The Algorithm of Complexity: What is Happening to Law and the Legal Profession in Russia in 2025-2026 and How to Protect Yourself

What the Post-Legal State Means in Simple Terms

The post-legal state is a term denoting a condition of the legal environment in which formal procedures are preserved, but their substance ceases to align with what is declared. The law exists, the code exists, courts operate, and attorneys plead. However, the outcome of the process is predetermined before the process begins in the overwhelming majority of dispute categories involving state interests.

This is not the "absence of law." It is a different state of law, where an additional layer is embedded between the norm and its application—the factual predetermination of the outcome.

Characteristics of the post-legal environment in current Russian practice:

• Structural imbalance favoring one party. In tax disputes, the FTS wins 95%+ of cases by amount. In subsidiary liability disputes, creditors win 52-61% of cases. In criminal cases, acquittals account for 0.3-0.5% of the total.

• Formal procedures replace substantive review. Presumptions of guilt (instead of the presumption of innocence) in subsidiary liability disputes, in non-bankruptcy subsidiary liability, and in cases under Article 54.1 of the Russian Tax Code. The burden of proof is shifted to the defendant—this is no longer a court adjudicating a dispute, but a court expecting the defendant to provide evidence of their own innocence.

• Automation of control processes. ASK NDS-3, ASK NDFL, Single Tax Account (ENS), Unified Register of Taxpayer Profiles (ERPD), goods labeling, bank monitoring—everything operates in real time and automatically forms an evidentiary base even before an inspector opens a case.

• Narrowing of the defense space. What was considered "optimization" in 2015 became a "risk zone" in 2020, and in 2025 is classified as a violation. This is a movement in one direction—toward simplification for the state.

• Systemic routinization of repressive procedures. In 2018, 2,300 individuals were brought to subsidiary liability. In 2024, the number reached 5,331. In 2017, a criminal tax case was a rare event. In 2025, it is a routine procedure for mid-sized businesses.

This shift will not stop on its own, nor will it reverse in the foreseeable future. This is precisely the algorithm of complexity—a sequential movement in one direction, following the logic of expanding automated state control.

The Algorithm of Complexity: How the Process Works

The algorithm of complexity is a systemic pattern whereby the legal environment moves from a state of "clear law, understandable rules, predictable courts" to a state where "formal rules are preserved, but their application becomes opaque and systemically unfavorable for one of the parties."

This pattern operates according to the following principles.

Principle 1. Every Iteration Adds Complexity

Any change in the rules moves toward complicating matters for the participant and simplifying them for the state. Thus, in 2017, Chapter III.2 on subsidiary liability was introduced into Federal Law No. 127-FZ on Insolvency. This simplified the recovery from the controlling person of debtor (CPD) for creditors. In 2021, the Russian Constitutional Court established the tortious nature of subsidiary liability (the Karpuk case)—this simplified the recovery procedure. In 2023, the Russian Constitutional Court shifted the burden of proving good faith in non-bankruptcy subsidiary liability to the defendant (the Pokul case)—this simplified matters for creditors. In 2024, court fees were increased—this made creditors more selective, but the claim satisfaction rate grew from 43% to 52%. In December 2024, the circle of CPDs was expanded via Supreme Court Plenum Resolution No. 42—simplifying the prosecution of informal beneficiaries.

Each step represents the addition of one layer of complexity for the defense and the removal of one barrier for the attacking party.

Principle 2. Yesterday's Gray is Today's Black

The zones of the permissible are systematically narrowing. In 2015, working with a single tier of 'technical' counterparties (shell companies) was common practice. In 2018, it began to raise questions. In 2020, it became grounds for denying deductions. In 2023, it became grounds for a criminal case. In 2025, it is grounds for subsidiary liability and the personal bankruptcy of the owner.

This shift is synchronous across all sectors. Artificial business fragmentation: 22% of victories in cassation in 2024 → 2.5% in 2025. Tax reconstruction: works declaratively, but in practice only upon disclosure of the real supplier at the objections stage. Due diligence: provided protection until 2017; since 2017, it does not protect.

