohol, etc. So I had an excellent opportunity to take part in major business process changes required of globally-known companies by ever-changing Russian and CU (Custom Union) legislation. For example, with EFES I led a project of beer licensing. In that case, it was not 100% clear to us whether beer was going to be licensed as strong alcohol, so we were forced to act on some assumptions. In fact, beer is still not licensed as strong alcohol – but I think that EFES is ready for that now [smiles].

N.B.: Integration begins the second after all the papers of the merger are signed. In our case the process was very specific and complicated because it was an alliance of companies with different corporate cultures and ethics, methods of production, logistics, and sales. Even the corporate schemes of the legal entities and branches was different. It meant that we were required to analyze all the processes of EFES and SABMiller – from production until the sale of goods to retailers – and to choose the best solution for the new company. Sometime, in fact, the best solution was a third option not used before by either SABMiller or EFES.

We created a integration team with participants from all departments. I believe that the main role of an integration process is to keep the business viable. That is why one of my main tasks was to respond to all the questions from the departments and to find a way to help production, logistics, and sales personnel from both companies work without any pause or objections from state organs or counterparts.

Needless to say, we made sure our merger and integration aligned with beer legislation requirements, and we checked every step not only against our internal plan, but also with all the amendments that occurred every half year.

After the merger we faced tricky moments with the sale of goods that had been produced before the merger to retailers. This was caused by the fact that current beer regulation has only one format of documents for any run of goods and imposes strict liability on any producer or retailer in the case of miss-steps. I prepared many different forms of documents (by law the production, warehousing, transportation, and supply of beer all require a list of documents for every party) and had big conversations with state organs and our key accounts to exclude the risks of penalties or the return of beer from our clients. And I should say: no returns and no penalties were incurred!

At the same time, any merger includes optimization processes – and in our case big ones were involved. We closed two breweries: one in Moscow and one in Rostov-on-Don. I led on all matters concerning land, labor, real estate, and dangerous production equipment.

N.B.: The main challenge we faced was the fact that one company previously had a decentralized form of legal support – lawyers in the regional breweries also supported the sales department – while in the other company this function was centralized. The new company decided to keep the personnel of EFES and SABMiller and then in the process of work to define which specialists were preferable for each t area. 

This task was fully on the shoulders of the Legal Director of the company. And, over time, it became clear that this was the best solution. Some people found themselves in new departments. Some decided to continue their careers outside. But finally the department became so balanced that we took second place in the “Best Legal Departments of Russia” awards in 2013.

N.B.: You know, it is a common mistake to assume that companies use outsourcing in cases where they lack people, resources, competencies, or have short deadlines. External counsel cannot replace internal people or make final decisions. Instead, external counsel are necessary for support on specific occasions. When I choose to outsource I consider as mandatory: professionalism, management skills, ability to work with very specific cases, ability not to be only a consultant but also very a precise decision-maker, and the ability to become a part of the company team – be IN, not OUT.

I also use outsourcing to receive “second opinions” when the law is contradictory and making a mistake would be harmful to business. Sometimes external counsel have more practical or inside information about such cases.

N.B.: When we talk about the current situation and crisis – which has affected almost all spheres of our life – I always say that I am a very lucky person because people will never stop eating [laughs]. And, for our company, all these changes have not had a massive impact. But on a more global scale – not specifically about our company – you can see a big change in demand in the Russian market caused by the downturn in our economy. All the businesses have changed their expectations and reduced their costs. Some businesses are almost dead – for instance, travel agencies.

As you know, Russia is also restricted from importing products from European countries. This has increased the percentage imported from other lands. And sometimes it helped countries to add new goods not imported before. For example there are now countries which produce seafood without any fresh water within their borders [smiles].

