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.
How does a Russian lawyer end up a GC in Montenegro? Why did you take up that challenge and how was your time there different than in Moscow?
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.
You have spent a great deal of your career in the TMT industry. What aspects of it draw you and still make it exciting to go to work on a Monday morning?
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.
You’ve had some exposure to the private practice world. In your view, how does it differ from working in-house?
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.
How do you feel the “Virgin Culture” resonates within the set-up and daily operations of your in-house team?
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.
How large is your legal team and how is it structured? Are the functions of regulatory and compliance integrated within the legal function or separated? Why?
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.
When you do need to externalize work to law firms, what are the main criteria you use in selecting the firms you will work with?
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.
How do you identify these “stars”? Do you rely on referrals, past experiences, directories, etc?
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.
Looking at the Russian market these days, in what ways, are current events affecting your business and your work as an in-house counsel?
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.
Since you mentioned a deficit of resources, what are the main budget conservation strategies you employed in the last year?
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.
On the lighter side, what is you favorite holiday destination and why?
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.
- Deal 5: Lawyer at Credit Bureau Creditinfo Anatolijus Kisielis on the Use of Facebook Data Case
- Deal 5: Burgan Bank Head of Consultancy & Corporate Governance Unit Nesteren Caliskan on the Bank's 2016 Syndicated Loan
- Deal 5: Ashok Leyland UEA's GC on Truck Manufacturer Ownership Transfer
- New Chief Legal Counsel at Kurum Holding
- Deal 5: C3's Executive Director of Corporate Development on Acquisition of Majority Stake in PM