Any decision made today in the gray zone becomes grounds for claims in 2-3 years.

Principle 3. Precedent Does Not Work as a Defense Tool

The classical theory of legal precedent assumes that a single victory in a higher instance creates a defensive position for others. In a post-legal environment, it works in reverse: a single victory for the defense becomes a reason to close the loophole through the next change in the Supreme Court's position or a new clarification from the FTS.

The Rasoyan case, A63-1714/2020 (July 2025)—RUB 703 million of subsidiary liability to the FTS was discharged via Paragraph 58 of the Supreme Court Review of June 18, 2025. A breakthrough. Yet in the very same discussion, VIP lawyers are already formulating a limitation: this will not work for defendants under Article 199 of the RCC. That is, a loophole opened, and the boundaries of its applicability were immediately delineated—not in the form of a normative act, but as an established professional interpretation.

Principle 4. Time is on the State's Side

Every procedural month works against the defense. The statute of limitations under Part 1 of Article 199 of the RCC is 2 years, and it is often not successfully waited out. The statute of limitations for subsidiary liability is 3 years from the moment the applicant learned of the grounds, which effectively means "until the creditors find the assets, the clock does not start." The time limits under Article 53.1 of the Russian Civil Code are 3 years from the moment the company's participants learned of the losses.

Under this logic, the position of "dragging out the process to win on the statute of limitations" works only to a limited extent and in specific niches. In most categories, time is a systemic ally of the advancing party.

Principle 5. The Volume of Changes Exceeds the Speed of Professional Adaptation

In 2020, a specialized tax attorney needed to track 5-7 key Supreme Court positions per year. In 2025, they must track 30-40 positions of the Supreme Court, Constitutional Court, and FTS, plus amendments to the Russian Criminal Code, Russian Tax Code, Code of Administrative Offenses, and Insolvency Law, alongside practice reviews from every relevant arbitrazh circuit. The volume of changes has grown approximately 5-7 times. The speed of professional adaptation has not.

This means that the vast majority of practicing attorneys are operating on an outdated picture of the law. Their advice in 2025 is based on their experience from 2018-2022, when the rules were different. They do not know that the rules have changed—because it is not a single change, but a series of dozens of minor shifts, each of which passed unnoticed.

The Attorney as a Hallucinating Neural Network

This is the key metaphor for the algorithm of complexity. It is important because it describes a functional mechanism, not a moral judgment.

A language model is a system that produces convincing text without a verification loop connecting it to reality. When a neural network makes a mistake, it does so confidently. It does not know it is mistaken. Its internal circuitry does not distinguish between "I know" and "sounds plausible."

An attorney promising a client a win in a subsidiary liability dispute in 2025 (where the satisfaction rate is 61%), promising to "fight off" field tax audit assessments in court (where the chances are less than 5%), or promising to "resolve the issue" with an inspector sitting behind a monitor with an automated control system, is functionally operating in the same mode as a language model.

They are not lying consciously. They sincerely believe in what they promise. Their internal circuitry is their experience from 2018-2022, when such promises sometimes came true. They extrapolate this experience to 2025, failing to notice that the environment has changed. They hallucinate—producing convincing text without a verification loop to current reality.

There is one difference. A neural network transparently discloses its nature: "I can make mistakes, verify independently." An attorney promising a win conceals their nature. They do not tell the client: "I might be wrong because my picture of the law lags 3-5 years behind the current environment." They say: "I have 25 years of experience, I will win."

This is not a flaw of specific attorneys. It is a systemic characteristic of the profession under the conditions of the algorithm of complexity. The professional assimilation of updated information occurs more slowly than the information itself updates. And every month, the gap between "how it was" and "how it is" grows.

One hundred percent truth to the client is the only defense against one's own hallucination. And it is the only thing that distinguishes a practitioner from an imitator today. Not "I will win" or "I will fight it off," but rather: here are the risks, here are the chances, here is what actually works, here is what does not work, the choice is yours.

