Makarov is convinced that the Ukrainian law industry has weathered the storm caused by increased competition from international players, something he puts down to the ability of the industry to respond to the challenges posed by an increasingly complex international legal framework.
The durability is largely a product of the way in which the domestic market operates, explains Makarov. "The arrival of international law firms in Ukraine over the past few years was widely expected to signal the collapse of the domestic market but that hasn't happened. The truth is they simply came too late, appearing at a time when we could already offer services of the highest quality to major international clients," Makarov explains.
"The Ukrainian market had already been consolidated by a new generation of legal companies some years ago which were staffed by a new generation of lawyers who graduated from foreign universities and gained experience with foreign law firms. Their arrival on the Ukrainian market created competition for the traditionally dominant companies and we welcomed their arrival as it served to wake the market up. They have made the old law firms which were established in the last years of the Soviet Union take a fresh look at the market. encouraging them to reorganise, reform their partnerships and reconsider everything from their approach to clients right down to staffing policy. Now when we are analysing the arrival of international companies, we can say that it also serves to develop the market," he says.
The biggest single challenge facing the Ukrainian legal system today remains the endemic problem of courthouse corruption, something Makarov has experienced firsthand while representing Vasil Kisil & Partners clients as head of the firm's courtroom team. "I am deeply convinced that as a society we have been ready to confront and beat this corruption for a long time. The uncertainty caused by a lack of faith in the objectivity of the court system doesn't suit anyone, whether we're talking about billionaires or ordinary citizens looking to the courts for resolution of some standard administrative issue."
Playing by international rules
Despite this apparent optimism Makarov accepts that corruption is not going to go away overnight, but is confident that there are ways of defeating it within the constraints imposed by the current legal climate.
"We stick to internationally accepted rules and laws because we know that these rule determine the positions of the international companies working on the Ukrainian market. At the same time we are Ukrainians and we know how to resist corruption and fight against the elements of corruption which could otherwise be used against our clients. The lawyer's task is to plead a case in such a way as to render any corruption harmless and protect our clients' interests employing only those legal methods which the law affords us." he states.
Many law companies have taken a less proactive approach to battling through Ukraine's corrupt court system and now tend to limit themselves to a consultative role in order not to be exposed to underhand factors, but Makarov sees his firm's willingness to fight through the system as one of their major advantages. "We have an edge over law firms which restrict themselves to consultation and are afraid to go to the courts because they know all about the surprises which could be waiting for them there. They only offer clients long explanations of the intricacies of the Ukrainian legal system and about corruption, but ultimately someone has to go into battle and protect a client according to the legal standards they would expect to find anywhere in the world." he says.
State salaries and endemic corruption
Getting to the core of the corruption problem means targeting the incentives to bribe and bend the rules, which Makarov argues means introducing competitive salaries for all of the nation's judges. "In other words a judge's salary should not be less than the salary of a senior lawyer in a normal law firm," the legal veteran argues. "It is not a question of preventing certain judges from succumbing to corruption by higher salary; the idea is to recruit a better class of judge by increasing competition for vacancies. An experienced, senior lawyer earning USD 3,000 to USD 5,000 per month would not currently be tempted to apply to become a judge if he knows that the salary will be USD 600 if he does apply, then this raises suspicions as to why he was prepared to accept such a drop in salary. This is why the competition for judicial appointments has to be increased via the mechanism of higher salaries. There are only 7,000 judges in the whole country and if the government raised the salary of each and every one of them by at least USD 1,000 the overall cost would only be USD 7.5 to USD 8 million per month," he reasons.
Makarov is hopeful that any new anti-corruption drive will adopt practical policies that focus on the root causes of the graft endemic throughout the country's legal system. "I think that in the near future the state will introduce systematic measures to target the environment which gives birth to corruption itself," he states. "I've illustrated just one approach which could help to remove corruption from the process of selecting new judges. All this is quite possible and must be the strategic aim of the state. If approached in the right way, it could be achieved in very short period of time."
As Ukraine begins negotiations on a far-reaching new free trade deal with the EU, the country's lawyers are bracing themselves for the latest wave of legislative innovations necessitated by the need to bring Ukrainian law into line with EU norms. Makarov sees a long and very much needed process of harmonization ahead as ties between Kyiv and Brussels strengthen. "There are lots of trade and economic issues which have not been addressed by existing Ukrainian legislation such as the question of competition regulation, land ownership, the energy sector, and telecommunications. It is necessary to take a number of serious steps to develop our economy and this process should in turn be regulated by legislation which has to be harmonised with the EU. Nevertheless, before we regulate the economy we must first free it and allow it to grow. Extra regulation has played a role in economic growth but it can also stop this growth any development of economic legislation should, first and foremost, be connected to the liberalisation of the sphere and an understanding that stricter regulation will be introduced when the market is more mature. This will be in everybody's interest.
The value of Ukrainian property and businesses has risen since democratisation and it is clear that this would be reversed if there was any move away from democracy. Most of enterprises are planning to launch IPOs and move onto world markets; they don't want their products to depreciate in value and be subjected to special regulation simply because they come from a non-democratic country."