Lawyers' fees

  • 2001-11-01
"When a lawyer tells his clients he has a sliding fee schedule," runs an old joke about lawyers, "what he means is that after he bills you it's financially hard to get back on your feet."

What Latvian Privatization Agency boss Janis Naglis experienced last week was just that. After telling his own bosses at the Latvian Cabinet of Ministers the amount of Latvia's legal fees paid to run an arbitration case, he shocked the ministers so much they even forgot about the confidentiality of the deal.

The details of the deal are supposed to be classified, but still the media were full of various figures already paid in a $1 billion litigation to British law company Clifford Chance and local law firm Lejins, Edzins, Torgans and Vansovics, anywhere from $5.58 million to $11 million.

Latvian Minister of Economics Aigars Kalvitis, who decided to punish Naglis for overspending, stripping him of the signature rights, suggested making the information on the litigation public to avoid any confusion in the future.

This proposal was denied by the government, leaving plenty of room for rumor and gossip. Government members will still be investigating whether Naglis was overspending or not, as it is not clear, they say, whether $550 an hour is too much or not.

But the general practice within the Latvian government, unfortunately, is to cry in outrage and then think silently for a long time afterwards. To see a fair investigation taking place and informing society about it only afterwards, carefully avoiding any scandal - even this may be too much to hope for.

So far, in this further spree of official surprise and confusion, nobody seems to care if the government succeeds in the business at hand: formally shrinking the Latvian fixed-line telecommunications company Lattelekom's term of monopoly provided under the umbrella investment agreement of 1994 to 2003, as required by the EU in order to comply with its anti-monopoly laws.

Because the monopoly term would have to be moved anyway, as Latvia can't afford to miss the EU train. However, the ticket may be costly. The amount of compensation claimed by Tilts Communication, Finland's Sonera-owned investor in Lattelekom, is no less, no more than $1 billion.

Taking into account the Latvian side's provincialism, this might be the Finnish company's best investment so far. Without investing much in the costly construction of telephone lines in the Latvian countryside, as agreed before, the investors will get their hands on the hefty compensation if the case is lost.

If Latvia wins it would have to pay anyway. To the lawyers. As Benjamin Franklin once said, "A countryman between two lawyers is like a fish between two cats."