Ahamkara and Why Business Owners Do Not Hear Attorneys

Ahamkara is a term from Sanskrit philosophy. It denotes the false "I"—a personality structure that perceives itself as the "doer," as the center of the universe, as someone to whom "such a thing cannot happen."

In a business context, ahamkara is the owner's programming that prevents them from believing that subsidiary liability could affect them personally. "Everything is clean with me," "I don't engage in cash-out schemes," "I have a normal company," "I won't be part of that statistic of 5,331 people prosecuted in 2024." These beliefs are not based on analysis. They are the product of ahamkara, which protects the ego from the need to change its worldview.

Any attorney working professionally with owners of mid-sized and large businesses knows this effect. An owner can read all the statistics, see the cases, agree with the figures—and two weeks later return to the thought, "but it won't happen to me." This is not stupidity or stubbornness. It is a function of ahamkara.

One practical rule follows from this. Prevention only works up to the moment ahamkara receives a blow from the outside. That is, before the tax audit act, before the demand for return to the register, before the lawsuit from the insolvency practitioner. After the blow, ahamkara restructures, and the owner begins to listen. But by that time, 80% of the game has already been played.

Therefore, the key work of a defender in a post-legal environment is the conversation with the owner's ahamkara before the external blow. Not through fear (ahamkara deflects fear too—"this is not about me"), not through numbers (it ignores numbers as well—"this is not my statistic"), but through the direct naming of reality and personal responsible action. A professional navigator does not try to defeat the client's ahamkara. They work with those fragments of it that are ready to listen.

Navigator Instead of Defender: Transformation of the Profession

In the classical picture of law, an attorney is a defender. The one who will go to court and win the trial. This role worked in an environment where the judicial process was open in terms of outcome—that is, where both parties had real chances.

In a post-legal environment, this role does not work. Not because there are no good attorneys. But because the process itself has ceased to be open in terms of outcome in the overwhelming majority of categories involving state interests. A defender promising to "win in court" is promising something that does not depend on their professionalism.

In this environment, a new role is forming—the navigator. This is a different professional function.

A navigator does not go to court to win a trial. A navigator works years before the court so that the court case does not arise. And if a court case does arise—so that it proceeds according to a scenario in which the client has the maximum preserved, rather than the maximum contested.

What a navigator does:

First. Sees the map of real risks in the current state of the legal environment. The six layers of personal liability for a director. The connections between them. Deadlines. Points of no return. This is not general theory—it is an up-to-date map that is updated every few months.

Second. Forecasts four years ahead. The owner's current decisions must be resilient to rules that have not yet been adopted but logically follow from the trajectory of the algorithm of complexity. This is working with a moving target. An attorney giving advice based on current norms without a 4-year forecast is giving advice that will no longer work in 2-3 years.

Third. Assesses risks in the logic of probabilities, not possibilities. "You have a chance to win" is a formulation from the old picture. "The probability of outcome A is 47%, outcome B is 35%, outcome C is 18%, the cost of each is N million"—this is the formulation of a navigator. Decisions are made based on the mathematics of expectations, not on hope.

Fourth. Acts preventively. Before a tax audit—transparent operations, documenting decisions, building structure. Before the audit act—internal audit, severing ties with dubious counterparties. Before the audit decision—objections with tax reconstruction. Before the decision enters into force—appeal to the Regional Tax Office (UFNS). Before bankruptcy—evaluating the scenario of voluntary bankruptcy as a strategy. Before subsidiary liability—preventive financial architecture of personal assets.

Fifth. Exhausts the creditor's interest when winning in court is impossible. The goal is not to win. The goal is to reach a point where the creditor loses interest in pursuit because the debtor's pockets are empty, and the litigation becomes economically pointless. This is a legal strategy, lawful at every step. But it requires playing the long game, without promises of quick results.

Sixth. Tells the client one hundred percent of the truth. Without preserving illusions. Without sugarcoating forecasts. Without "but we will try" where there is no probability of success. The client does not receive hope. The client receives a picture based on which they make their own decisions about their life and assets.

Four-Year Forecast: The Navigator's Horizon of Work

One of the key parameters of the algorithm of complexity is the speed of change. Every 2-3 years, the environment changes in such a way that decisions made under the previous picture cease to work.

