Sanctions put Texas law firms with Russian clients and offices in difficult positions

As sanctions against Russian companies and those doing business with Russian entities grow daily, the role of lawyers is increasingly in the spotlight, including pressure to drop their Russian clients. And the fate of American lawyers practicing in Moscow is even more problematic.

Fourteen major business law firms operating in Texas also have more than 200 attorneys in their Moscow offices. Companies such as BP and Shell have in-house lawyers who live and practice in Russia. In addition, several large Russian companies, such as Lukoil, hire dozens of Texas lawyers to handle legal issues related to contractual agreements, financial transactions and international arbitration.

Three of those 14 law firms – Akin Gump of Dallas, Baker Botts of Houston and Norton Rose Fulbright – formerly Fulbright & Jaworski of Houston – have deep Texas roots and together have more than 50 lawyers in their Moscow offices.

Baker Botts, who represented the energy companies in his operation in Moscow, released a statement on Tuesday condemning the invasion of Ukraine.

“We are actively considering the complicated impacts of this dispute on our customers and the future of our work in Russia,” Baker Botts executives said in a written statement. “These include serious ethical, moral and legal considerations for the firm’s next steps and working directly with clients on any necessary transitions.

“Protecting and supporting the staff in our Moscow office remains a top priority for our firm during this challenging time,” the firm said.

Three domestic law firms with large operations in Texas — Baker McKenzie, Sidley Austin and White & Case — said this week they were dropping Russian clients specifically named on the banned list.

Some law firms, like Baker Botts, say they are reassessing their operations in Russia. A few firms have encouraged their lawyers to leave Moscow as quickly and discreetly as possible, fearing reprisals from the Kremlin, according to lawyers from those firms.

“Lawyers find themselves in a very delicate situation right now involving Russia,” said Milan Markovic, a law professor at Texas A&M. “There is a lot of public pressure on law firms to stop doing business with Russian companies. The speed with which this is happening regarding sanctions is problematic.

As an example of the ever-changing sanctions environment, Akin Gump’s International Trade Practice Group has sent over 30 updates to clients in the past five days.

Although the current sanctions have a technical “exception” for lawyers providing legal advice to Russian clients to help them stay compliant with the law, US lawyers face other concerns in Russia.

“A big issue in Russia is getting paid,” said Ryan McConnell, adjunct professor of law at the University of Houston Law Center and partner at the R. McConnell Group. “If you can’t pay employees, you can’t operate. And there is the very real issue of physical security. Law firms are concerned about the safety of their employees.

Citing security concerns for their legal teams, attorneys at several law firms declined to comment on the filing. Lawyers for Akin Gump and Norton Rose Fulbright declined to be interviewed.

Norton Rose Fulbright found himself in an internal dispute which was made public on Tuesday. First, Bloomberg published an internal memo apparently from the global company’s management asking its staff to “refrain from providing any comment” regarding Russia’s invasion of Ukraine. Hours later, Norton Rose Fulbright’s president of Canadian operations wrote on LinkedIn that he and his colleagues “stand with the people of Ukraine ‘and no other positions are remotely acceptable and are completely disavowed.’

Norton Rose Fulbright later told Bloomberg that the original memo was not intended to ban his lawyers from speaking out in favor of Ukraine.

Most of the Moscow lawyers of Akin Gump, Baker Botts and Norton Rose Fulbright specialize in corporate finance, mergers and acquisitions, energy law and international business representation.

Markovic said there has been a long-running debate over whether lawyers should represent unpopular clients. In many cases, however, these clients have longstanding relationships with the law firms, sometimes for decades, he said.

You can’t suddenly wash your hands off customers because public sentiment has turned against them,” Markovic said. “Even when ending representation, lawyers are ethically bound to do as little harm as possible.”

Matthew Boyden, an adjunct professor at the University of Houston Law Center, said the “exclusion” of penalties for lawyers was necessary.

“Lawyers are needed to provide legal advice,” Boyden said, including to prohibited entities, on how to stay compliant with the law.

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