ANALYSIS: Confidentiality issues in today’s Ukrainian legal services industry

International clients should be careful to avoid making any assumptions on key issues such as attorney-client privilege

ANALYSIS: Confidentiality issues in today’s Ukrainian legal services industry
About the author: Myron Rabij is a partner with the US law firm, McCarter & English LLP
Myron Rabij
Monday, 29 April 2019 16:40

If you are a US general counsel or an investor looking for a lawyer or law firm to represent your interests in Ukraine, I appreciate that you look for, among many criteria, a particular skillset, good recommendations, good English drafting skills, and timely advice. After identifying your dream team, you then send them your standard corporate terms of engagement, setting out billing and conflict procedures. Do your standard terms cover confidentiality or have you assumed a lawyer’s duty of confidentiality to apply? What about the issue of attorney-client privilege?

Unfortunately, you cannot assume that either a duty of confidentiality or attorney-client privilege will necessarily apply to Ukrainian attorneys under Ukrainian law. The “Bar” and associated ethical rules as understood in the US apply to all US attorneys. However, in Ukraine, as in Russia and other neighboring countries including several EU member states for that matter, duly licensed “attorneys” are generally “advocates”, or to borrow a term from the more familiar jurisdiction of the UK, “barristers”.  Everyone else is a “jurist” (i.e. a solicitor).

Your company’s in-house counsel or outside counsel in Ukraine may or may not be an “advocate”. The Ukrainian law firm you hire most likely is not an “association of advocates” or an “advocate bureau.” In such cases, Ukraine’s law “On Advocacy and Advocate Activity” will not apply. The legal requirements stipulated in the law as to “advocate secrecy” will not apply. You may feel relieved that your in-house counsel is an expat lawyer or your Ukrainian law firm has an expat or expats within their team. Let us assume they are British or American to keep this analysis relatively brief.

If they are duly licensed in their home jurisdiction, then likely the rules of those home jurisdictions will apply to such individuals even when they are working abroad. In the worst case, however, a Ukrainian court or agency may not care. Are these individuals registered in the “Unified Register of Advocates of Ukraine”, for example? What about the rest of the Ukrainian “jurists” with whom you are in contact?

To be clear, attorney-client privilege, as a statutory evidentiary protection in Ukraine, will not apply to your communications with them. This is not unusual for the region, but a US attorney may overlook this qualification. As to confidentiality, unless you include clear confidentiality provisions in your terms of engagement or a separate NDA, you are not covered. When drafting, you must include provisions as you would when contracting with any counterparty. Your protections are limited to contract rights. Additionally, it is important to ensure that your company’s standard engagement letter or terms of engagement will be adequate for cross-border contract purposes in Ukraine.

I have worked for and with many reputable Ukrainian lawyers and law firms over the past 25 years and can attest to the very high standards of conduct to which my many distinguished colleagues and friends rigorously adhere. Nevertheless, problems can arise if some of their employees do not adhere to such high standards, or if counterparties in litigation or arbitration, courts or government agencies make disclosure demands. There could also be issues if government agencies (such as tax or anti-corruption authorities) conduct investigatory “raids” or even scheduled audits.

In terms of litigation or arbitration, this is not limited to in-country litigation. The DOJ (in an FCPA investigation for example), EU agencies, or foreign counterparties may all make discovery requests. Furthermore, even in the case of an advocate, “advocate secrecy” in Ukraine does not apply in cases of anti-corruption investigations. If you have an internal company FCPA reporting record at your Ukrainian office or subsidiary, this can be subject to disclosure even if the records are kept at your advocate’s office.

Offices of international law firms and reputable local law firms include strong confidentiality provisions in their standard legal service agreements. In Ukraine, law firms are also establishing affiliated “associations of advocates” formed from among staff advocates. These associations sub-contract with clients to allow for greater client protection. If you are not sure whether your local counsel has created such an association, you should enquire.

Alternatively, you might choose to consider engaging and contracting your Ukrainian lawyers through your US outside counsel in order to fall within US attorney-client privilege rules. This provides some protection at least against discovery requests made outside of Ukraine. It is also worth considering what documentation and records you wish to keep in Ukraine or on local servers in Ukraine. You may wish to limit the scope of discovery in a Ukrainian litigation or an arbitration case by limiting what is discoverable.

If you also would have dealings with licensed notaries in Ukraine (for example, for real estate closings), please note that even though these individuals are also lawyers, they are subject to separate legislation which provides similar protections equivalent to those afforded to advocates. The same exemptions for issues like anti-corruption investigations also apply.

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