N.B.: There were huge court reforms last year. The Supreme Arbitration Court was eliminated and the arbitration courts were combined with regular courts. This was very controversial in the legal community because the arbitration courts were more developed and had a more unified vision on economic cases. There is a lot of doubt as to whether all the experience generated in previous years will be used now. The court process also, now, includes one more stage. And so on. It means that we are in an unstable period in litigation. And now we prepare not only harder for every case, but we also try to take into account new the “corporate culture” of courts.

N.B.: One of the reasons for the merger of the Supreme Arbitration Court and the Supreme Court was the fact they had conflicting competences and sometimes different visions on the same issues. Although our legislation is not based on case law, we could refer to previous arbitration decisions and could expect that decisions on similar matters would be the same. Now with the new unified court system we are not sure that this informal rule will remain.

N.B.: For a long period of time it was a photo I took in Australia, Sidney. I was just sitting on the edge of the cliff in front of the ocean and swinging my legs. 

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Maxim started his legal career with Debevoise & Plimpton in Moscow when he was still a student. After several years with the law firm he joined as the only lawyer on a hi-tech investment project – Polar Quartz – then on its start-up phase. After growing the legal team to a total of 4 people and being appointed to the position of Deputy CEO and Member of the Management Board, he left for Tele2 in 2005 to become its Head of Legal. In this role – where, again, he started as the only lawyer in the Moscow HQ – he oversaw a total of 22 lawyers. Maxim later moved to Montenegro, first with the En+ (Basic Element group) company, and later moved into private practice. He joined Virgin in Moscow in 2013. 

M.N.: In 2008, when En+ approached me, the company’s strategy was to build itself up as a big aluminum producer in the CEE region. En+ owned a smelter and bauxite mine in Montenegro and an alumina factory in Romania, and its acquisition plans included a number of smelters and power stations in the region. My experience in M&A was interesting for the company and working abroad in a multicultural environment was attractive for me. However the M&A plans did not go through because of the financial crunch, and instead of expanding, the company started more of a “surviving” process. Prices for the primary aluminum dropped dramatically, the workforce was excessive, and – in addition – the company had an arbitration dispute with the government of Montenegro. After two years we managed to come to a very complicated settlement solution: we restructured our syndicated loans with a consortium of international banks, settled the arbitration, and entered into a shareholders’ agreement with the government, receiving a package of state aid, reaching operational break-even point, and so on.

I can say it was a perfect combination of interesting and difficult work coupled with living in a tiny beautiful country where you have a ski resort and, only two hours away, the seaside. My kids went to an international school so we, as the parents, also got into a multicultural society. The lifestyle was very different than in Moscow and it was interesting to learn about the cultures, languages, and history of the Balkan countries. The Russian and local language also made other Slavic languages much more understandable. Looking back at the experience, comparing different cultures, traditions, and mentality really opens your mind and makes you spiritually richer.    

M.N.: Telecom is a rapidly changing business. Every single day something new appears in terms of technology, services, opportunities, and relevant regulations. All this keeps you in “good shape” and open to new ideas and always looking for new creative solutions.

M.N.: One big difference for me is in the nature of dealing with risk: in private practice you have to find all possible risks – and sometimes impossible risks – for the client to consider, and it is the client’s responsibility to choose what risk level is acceptable. Working in-house, it is vice versa and it is I, as the client, who makes that call. The type of involvement is the difference.

M.N.: I enjoy working in such a culture. I cannot imagine a very serious lawyer in a white collar with an overly-expensive tie, who is proud of himself in his high position, who believes his company should have no legal risk and that all commercial ideas must be risk-free, to “give a damn” at Virgin. We do not make things look more difficult that they really are, we do not think something is impossible because we have not done it before, and we believe it is business that must be served by the legal function, not vice versa – that’s why we look for solutions for ideas and not for ideas within frameworks. By the way, we have a “no-tie” tradition.

