November 25, 2009 6:00 AM

Russia: Kleptocracy or Ripe for Legal Reform?

Posted by Brian Baxter

A recent opinion piece in The Moscow Times by Dewey & LeBoeuf Moscow office head Brian Zimbler portrays Russia as a country ripe for legal reform. Zimbler's column comes as Russia's legal system is under attack following the death last week of a prominent lawyer and accountant.

Russian President Dmitry Medvedev has ordered an inquiry into the death of Sergei Magnitsky, head of the tax practice at Moscow's Firestone Duncan, the law and accounting firm founded in 1993 by American lawyers. He died November 16 while in custody at a pretrial detention facility in Moscow. The lawyer had been caught up in a "battle between the Russian authorities and the international investment fund he was representing," as reported by The New York Times.

Magnitsky had been representing William Browder's Hermitage Capital Management, once the largest investment fund in Russia. He was arrested last November in connection with tax charges levied against Hermitage, after allegedly revealing corrupt practices by Russian police targeting the fund and its lawyers.

According to various news reports, the 37-year-old died of heart failure and toxic shock after being denied medical treatment by Russian authorities. Magnitsky's death led Browder--blacklisted by the Kremlin in 2005 after Hermitage campaigned against corruption at Russia's largest companies--to call Russia a "criminal state." Browder also has released a video in which he describes the dismantling of Hermitage in Russia as outright theft by the state.

We reached out to Zimbler for his take on the events of the past week. In an e-mail to The Am Law Daily, he tells us that firm policy prevents him from commenting on Magnitsky and the Hermitage matter.

In his op-ed, Zimbler touts the reform-minded measures undertaken by Medvedev against Russian "legal nihilism." Recounting several jokes and anecdotes about lawyers by the likes of Shakespeare, Lenin, and W.C. Fields, Zimbler references a historical reticence towards lawyers in society. But like America before it, Zimber writes, Russia now seems poised to embrace rule of law reforms.

"Serious steps are being taken to increase respect for lawyers and even honor them," Zimbler writes. "President Dmitry Medvedev, himself a lawyer, has frequently spoken about the importance of a sound legal system for the country's future development."

According to Zimbler, increasing respect for the rule of law is essential if Russia is to compete in a tough global economy alongside Brazil, China, and India.

"Good lawyers can play a key role in this process by doing excellent legal work, setting examples for others, helping to educate the public about legal matters, and properly training our own colleagues and personnel," Zimbler writes. "Having spent more than 20 years working on legal matters in the Soviet Union and Russia, I am proud of the many young Russian lawyers who have worked in my firm. I am confident they will contribute to the future development of their country."

Zimbler's views might provide some doing business in Russia with cause for optimism. But Magnitsky's death has ignited a storm of criticism against Russia's legal system, even against Medvedev, who is being accused of paying lip service to reform as he rolls back other institutions like jury trials. (The Daily Telegraph reports that London police are also investigating threats made against other Hermitage lawyers by Russian sources.)

Firestone Duncan cofounder Jamison Firestone, who released a statement expressing shock at Magnitsky's death, is cautiously optimistic about Medvedev's planned investigation.

"The key to all of this is that Magnitsky exposed a fraud and was detained and eventually died because of the fraud he exposed," Firestone says via e-mail to The Am Law Daily. "It will not be possible to identify the real killers, the people who ordered his detention and who ordered the denial of medical care, without investigating the underlying fraud."

Firestone knows a thing or two about Russian tragedies. In 1993 the other cofounder of his firm, American lawyer Terry Duncan, was killed by a sniper's bullet during a battle between reformists and communist hardliners on the streets of Moscow.

In Russia, history tends to repeat itself.

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