Big Law's Russia Wind-Down Complicated by Ethics, Questions of Return

Big Law firms with telecommunications, media and technology (TMT) practices are pulling out of Russia, and whether they will return after the end of Russia's Ukraine invasion is questionable. Some see the one-two punch of Ukraine and the COVID-19 pandemic making it less likely Big Law will return someday. Several TMT companies are also opting to end or limit their Russian presence.

Numerous Big Law firms cited the Ukrainian invasion and resulting humanitarian crisis. "Maintaining a presence in Russia is not aligned with our values and therefore no longer viable," DLA Piper said last week. Latham Watkins, Squire Patton, Baker Botts and Hogan Lovells made similar statements about deciding this month to shutter Russian practices or sever ties with those offices. Akin Gump, which reportedly also opted to roll up its Russia presence, repeatedly declined comment.

Many also said they won't work for Russian state-affiliated entities. “In line with the current international sanctions, we are not representing any entities included on the sanctions list and have committed not to take on any work for Russian state-owned enterprises,” said a spokesperson for law firm Sidley Austin, which doesn't have offices in Russia.

Complicating the law firm windings-down is that lawyers are expected to minimize harm when dropping a client, said Milan Markovic, Texas A&M law professor. One can often withdraw relatively quickly from a client or case picked up recently, but representation involving ongoing arbitration or negotiations or involving a deal with deadlines is "not the type of thing where, 'Oh, we are not representing you anymore, best of luck,'" he said. The COVID-19 pandemic and a major conflict in the heart of Europe could make Big Law gun-shy about returning to Russia, especially when technology increasingly allows servicing clients remotely, he said.

Firms might shut down offices due to business conditions or losing attorneys to other firms, but the decision-making in a crisis happens more quickly, Markovic said. While not a decision firms make instantly, sanctions and political pressures can make closing an office more a priority than sticking it through, he said. For companies with tangible assets in Russia, such as inventory, factories or storefronts, "the stakes are much higher," Markovic said.

The first Western law firm in the Soviet Union was Coudert Brothers in 1988, emailed Bruce Bean, Michigan State University professor emeritus-corporate and international law. After 1991 and the fall of the Soviet Union, "almost all western companies with something to sell arrived there." Some international companies repatriated their expatriate employees during the ruble crash of 1998, he said. "I personally carried $5000 in USD with me in case we had to leave in a hurry," said Bean, who also did consulting work on operating in Russia. Over time, Russians replaced expats at most international law firms, he said.

With the invasion of Ukraine, firms have withdrawn their few expats who remained and stopped doing business there, he said. "Not all of them have concluded they will stay away forever, but, for the moment, their reputations require them to withdraw," he said, saying there's a hope and expectation among international companies and law firms that they are able to return post-hostilities.

Meanwhile, Disney said in a news release it's pausing all business in Russia: “This includes content and product licensing, Disney Cruise Line activities, National Geographic magazine and tours, local content productions and linear channels.” The company previously announced it was halting all theatrical releases in the country. “Some of those business activities we can and will pause immediately. Others -- such as linear channels and some content and product licensing -- will take time given contractual complexities.”

Disney employees in Russia will remain employed, the company said. Along with stopping sales of products and services, Microsoft said it's working with Ukraine to block cyberattacks on government, financial and IT sectors there. AT&T, Comcast, Verizon, T-Mobile, Apollo Global Management and Liberty Global didn’t comment. Other than ground stations in Russia, most Western commercial satellite operators don't have a Russian presence or exposure, said Satellite Industry Association President Tom Stroup.