M.N.: My current legal team is a rather compact one: in four operational companies and corporate headquarters we have 5 lawyers. We aren’t fully segregated by function due to the size of the team, but I believe lawyers should have a specialization, like doctors. That is why I have assigned corporate functions and operational contracts review to different people. My personal part of work includes, besides the management function, M&A, corporate finance, and risk management. 

The regulatory function is split between the legal and security functions (security is responsible for licensing matters), and the compliance function is shared with the internal audit function. Such a setup is effective enough that it does not require full-time employees. 

M.N.: The selection process depends mostly on the complexity of the assignment. Cross-border projects (as occur in M&A or corporate finance) require foreign law expertise, usually English, hence we select an international law firm. For local law advice local firms are usually preferable because of the budget. In general I select people not brand names. In any law firm there are “stars” and I prefer to hire them. I believe that although their engagement is usually more expensive, at the same time they are much more effective. At the end the value for money is higher.

M.N.: All of the above. My own experience working with the lawyer and referrals usually work best, and then directories, rankings, etc. Of course, I review the counsel’s profile and his/her past experience in similar projects. Meeting in person helps understand whether it would be comfortable to work together. 

M.N.: All these political events around Russia, and their economic consequences, of course do not help business – at least our business. The drop of the ruble and increases in interest rates, of course, affect the company negatively – the revenues of the business are in rubles and increasing our prices in this highly competitive environment would be too simple solution to be correct. However hostile environments also push businesses to become more effective. I am used to working in a situation of deficit of resources and the challenge for me is to hire the right people able to work in the same way. 

M.N.: We have employed three strategies: no recruitment, assigning extra functions to existing lawyers, and reducing legal costs. Within that, we have closed open positions and split the functions for these positions between the team; several projects in corporate area and M&A, where we usually engage an external counsel, have been made in-house. The most challenging part was re-negotiating fees with external counsels, but the economic situation left us no choice. Thanks to them for their understanding and cooperation.

M.N.: I like mountains in any season: skiing, trekking, canyoning – the Alps, Balkans or Caucasus are perfect for that. For instance in Montenegro there are many unique canyons with amazing waterfalls which are not on common tourist routs. Passing through canyons is an unforgettable experience. I am not a fan of lazy holidays, instead active sports reload my batteries much better.

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Igor Smirnov is Head of Legal at ING Bank in Moscow. Prior to joining the bank in May 2007 he worked for UniCredit Bank and Peresvet Bank. Before joining Peresvet, he started his career by launching his own law office fresh out of university. 

I.S.: I started my professional path in 2001 by organizing my own firm. It was a small enterprise with just three young lawyers, all university classmates. We did have some interesting work, but at a certain moment we all began to realize that we needed mentors in the profession, people who were experienced and wise. So we all started to look around.

After a long chain of interviews I got an offer from a small Russian bank called Peresvet. It had a team of three lawyers, led by a very experienced Head of Legal. I learned a lot there. It was an exciting time – with litigations, bankruptcies, corporate takeovers, and security enforcements. It was the time when the Russian legal system was still working out its new principles and I was lucky to have the opportunity to see all this from the inside. This was also a time of active development of regulatory frameworks for banking, and at Peresvet bank I also learned the basics of prudential supervision.

This bank was a great place to work, but it was a purely Russian bank with very limited international exposure. Having obtained an LL.M. diploma, I was starving for an international environment. Eventually I was offered a senior lawyer position with a bank owned by a large German banking group, at that time called International Moscow Bank, which after a while was bought by the UniCredit Group and became UniCredit Russia. At that stage of my career I focused on transactional work and dug deep into various types of lending and other banking businesses.

After 3 great years with UniCredit Russia I was asked to join ING Moscow as the Deputy Head of Legal. At ING I continued with transactional work, but at a more sophisticated level and supporting more complex structures, working in multi-jurisdictional teams of lawyers, and cooperating with business people from ING locations all over the globe. 