This means that the horizon of effective prevention is four years. Not one year—that is too little, because decisions do not mature in a year. Not ten years—that is a utopia given such a speed of change. Four years is a timeframe over which the trajectory of legislation and practice can be predicted, and a resilient structure can be built to match this trajectory.

What a "four-year forecast" means in practice:

• Today, a business works with a single 'technical' counterparty. In 2 years, this will be grounds for denying deductions. In 4 years, it will be grounds for a criminal case. A decision today must account for both prospects.

• Today, the structure of a group of companies is divided across several simplified tax systems (USN). In 2 years, the FTS will see signs of artificial business fragmentation. In 4 years, there will be unified rules for the group. A decision today must align with a logic in which consolidation has already occurred.

• Today, the director stores documents in one place. In 4 years, any gaps in document flow will be grounds for the presumption of the CPD's guilt in bankruptcy. A decision today must create an archive resilient to the requirements of 4 years ago.

• Today, the owner holds assets in their own name. In 4 years, the insolvency practitioner will easily find everything through the FTS automated systems, registers, and the banking circuit. A decision today must create an ownership structure resilient to future search tools.

A 4-year forecast is not "guessing." It is an analysis of the trajectory of the algorithm of complexity, extrapolated to upcoming changes. Most of these changes are already visible. They are being discussed in the Ministry of Finance, in State Duma draft laws, and in speeches by FTS leaders. They do not need to be guessed. They need to be seen and integrated into current decisions.

What Real Practice Shows

In my practice over recent years, the following picture has emerged.

None of the clients have been brought to subsidiary liability. No one is in prison. At the same time, no one has won against the tax authority on the merits—all tax disputes in zones of significant state interest have been lost.

This fact must be interpreted correctly. The absence of imprisonments and subsidiary liability is not the result of "outstanding defense in court." It is the result of prevention built years before the problem arose. It is the result of working in the logic of a navigator, not a defender.

When an owner transitions to fully transparent operations, the tax authority has no grounds for aggression. When there is a four-year forecast, the business structure is preemptively resilient to new rules. When a problem arises, the strategy of exhausting the creditor's interest comes into play. When I tell the client 100% of the truth, the client makes decisions based on facts, not illusions.

This is the post-attorney role. Not a defender who will go to court and win the case. A navigator who works years before the court and steers the situation to a point where subsidiary liability and criminal cases simply do not arise. And if they do arise—where there is, by the time the procedure is undergone, a justified window for discharge or exit with minimal damage.

What a Business Owner Should Do in 2025-2026

Within the framework of this manifesto, I do not unfold a detailed step-by-step program—it is contained in the six specialized long-reads of the series (tax disputes, subsidiary liability, field tax audit, Article 199 of the RCC, interrogation at the FTS, personal risks of the director).

Here is the general framework to which these long-reads are attached.

First. Acknowledge that the environment has changed. This is working with one's own ahamkara. The figures above—regarding the 52% satisfaction rate for subsidiary liability claims, the 98% effectiveness of field tax audits, the links between the six layers of liability—apply to the environment in which you operate today. Not to a parallel universe. To yours.

Second. Accept that classical defense does not yield reliable results. The chances of complete victory in an arbitrazh dispute with the FTS are less than 5% by amount. For complete exemption from subsidiary liability, they are 39-48%. This is not "let's try—maybe." This is the mathematical reality in which decisions are made.

Third. Shift the center of work to the preventive plane. Four years before a potential problem. Structure, document flow, counterparties, documenting decisions, personal financial architecture. This is not paranoia. This is the professional standard of work in a post-legal environment.

Fourth. Find a navigator, not a defender. Specialized, focused, and truthful. Capable of providing a 4-year forecast, rather than "advice for right now." Not promising a win. Providing a risk map and recommendations in the logic of probabilities.

Fifth. Make decisions based on facts, not illusions. This is the hardest part. Because ahamkara resists. Because one wants to believe that "this won't happen to me." But this is precisely where the survival of the owner as a legal and financial entity in the medium term begins.

