From Russia with lawyers: who has pulled out so far?

Several major US firms and all four of London’s ‘Magic Circle’ law firms that have offices in Russia have announced their plans to end operations in the country, following Vladimir Putin’s invasion of Ukraine in late February.

Allen & Overy and Clifford Chance are the latest of the Magic Circle to pull out, following similar decisions by Freshfields Bruckhaus Deringer and Linklaters, which was the first major Western law firm to announce it was pulling out of Russia, on March 4.

“Once Linklaters decided to close in Moscow it was immediately clear that others would follow,” Michael Evans, former EMEA communications head at Baker McKenzie, and now a director at legal PR agency Byfield, was quoted by Financial News as saying.

DLA Piper, a UK law firm with a large presence in Russia, also plans to exit the country. The firm will transfer its Russian business, which includes around 200 staff and offices in Moscow and St. Petersburg, into the hands of its local partners to create an independent group with no ties to its former parent, a person familiar with the matter was quoted by the Financial Times as saying.

“In light of Russia’s actions in Ukraine and the resulting humanitarian crisis, and our consequent decision not to act for clients connected to the Russian state, we have concluded that maintaining a presence in Russia is not aligned with our values and therefore no longer viable,” the firm said in a statement.

Other firms to have announced their exodus in recent days are Herbert Smith Freehills and Bryan Cave Leighton Paisner (BCLP).

Allen & Overy, which last year had revenue of £1.77 billion, has had a presence in Moscow since 1993, with 55 staff in the country. In a statement, the firm said that it was “doing everything [it] can to support and where possible will redeploy [staff] to work elsewhere.

“It is with regret that this has been made necessary by the illegal and senseless invasion of Ukraine and the ensuing humanitarian crisis,” Allen & Overy added in its March 10 statement.

On the same day, Clifford Chance said: "Following our earlier announcements condemning the Russian invasion of Ukraine and our position on Russia-related work, we have decided to progress our steps for an orderly wind-down of our operations in Moscow".

For law firms of such size, winding down operations in a country in which they have become well established is no easy task. BCLP has more than 120 lawyers in Moscow, according to its website, while Herbert Smith Freehills has 111 staff in the country, including 55 lawyers, and firms will be looking to redeploy staff to other cities, while closely monitoring the war in Ukraine amid any signs of a de-escalation and the possibility of returning to Russia in the medium term.

Other firms to have announced their withdrawal from Russia include North American firms Latham & Watkins, Eversheds Sutherland, Gowling WLG, Squire Patton Boggs and Norton Rose Fulbright, all of which announced their decision to leave in early March.

US-headquartered law firm Skadden, Arps, Slate, Meagher & Flom is pulling its lawyers out of Russia but will keep its Moscow office open.

In an internal memo quoted by Law.com, Skadden’s executive partner Eric Friedman said its Moscow-based lawyers would be leaving Russia with immediate effect “to ensure their safety in the face of increasing anti-American sentiment”.

“We are supporting our remaining Moscow team members and working with them to transition to a limited administrative presence,” the memo added.

White & Case also plans to keep its Moscow office open, but is “actively assessing the impact” of the situation, it said, while New York-headquartered firm Debevoise & Plimpton said on March 8 it was “conducting a review of the status of [its] Moscow office”.

European law firms are also withdrawing from Russia, such as Helsinki-based Borenius; Swedish firm Mannheimer Swartling, which has suspended operations in Moscow and is analyzing whether to pull out of Russia altogether; and Amsterdam-headquartered Houthoff, which said it will drop all Russian government and state-sponsored clients.

While law firms are eager to safeguard their reputations by severing links with Russia, in line with the growing number of multinational companies that are abandoning the company, they will be reluctant to step out of a large market that has proved lucrative, given the demand for legal services from Russian multinationals and oligarchs, as global law firms have been instrumental in connecting such figures to the global marketplace and financial markets.

Global law firms have played a fundamental role in brokering major deals between Russian companies and their partners or buyout targets outside of Russia, and will undoubtedly take a hit to their revenues by relinquishing clients in the country, while mindful that their withdrawal is tantamount to applying pressure on the country, depriving Russian private companies as well as state-owned ones of vital representation in global legal affairs.

Withdrawal is also a necessary move to sidestep the sanctions imposed by the UK, the US and the European Union, which impede foreign companies from doing business in the country.

"If you cut off legal advice to these guys, it's going to have repercussions in tax, in securities, in investments and in reputation management,” Elise Bean, former staff director on the US Senate’s Permanent Subcommittee on Investigations, said in an interview with Axios.

But not all law firms with operations in Russia are keen to leave so soon. Dentons, the world’s largest law firm, currently intends to remain in Moscow. The group, which has around 250 staff in the country and whose clients have included state-owned energy group Gazprom, has voiced concerns about the risk of reprisals against its workforce if it pulled out.

Alexei Zakharko, Dentons AB’s managing partner in Russia, said on Monday that the team would “continue to operate as an independent law firm”, while chief executive Elliott Portnoy said: “Our hope is that at a future time we will be able to come back together when it is lawfully and practically possible to do so.”

The most recent announcement comes from Baker McKenzie, which said on March 15 that its Russia operations, which are located in both Moscow and St. Petersburg, will become an independent law firm.

“We have made this difficult decision following ongoing consultation with our multinational clients, whose urgent on-the-ground legal needs we are serving, as well as careful consideration of the wellbeing of our many people in the wider region,” the firm, which has more than 260 staff employed in Russia, including 130 lawyers, said in a statement.

Adam Critchley