I spent another 3 fascinating years as a transactional lawyer at ING before the ING Head of Legal decided to make a new step in her career and moved to UniCredit Moscow as Head of Legal. I was promoted to Head of Legal at ING. That is how ING and Unicredit swapped lawyers. And this is basically how I stepped into my role, which I have held now for 5 years.  

I.S.: Well, as I mentioned earlier, I got in the banking sector almost accidentally. I would say it is not that I picked the industry, but rather that the industry picked me. But I never regretted it. It was a lucky accident. Banking always involves something new. Dealing with clients you have to understand not only your own products, but also how your clients work as well, and this may involve any industry, from subsoil to aerospace. And it is only the business part. The regulatory/prudential part also brings a lot of challenges and excitement. Recently, many national regulators have realized that a reactive stance does not work anymore in the fast and always-changing contemporary finance world. Now we see plenty of regulations appearing: Dodd Frank, EMIR, Basels, FATCA, CRS – and these are only the global initiatives. On the local level, each week something new is developed.

I.S.: The international environment, without a doubt, gives much more in terms of knowledge and experience sharing. It is more difficult for lawyers from local banks to get experience from other jurisdictions, to step beyond the traditional range of products, and to develop new skills, while in international banks lawyers enjoy not only constant knowledge sharing, but, straight away, the opportunity to see how that knowledge is applied in practice. An international environment also allows us to send our team members to other offices for short term assignments, which is a great learning and motivating tool.

I.S.: The most difficult for me is finding new team members. It does not matter how many interviews are held, it is extremely difficult to assess the personal and professional qualities of a person without working together for at least a couple of months. Honestly, I have not yet found any universal recipe, so I am dealing with this on a case-by-case basis. So far, this approach has been successful, but it still is the most challenging.

I.S.: These days more and more extraterritorial laws come from different parts of the world. Sometimes they perfectly fit into the local legislation framework, but sometimes they do not. Where mandatory extraterritorial regulations contradict local legislation it creates a lot of unpredictability, which business certainly does not benefit from.

It would not be honest to stay silent on the geopolitical tension, which of course affects business, but we do hope that it will be settled soon.

I.S.: The most sound example would be FATCA. It started in 2010 with severe critics. Specialists, including politicians, argued that it conflicts with every possible law in Russia, that application of FATCA even prejudices Russia’s sovereignty. Disputes continued until the FATCA registration started – at which time, luckily enough, the legislators recognized that FATCA could be beneficial, and passed a law facilitating FATCA provisions in Russia. There are still a number of gaps where local law and FATCA are contradictory. We address these mismatches with FATCA, just as we do many other law conflict issues, in our contractual documentation with the clients. We try to be as detailed, specific, and predictable as possible, which is truly appreciated by the clients even thought the provisions which we have to insert are not always pleasant for them.

I.S.: Well, we have a long history of implementing cost-cutting solutions over the last few years, so as we face this crisis, we are already “lean and mean.” Budget discipline has been my KPI for a number of years. We at ING constantly look after our cost side, and by now that has become a part of our culture. This does not mean that we live from hand to mouth – it just means that we are consistently responsible regarding our spends. So answering your question – cost discipline is the best budget saving solution.

I.S.: I use a very simple tool: before I approve any spending I ask myself three sanity-check questions: whether I really need this buy; whether this is the best solution and have I considered all the available options for achieving the same result in the most efficient way; and am I obtaining the best value for my money? If the answer is “yes” to all, I authorize the spending.

This does not mean that we lack a proper framework, of course. We do have policies and procedures in place regarding cost controls – but here I mean going the extra mile. The discipline starts inside of us. People have to learn to be strict with themselves in the first place, and the best incentive for this is remembering that if you do not do your own sanity-checks, someone else will, do them for you, and then the classic cost containment measures will come.

I.S.: You have probably heard about an initiative called Common Reporting Standards, which is a worldwide analog of FATCA. I have great hopes for this initiative. It will not be easy to implement for sure, but the most exciting part for me is not the legal technical one here – just imagine how this (basically a transparency tool) will change the world!

