(Bloomberg) -- Several law firms said they are reviewing and, in some cases, planning to cut ties with major Russian clients as pressure mounts to comply with strict sanctions aimed at strangling the country's influence around the world.
Baker McKenzie, a Chicago-based firm that posted over $3 billion in revenue last year, said it was reviewing its Russian-related operations and clients to comply with sanctions. Baker McKenzie advised VTB Bank on a refinancing agreement in 2020 and represented Russia's Ministry of Finance on a sovereign bond offering last year.
“We do not comment on the details of specific client relationships, but this will mean in some cases exiting relationships completely,” said a spokesperson for the firm. Baker and a second law firm, Dentons, have closed offices in Ukraine's capital.
U.S. firm Sidley Austin said last week it had severed ties with VTB following the invasion. London-based Linklaters LLP said in a statement Monday it's “reviewing all of the firm's Russia-related work.” White & Case LLP, based in New York, said it was “reviewing our Russian and Belarusian client representations and taking steps to exit some representations in accordance with applicable rules of professional responsibility.”
Sanctions imposed by the U.K., EU and U.S. in response to Russia's invasion of Ukraine are forcing firms globally to consider whether they should continue working with Russian clients who are state-owned. London courts have long been a venue for wealthy Russians seeking to resolve disputes over business deals gone awry or failed marriages.
A group of the largest law firms in London -- including Allen & Overy and Clifford Chance -- either failed to respond to requests for comment over the handling of their Russian clients or declined to comment on Monday.
VTB is involved in at least two lawsuits in London, with Freshfields Bruckhaus Deringer LLP working for the bank in its High Court fight against the Mozambican government over a “tuna bond” scandal and White & Case separately representing it over the disputed sale of shares in a Bulgarian telecoms company. Freshfields declined to comment.
VTB previously declined to comment on the sanctions and pointed to the bank's earlier statement, in which it said it has worked to minimize the effect of sanctions on clients and that “another round of politically motivated anti-Russian sanctions came as no surprise.”
Legal Headache
The U.K. sanctions regime will also add new billing headaches for London's lawyers. Without a government license that specifically allows for workarounds like legal advice, attorneys simply cannot get paid.
The potential impact of the action was already under discussion in London's courts on Monday. A Luxembourg-based unit of Gazprombank JSC is “potentially in the frame” for asset freezes, its lawyer Michael McLaren told a judge in the High Court, at the start of a two-day hearing.
Gazprombank isn't one of the current Russian banks facing a raft of new measures but is already under limited sanctions, he said. European countries, he said, were reluctant to impose stiffer sanctions on his client to “preserve their gas supplies.”
The judge responded that as long as the bank could be represented by attorneys, then the hearing could go ahead.
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