Lawyer Monthly - April 2022

WWW.LAWYER-MONTHLY.COM 15 The Impact of Sanctions It is more difficult for law firms to cease their operations in a country than it is for most companies. Unlike other multinational businesses, firms cannot simply cut off support to local outlets with the potential to return when the environment has changed. Since the fall of the Soviet Union, firms have spent decades building Russian client loyalty that will undoubtedly evaporate if they pull their national presence. Closing an office can be expected to have a similar effect, as lost local staff and the personal goodwill they have earned will not be easily replaced. And of course, this is to ignore the obvious legal obligations that a firm has to its existing clients. But firms that might have been willing to “ride out” the reputational damage rather than give up their Russian operations may simply have their hand forced by sanctions. Particularly in the UK, there has been a surge of new amendments to sanctions legislation (and an increase in the number of entities to which they apply), with a potential risk of regulatory action and criminal prosecution for firms and individuals found to be in violation. With a significant new range of sanctions inhibiting firms from receiving payment from or issuing payment to named individuals and organisations, the attraction of doing business with Russia is sure to diminish even for firms willing to risk a knock to their reputations. It remains to be seen just how far the list of sanctioned entities will ultimately extend, but it is a safe bet that it will not soon stop growing. The Sector Moving Forward Beyond merely sitting out the war in Ukraine, we can expect to see many familiar firms become involved in legal action against Russia over its military activities. Some have already done so in the employ of Ukraine: acting on the government’s behalf, Covington & Burling filed a claim at the International Court of Justice in the early days of the conflict, demanding that Russia cease its attack. Ukrainian President Volodymyr Zelenskyy has also hired US firm Morrison & Foerster to counsel his office on US, UK and EU sanctions regimes, and attorneys from Los Angeles-based Quinn Emanuel Urquhart & Sullivan have been brought on to represent Ukraine before the European Court of Human Rights in a case accusing Russia of human rights abuses. Other firms are assisting Ukraine by engaging in charitable support. Norton Rose Fulbright has also made public its intentions to collaborate with global partners to raise funds, “as well as providing pro bono support to those Ukrainians and others who are being forced to relocate”. Its peers have followed suit, with DLA Piper stepping in to run an advisory service for Ukrainians seeking refuge in the UK. We expect to hear further stories of charitable work on behalf of Ukraine in the months to come. It is also reasonable to expect that law firms serving Russian clients – particularly sanctioned individuals and organisations – will suffer ever-increasing negative media attention. It is too early to determine the impact of all this upon the Russian economy and the global legal sector, though it is certain to be without precedent in modern history. For the time being, we will continue to report on law firms’ activities in and around both Russia and Ukraine, and continue to hope for a swift resolution to the conflict. It is more difficult for law firms to cease their operations in a country than it is for most companies.

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