I.S.: It is difficult to pick one, maybe the viewpoint in front of the main building of Moscow State University. It is a great view of Moscow, with parks all around, and the beautiful architecture of the university building.

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Peter Teluk is the Managing Partner of the Kyiv office of Squire Patton Boggs, where he represents investors in private equity, mergers and acquisitions, corporate finance matters, and real estate transactions. Teluk has served as the Ukrainian General Counsel and member of the management team of Philip Morris International. With Squire Patton Boggs, he handles FCPA, corporate, competition, shareholder agreement, real estate, labor, finance, compliance, and marketing matters.

P.T.: I first came to Ukraine in the summer of 1992 as a volunteer for the Advisory Council to the Ukrainian Parliament. After finishing law school in 1993, Baker & McKenzie asked me to come out and work for them. I stayed for four years, then went to Dallas for just over a year and then joined another major DC firm. During the tech boom of the late 1990’s and early 2000s, I was asked by a client – US-based but publicly traded on the Australian Stock Exchange – to come over as their GC. Unfortunately, the economy went into a bit of down-spin and the company did not fare well. Instead of cashing in on stock options, I got an experience in board fights, downsizing, and bankruptcy law. After this experience wound down, I heard that Philip Morris International was looking for a counsel in Ukraine and came back to Ukraine in 2002. After working for PMI for four years, I went back into private practice with a small firm that was affiliated with Squire. Squire then asked me to join them and grow their office in Kyiv. 

P.T.: Yes, but not an exclusive goal. I remember interviewing with the Department of Justice back in law school and telling the interviewer that I could see myself working on commercial litigation in the States or working as an international transactional lawyer. I had never been overseas until I was 25 and came to Ukraine to engage in volunteer work. However, both my parents were of Ukrainian descent and I was raised speaking Ukrainian and being taught the traditions of the country. After being sent to Ukrainian school every Saturday for 12 years, the idea of coming back to a newly independent State and trying to make a difference was really appealing … or maybe it was revenge against my Mother’s insistence that I attend Saturday school instead of playing soccer.

P.T.: Exciting, to say the least. We moved offices right before the demonstrations began and I had a front row view right on Khreschatyk. I was at most of the demonstrations, was once gassed getting too close and was trapped in the hotel Ukraina the night before the horrible shootings, watching the fires burn on the Maidan. What really struck me was the determination of the Ukrainian people to push for change and to stand up to a President and administration that had been trampling all over human rights and the rule of law. Unlike two years ago, there is now a sense of optimism and a sense of determination to change the corrupt system.

P.T.: A number of years ago I was stumped by a question from one of my associates as to what happens first in the US, the transfer of shares or payment of money. He wouldn’t accept that it happens “simultaneously.” After a day, I came back to him and I told him that I understood the question, or the context, and gave him a more useful answer. In the US, we spend days or months negotiating an agreement and can write hundreds of pages setting out the intentions of the parties. In Ukraine, the preference is for shorter agreements, which are often vague and open to interpretation. In the US, after you have negotiated and signed an agreement, the parties hope that it is put away and then they get to work carrying out what they agreed to. In Ukraine, there is often a suspicion that the other side will try to get the better of you, and unfortunately, the legal system is one that often looks at form and technicalities as opposed to justice or fairness in making determinations on contested issues.

Explaining to foreign clients the need to sew together documents or for a company stamp on an agreement or other steps that must be taken for an agreement to be considered valid is also a treat, after seeing billion dollar agreements in the US consummated with conforming signature pages being faxed over.

P.T.: A desire to deregulate and root out corruption. A lot has been done by the government already. Reform of the court system still requires a lot of work.