FAQ

What is the post-legal state?

It is a condition of the legal environment in which formal procedures (courts, codes, appeals) are preserved, but their substance ceases to align with what is declared: the outcome of the process is predetermined before it begins in categories involving state interests. Characteristics: structural imbalance favoring one party, presumptions of guilt instead of innocence, automation of control, narrowing of the defense space, routinization of repressive procedures. This is not the absence of law, but a different state of law—where an additional layer of factual predetermination is embedded between the norm and its application.

What is the algorithm of complexity?

A systemic pattern whereby the legal environment sequentially moves toward simplification for the state and complication for the participant. Every change adds one layer of complexity for the defense and removes one barrier for the attacking party. Yesterday's gray becomes today's black. Statutes of limitations work on the state's side. The volume of changes exceeds the speed of professional adaptation. This process will not stop on its own, nor will it reverse in the foreseeable future.

Why is an attorney compared to a hallucinating neural network?

This is a functional metaphor. A language model produces convincing text without a verification loop connecting it to reality. An attorney promising a client a win in a subsidiary liability dispute (where the satisfaction rate is 61%) or the cancellation of assessments in court (where chances are less than 5%) is functionally operating in the same mode. They are not lying consciously—they sincerely believe in their experience from 2018-2022 and fail to notice that the environment has changed. The difference: a neural network transparently discloses its nature, while an attorney does not.

What is ahamkara in a business context?

A term from Sanskrit philosophy—the false "I," a personality structure that perceives itself as "someone to whom such a thing cannot happen." In a business context, it is the owner's programming that prevents them from believing that subsidiary liability, a criminal case under Article 199 of the RCC, or personal bankruptcy could affect them personally. These beliefs are not based on analysis—they protect the ego from the need to change its worldview. Prevention only works up to the moment ahamkara receives a blow from the outside (an audit act, a demand, a lawsuit).

What is a navigator in the legal profession?

A new professional role forming instead of the classical defender under the conditions of a post-legal environment. A defender goes to court to win a trial—this worked in an environment open in terms of outcome. A navigator works years before the court so that the court case does not arise, or proceeds according to a scenario of maximum preservation. A navigator sees the risk map, forecasts 4 years ahead, assesses in the logic of probabilities, acts preventively, exhausts the creditor's interest when winning is impossible, and tells the client 100% of the truth.

What does a "four-year forecast" mean?

This is the horizon of preventive work over which the trajectory of legislation and practice can be predicted, and a resilient structure can be built to match this trajectory. One year is too little; decisions do not mature. Ten years is a utopia given the current speed of change. Four years is the optimal timeframe. Decisions made today must be resilient to rules that have not yet been adopted but logically follow from the current trajectory.

What is the strategy of exhausting the creditor's interest?

This is an effective defense strategy in cases where winning in court is impossible (a 52-61% satisfaction rate for subsidiary liability claims means a 39-48% chance of complete defense, which is insufficient for a reliable strategy). The goal is not to win, but to steer the situation to a point where the creditor loses interest in pursuit: the debtor demonstrates empty pockets, and the litigation becomes economically pointless. The strategy is lawful at every step but requires playing the long game and a pre-built financial architecture.

How does this picture differ from "standard legal consulting"?

Standard consulting provides advice based on current norms: "right now this is legal/illegal, do this." Working in the logic of the algorithm of complexity provides advice based on the movement of the environment: "right now this is permissible, in 2-3 years it will be in the risk zone, in 4 years it will be grounds for a criminal case, therefore a decision today must account for the entire trajectory." This is not theory—it is the working standard of preventive defense in the post-legal environment of 2025-2026.

Why do business owners often fail to hear attorneys?

Due to the operation of ahamkara—a personality structure that protects the owner's ego from information requiring a restructuring of their worldview. An owner can read all the statistics, see real cases, agree with the figures—and two weeks later return to the thought, "but it won't happen to me." This is not stupidity or stubbornness; it is a function of ahamkara. A professional navigator works with those fragments of it that are ready to listen, without trying to defeat it.

