A year on from the creation of Goltsblat BLP, James Swift asks whether other international and local firms can overcome cultural barriers, or if this is destined to be the tie-up nonpareil
Goltsblat BLP stands alone in Russia’s legal market as the only joint venture between an international and a local firm.
The firm was formed in December 2008 and opened for business in January 2009. At not quite two years old, a definitive assessment of how successful the merger has been is tough to make, especially since the firm was formed when the Russian market was at its bleakest. Nevertheless the office appears to have made an impressive start, with total revenue for the first six months of the year up by 60 per cent on the same period’s figure for 2009.
East meets West
Goltsblat BLP was created through the merger of a team of around 70 lawyers from Pepeliaev Goltsblat & Partners with Berwin Leighton Paisner (BLP). Pepeliaev remains one of Russia’s largest and most prestigious firms, with more than 160 lawyers.
“I think everyone knew Pepeliaev Goltsblat & Partners,” says Carol Patterson, Baker & McKenzie CIS managing partner. “It was the first Russian law firm I would have mentioned if you’d asked me to name a firm two years ago.”
The merger took more than a few commentators by surprise. International firms have been in Moscow and St Petersburg since the early 1990s, but have always kept their distance from domestic firms. Both grew in their own spheres, but the cultural differences were seen as too wide for a successful merger.
“Even among two European firms there are cultural issues and we’ve seen quite a few collaborations collapse,” says one Moscow partner at an international firm. “People are fairly unanimous in saying that the major obstacle here is a cultural one, and if Goltsblat BLP can overcome this then it might be a successful venture. But there are very few examples of successes. Usually it’s one party who absorbs the other party and instead of a Russian-UK firm you end up with one or the other.”
Undeterred by the prospect of a culture clash, it was Pepeliaev co-managing partner Andrey Goltsblat who initiated the merger, spurred on by the looming financial crisis and what it might mean for Russian firms.
Doing it all
“What changed for us?” says Goltsblat. “It was 2008 and I just realised that we had to do something, otherwise things would get difficult. I thought, I could easily do Russian law forever, but I was really bored. Now I’ve got new deals and a new practice. What we’re saying to clients is that we’re still a Russian firm, but that we have international people too, so a client can get everything they need on the ground here.
“I think we’re now entering into completely different niche in Russia. Russian law firms are very good and dominate in the purely Russian legal work, but they’re limited, and that was the reason I wanted to move up and merge with BLP.”
Goltsblat drew up a shortlist of firms using a checklist of criteria, with BLP coming top. “Ideally we thought the firm wouldn’t have an office in Russia and would provide us with a certain level of freedom to run the business,” he says. “Also, the firm should agree with our strategy and should have nice people in it. Also, we didn’t want the firm to be the top law firm in London, otherwise they’d have just swallowed us.”
BLP, on the other hand, was looking to expand internationally (it also opened an office in Abu Dhabi in the same year) and had adopted a freethinking attitude to the process.
“First, having a presence in Russia is consistent with our emerging market growth plan,” says BLP managing partner Neville Eisenberg. “And we’d been working with Andrey [Goltsblat] and his team for a number of years and knew them quite well. We were openminded in our approach and thought the merger would be a good way to get in the market. We didn’t have a particular model, just an open mind.”
According to Eisenberg, the tie-up is a “full-blown merger”, although the Moscow office’s financials are reported separately.
“Andrey’s a partner of BLP and the other partners in Moscow are partners in the firm,” insists Eisenberg. “For all practical purposes they’re partners like anyone else, but we’re structured to report results separately for reasons of convenience.”
Both sides report that the integration process has been remarkably smooth, with greater integration through more secondments expected. And although the Moscow office’s performance may turn a few heads, imitators are unlikely.
Russia is hardly teeming with large, corporate-orientated firms, and it is difficult to imagine any of the few top-tier practices out there agreeing to a merger.
It looks as if Goltsblat BLP will just have to get used to being unique.
By James Swift
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