P.T.: I think a feel for the issues and how to approach them. Having worked in both the US and Ukraine and both as in-house counsel and in private practice, I try to understand what the client first and foremost wants and needs. I believe that expat lawyers also bring an added level of protection with respect to ethics. Unfortunately, some Ukrainian lawyers work only for “results” and as long as they can deliver a short term fix for a problem, they see that as a job well done. They can fail to see the potential long term risks for clients – legal, financial, and reputational. I’ve been preaching for over 10 years that the FCPA can affect businesses in Ukraine – including as an in-house at PMI, where we rolled out compliance reviews and training. The looks on some of the faces and some of the comments that I received – like, “Peter, this is Ukraine, everybody does it and no one cares” or “we won’t be able to run our business if we run by those policies” – were surprising. Fortunately, we were able to prove that a business could be successful and management could sleep better even if we were leading the way with compliance practices when people initially claimed that it couldn’t be done that way.

P.T.: At this time, Poland, which, despite having a difficult history with Ukraine, has been a big supporter of Maidan and the attempt by Ukraine to become more of a European country.  

P.T.: My eight year old’s elementary school – Liko School, which is a new private Ukrainian school. I enjoy it because it shows the potential of this country and people. A new school, not very expensive, where the teachers and administration care about the children and what they are learning. We had three years in one of the “best” public kindergartens and schools in the center of the city. When teachers responded “we carry out all that is required by the Ministry of Education” to my concrete questions and when I had the feeling the teachers were more concerned about playing the system instead of teaching our children, this was very disheartening. Not to mention the old building, unlit corridors, requests for “donations” to help pay for basic materials, and a teacher who once told us to call another parent to find out about a missed assignment. At my son’s school now, the assistant teacher sends parents messages and photos of the kids by Viber every day, they talk with the parents when you drop off your kids, and they honestly care about how your child is doing and what needs to be worked on. My son goes to school with pleasure every day. If Ukraine takes this small example of how to take certain activities out of the bureaucracy and actually care about its citizens, the country will go a long way.

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Timur Khasanov-Batirov focuses on promoting compliance and business ethics as the Co-Chairman of the Compliance Club of the American Chamber of Commerce in Ukraine. He was previously Chief Compliance Officer of the DTEK energy company. Timur specializes in mitigating corporate compliance risks in emerging markets. 

T.K.: I am a lucky person to have enjoyed the opportunity to practice as an in-house lawyer, an external counsel, and as a compliance officer. The geography of my roles has included positions in Uzbekistan, Kazakhstan, the United States, and Ukraine. I was always passionate about international business law. It was the reason I focused specifically on cross-border transactions both in my LL.M. studies at the University of Minnesota School of Law and in legal practice.  

The last 7 years I have been devoted to compliance risk management. In this capacity I was responsible for the launch and execution of the compliance program for DTEK, which employs about 140,000 people in the CEE region. Compliance is a challenging and inspiring mixture of law, governance, and risk management.  

T.K.: I think that both options have advantages. Being part of the Legal function the compliance team has immediate access to the in-house network of lawyers who are involved in major corporate projects. It is a valuable combination for proactive risk management and coordination of efforts. At the same time, this scenario de facto abolishes the independence of the compliance function and creates the risk of conflicts of interest. My personal view is that the compliance role is just another profession. It requires communications skills and the ability to conduct trainings and overcome resistance. At the same time, lawyers are traditionally considered the smartest people in the room and perfect subject matter experts. Consequently, if people wish to use their legal expertise to promote integrity in their organizations, in my view, they should become compliance officers. However, you have to excuse me, as a compliance person, it’s possible I’m biased. [smiles]  

T.K.: Among the main challenges, I would name the requirement to apply Western anti-bribery standards to the reality of an emerging market. This is a tough mission for both captains of industry and in-house staff responsible for ethics. While the anti-corruption regulatory environment in Ukraine has been developing, many things still need to be accomplished. This, for instance, applies to consistent enforcement practice. As another challenge, I would identify the scarcity of compliance personnel with practical experience in this area. A positive development that we are seeing, however, is a booming interest in compliance in the professional community, business leaders, and outside counsels in the CEE region.

