When a lawyer is responsible for the company's debts

Usually, the founders (participants) and the head of the debtor company are brought to subsidiary liability. However, under current legislation, the concept of a controlling person is much broader. In fact, anyone who can influence the debtor's activities and give him mandatory instructions can be recognized as a CDL.

Let us consider two situations.

1. A lawyer is a representative of a legal entity.

The representative should be restrained by the actual fiduciary relationship between him and the client. His position will not differ from that of the director as the sole executive body of a legal entity (duty of loyalty). In such a situation, a breach of trust, an act in one's own interest, and not in the interest of the corporation, is an absolute basis for bringing you to subsidiary liability.

2. A lawyer is a representative of the controlling entity of an organization whose interest is aimed at extracting personal benefit from the organization's activities, and circumventing the law.

A lawyer should be deterred by the standard of good faith in relation to a legal entity as a participant in civil turnover. The Supreme Court, in its Ruling No. 305-ES19-13326 dated December 23, 2019 in case No. A40-131425/2016 pointed out that providing “advice on accounting and taxation issues separately does not indicate that there are grounds for holding the accountant responsible for complicity in bringing bankruptcy”. Here, the Supreme Court also emphasized the distinctive feature of the subject of subsidiary liability in the case — profiting from the CEO's unfair and illegal behavior.

This logic is fully applicable to legal advice as well. Moreover, at the moment, there is already a practice of invalidating legal services agreements with reference to art. 10 et Article 168 of the Civil Code. Justification is proof of the use of an organization that provides legal advice as a source for withdrawing assets.

A unique development of this trend can be considered case No. A76-22330/2018, in which, as part of a dispute over bringing a cooperative's legal adviser to subsidiary liability, the court seized its movable and immovable property as an interim measure. The reason for making this decision was the plaintiff's arguments that the lawyer was the organizer and developer of the fictitious document management. As a result, the court refused to bring the consultant to subsidiary liability.

Judicial practice clearly forms a broader range of CDL. The courts are beginning to understand that the decisive factor in bringing to justice should be the will of a person to violate the property independence of a civil entity, and not his status, profession or method of causing losses.

Every year, the legal market receives several thousand specialists who fall into the paradigm “the client's interests, whether they are legitimate or not, must be respected”, which ultimately leads not to finding a legal and fair solution, but to circumventing the law, using legislator's mistakes or gaps in legal regulation. In the minds of many market participants, a lawyer is ready to take on any case for a fee. Thus, a vicious circle of supply and demand is being created that neither the legislator nor the professional community wants to break.

We ourselves have heard from colleagues more than once and seen similar examples when a lawyer as a representative:

• signs a settlement agreement on unadvantage/unprofitable terms for the client;
• issues a transfer of trust to a “dubious person” at the direction of, for example, his employer;
• receives an executive document in court and transfers it without an act of acceptance and transfer (on close confidence) to his employer or directly to the client.

If you find such signs in your activities, you should immediately take measures to reduce the risks of recognizing CDL.

We believe that in order to solve the problem, a standard for the provision of legal assistance will be created, which will increase the responsibility for lawyers as a professional market participant. The current absence of responsibility, any regulation of the provision of legal services and the lawyer's behavior towards both the client and other participants in civil turnover is the reason for the decline in the professionalism of the entire community.