Conclusion

The algorithm of complexity is neither a theory nor a philosophical observation. It is a working framework within which practical decisions are made regarding business structure, choice of counterparties, document flow, personal assets, and the hiring of a defender.

Those owners who continue to operate under the logic of the 2010s—"we will fight it off," "we will resolve it," "we will win in court"—are guaranteed to encounter one of the six layers of personal liability in the foreseeable horizon. Their defenders, in most cases, operate in the mode of a hallucinating neural network—promising results that do not depend on their professionalism.

Those who redefine their approach—building transparent operations, forecasting four years ahead, working with a navigator, making decisions based on facts rather than hopes—preserve their assets, reputation, and personal freedom.

This is not a reason to panic. It is a reason to act in accordance with the logic of the current times.

The six specialized long-reads of the series unfold this framework into specific procedures:

• Tax disputes in 2024-2025 — statistics, real chances, defense strategy
• Subsidiary liability in 2024-2025 — who, for what, how much, how to protect oneself, how to discharge (the Rasoyan case)
• Field tax audit in 2025-2026 — stages of maneuvers, tax reconstruction, pre-trial appeal
• Article 199 of the RCC in 2025-2026 — procedure for initiation via FTS-IC, sentencing statistics, how to avoid
• Interrogation at the tax inspectorate — what they already know, what actually works, Article 51 of the Constitution
• Personal risks of the director and chief accountant — six layers of liability, Supreme Court Review of July 30, 2025

Each of these long-reads covers a separate procedure. Together, they form a map by which an owner can navigate the algorithm of complexity with minimal losses.

The expanded framework of the legal environment's transformation is available in the System Synthesis Research Institute project at isslab.ru. The "Kautilya" Telegram channel serves as a laboratory for formulations and current observations. Foundational material on the systemic analysis of the post-legal transition is in the book Homo Integer at fishchuk.su.

Here is the working manifesto. Next is specific work within specific procedures. With an understanding of the framework in which this work takes place.

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Sources and Links to Series Materials

Specialized long-reads of the series (on this site):

1. Tax disputes in 2024-2025
2. Subsidiary liability in 2024-2025
3. Field tax audit in 2025-2026
4. How to avoid imprisonment during tax maneuvers: ten years later
5. Interrogation at the tax inspectorate in 2025-2026
6. Personal risks of the director and chief accountant in 2025-2026

External materials:

1. https://fishchuk.su — author's book "Homo Integer"
2. https://isslab.ru — System Synthesis Research Institute
3. https://t.me/Kautilya_official — "Kautilya" channel (source of the manifesto)
4. https://pravorub.ru/articles/105541.html — author's publication on the Rasoyan case
5. https://fishchuk.pravorub.ru/ — publications on Pravorub (260+ materials)
6. https://www.klerk.ru/buh/articles/427814/ — author's 2015 article, of which long-read No. 4 is a remake

Key normative sources shaping the 2025-2026 picture:

• Russian Supreme Court Plenum Resolution No. 53 of December 21, 2017 (subsidiary liability)
• Russian Constitutional Court Resolution No. 20-P of May 21, 2021 (Karpuk case)
• Russian Constitutional Court Resolution No. 6-P of February 7, 2023 (Pokul case)
• FTS Letter No. BV-4-7/3060@ of March 10, 2021 (tax reconstruction)
• Federal Law No. 79-FZ of April 6, 2024 (raising thresholds for tax crimes)
• Federal Law No. 176-FZ of July 12, 2024 (business-splitting amnesty)
• Russian Supreme Court Plenum Resolution No. 42 of December 23, 2024 (expanding the circle of CPDs)
• Russian Supreme Court Review of Judicial Practice in Personal Bankruptcy Cases of June 18, 2025 (Paragraph 58)
• Russian Supreme Court Review of Practice under Article 53.1 of the Russian Civil Code of July 30, 2025 (26 legal positions)
• Case No. A63-1714/2020, Arbitrazh Court of the Stavropol Territory, July 2025 (discharge of RUB 703 million in subsidiary liability)