T.K.: In practice, the size of the compliance function reflects the scop of assigned functions. For example, our compliance headcount reached up to eight people when we were conducting internal investigations, providing trainings, and taking responsibility for ABC (Anti Bribery and Corruption) and Sanctions Programs. After an internal reorganization aimed on divesting operational responsibilities from the functions of direct reporting to the CEO, our team shrank to four people. Consequently, the scope of work was framed to cover both programs, as well as conflict of interest management, Code of Ethics consultations, and whistleblower protection. 

T.K.: If we are talking about culture, I would suggest the following KPIs to evaluate progress in compliance promotion within an organization:

• The percentage of employees who pass compliance tests. This is about the quality of trainings. Educational efforts have to bring added value, which can be measured by the number of employees who are able to demonstrate the required level of knowledge;
• The percentage of whistleblower allegations in which employees identify themselves. In my view this is the best way to evaluate whether personnel is comfortable reporting violations. If a person does not fear retaliation for revealing his name, this is vivid evidence of an open corporate environment;
• The percentage of “substantial” breaches reported via the whistleblower line. There is a discussion about defining “standard” or “good” quantity of signals obtained within a certain period. In my view the quantity of obtained allegations is not as important as the percentage of serious violations reported among those signals. While serious misconduct along with other breaches usually is not reported, an increase of “substantial” cases reported among the received signals shows internal health.        
• Quantity of retaliation cases against whistleblowers. The best way to shape a system allowing the company to become aware of misconduct is to protect the people who report violations.   

T.K.: I believe in specialization. Therefore, each member of our team is responsible for a particular compliance area. This includes monitoring regulatory updates, international trends, and investigations. I also find it very useful to review the compliance practices of Fortune 500 companies for modeling KPIs, budget estimation, and so on. FCPA Compliance and Ethics Blog by Thomas Fox, a compliance guru, is my favorite source of analysis of recent enforcement cases. 

T.K.: I would externalize those services which would improve KPIs, which we have discussed earlier. In other words, there is sometimes a need for practically-oriented advice from a seasoned practitioner rather than multi-page discussion on various legal provisions.  

T.K.: For me it is a simple choice. While we deal primarily with regulatory requirements – for instance, compliance with sanctions and anti-bribery regimes – I seek outside counsel with a previous background in the relevant regulators. Those type of experts are more aware than anybody else of enforcement practices and regulatory expectations.

T.K.: To start with, the current situation itself is generating new compliance challenges. For instance, the Western sanctions prohibit not only dealing with blacklisted individuals from Russia and Ukraine, but also with companies which they own or control. This second element poses a challenge, as it requires extra scrutiny in due diligence processes.

T.K.: Kyiv has a plenty of places to offer, starting from historical sites and parks to a wide variety of restaurants and museums. So for me Kyiv as a city of many wonders is a single favorite spot.

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

Olga Lukyanova is the Legal Department Head & Compliance Officer at Henkel in Ukraine, where she has been for the past 7 years. Previously, she worked as the Legal Director of JT International, which she joined after working for Procter & Gamble. Before that she worked in-house with Intercar-Ukraine. Her legal career began with a position at the Ukrainian Ministry of Justice.

O.L.: In terms of knowledge, I think the main bits were that I got to see first hand how the system works and the thorough process behind implementing new or potential legislation. In terms of skills, the most important aspect for me was that I was surrounded by some pretty amazing professionals – some later moving on to become supreme judges or other high ranking positions in the Government (though, unfortunately, many of them no longer hold those positions), who taught me how to ground the legal aspects I was exposed to in the realities they were intended to address. That, and the amazing contacts who helped me with guidance throughout the early stages of my career, played a big role in my development as a professional. 

O.L.: No, not really. In my opinion the difference between the two is too big to comfortably make the switch. Within a law firm you are not able to be independent of your specialization – or at least not nearly as much as in the in-house world. Working within a company you touch such a wide variety of functions on a day-by-day basis, ranging from HR, to Marketing, to Logistics, and many others. You are constantly exposed to new fields of law, making you a true generalist. At the same time, I love the focus of moving forward that my role entails. I also feel that private practice tends to involve more of an introverted job – and I am an extrovert by nature. I cannot imagine a role that resembles locking yourself in a room and reading a book. I need to feel like I am pushing an idea forward – I guess I am a natural salesperson in that sense. 

Are there worst-case scenarios that I can imagine pushing me into a law firm? Sure. But I definitely enjoy working in-house far more. 

O.L.: The main one is implied in the name of the sector – it’s fast moving! It is a real challenge to be operating in a constantly changing environment, within which we are constantly developing new products that need to be distributed and marketed (all of which need relevant legal input). 

O.L.: They are different animals really. While, as I explained earlier, the fast pace is what poses challenges in my current sector, in regulated industries it’s the opposite issue that comes into play. You constantly feel there is no room to move forward because of the regulations in place. 

On a personal level, it was also the nature of the specific sector that played a part. It is hard to ignore the fact that you are selling – to put it mildly – not a necessarily society-approved product, and I realized soon after I had my first child that I would feel more comfortable telling my kids that I work for a company that sells detergent or cosmetics [laughs].

O.L. There are two challenges that I had to learn to cope with. The first is that in a large corporation such as ours you are really just one piece in a very long chain. But the second one is the biggest one: An in-house counsel in this kind of company needs to learn how to translate legal issues for all the various functions of the company within this chain. 

The reality is that all of them – operations, marketing, the Board – speak different languages, and you need to be able to ask the right questions to asses actions through a legal lens and be able to understand the different functions and their intrinsic objectives in order to translate a legal matter into the right buttons to push within those functions to minimize legal risk. Acting as a translator is also one of the critical roles internally when working with external counsel, since it is an activity that needs to happen both ways: external counsel to the business, and vice-versa. This translation is also the critical component when interacting with management. The simple trick is to not overburden them with legalese, but rather to keep it short and as actionable points that the decision-makers can consider. 

O.L.: Naturally, we have preferred firms globally. For a company of our size, it makes sense and it is more convenient since you are then speaking with a firm that has a thorough understanding of you across geographies. That is not always the best choice, however, since local firms may be at times a bit more grounded into the local realities, and many are able to provide the needed level of service. To that I would add that it is not always the case that the level of service provided by international firms is consistent in all jurisdictions. 

In terms of what I specifically base my choices on, I tend to monitor industry publications, Internet resources, and newsletters on a rolling basis. I look to their reputation, size, past experience (I would definitely look at their portfolio to see relevant experience on similar deals), and the number of recognized lawyers. As an international company, we also look at the level of English and the firms’ compliance with international professional and ethics standards. Last – but surely not least – their fees and flexibility on fee arrangements plays a big part.

O.L.: There are two biggies for me. The first is lawyers who, pitching for a project, promise you the world. I prefer grounded and realistic projections and I feel I cannot trust a counsel who, in an excess of zeal to get a file, will make promises he or she cannot deliver on. 

The other one thing I am annoyed by is when I get a bill that includes time for “exercising/investigating the law.” In my opinion, I am paying for their specific and, more importantly, existing legal knowledge that is already in place and the time they spend applying it to my specific issue at hand, not for them to polish up on the law itself. 

O.L.: I actually asked my colleagues for their impression about me on this. They all basically yelled out “COFFEE!” I would have said that my normal routine in the office is to come in, exchange a few words with my colleagues, then grab my coffee, and only after start on my work. As a result I would have said “talk to my colleagues to catch-up” but the consensus about me seems to be that coffee is a definite must. 

This Article was originally published in Issue 2.2. of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.