Risk Update

Russia/Ukraine Conflicts — Ethical Conflict Called, Client Selection Conflicts, PR and Reputation Risk

‘Baker McKenzie Should Be Disqualified’: Georgia Lawyer Wants to Stop Firm Representing Russian Bank” —

  • “As pressure builds for Western law firms to break ties with major Russian clients amid the fast-developing conflict in Ukraine, a Georgia law firm is seeking to disqualify an international firm from representing a commercial Russian bank.”
  • “Baker McKenzie International partner Jacob M. Kaplan of New York is representing VUZ-Bank JSC, a wholly owned subsidiary of Ural Bank for Reconstruction and Development CB PJSC, in its request to take discovery in the United States District Court for the Northern District of Georgia for use in alleged fraud proceedings in Dubai.”
  • “But Poole Huffman trial attorney Luke Andrews of Tucker, Georgia, has motioned to disqualify Baker McKenzie International from continuing to represent VUZ-Bank, citing a conflict of interest.”
  • “The motion remains pending from December, but the current escalation of the Russia-Ukraine conflict, coupled with Baker McKenzie’s recent decision to cut ties with other Russian clients, might impact the litigation.”
  • “‘A most fundamental obligation of lawyers worldwide is the duty to protect client confidences, and a fortiori, not to deploy a client’s confidential information against that client,’ the motion drafted by Andrews read. ‘It most definitely precludes lawyers and law firms from obtaining a prospective client’s information concerning an existing dispute—while already representing the other side in that dispute—and then continuing to represent the other side in that dispute. Baker McKenzie’s representation of VUZ-Bank and Ural Bank against Hakan Agro offends this fundamental obligation, and must be stopped. Baker McKenzie should be disqualified.'”
  • “In the disqualification motion, Andrews noted that in mid-2021 Baker McKenzie sought to be retained by Hakan Agro to advise on a corporate restructuring, ‘despite already representing VUZ-Bank against Hakan Agro and the entire Hakan Group.'”
  • “Baker McKenzie is one of several firms that began parting ways with major Russian clients last week amid heightened sanctions and a growing call for the West to take action, as Ukraine continues to defend against the Russian invasion.”

(Reported last Friday): “Moscow: Global corporates are turning their back on Russia in their droves: It’s time for law firms to step up” —

  • “Legal IT Insider asks international law firms with a Moscow office what their plans are for the jurisdiction. The time for legalistic twaddle is over, argues editor Caroline Hill.”
  • “For many law firms, however, the war in Ukraine has been a PR nightmare, whether it be Norton Rose Fulbright telling lawyers they can’t comment on sanctions, to the many firms that have issued vague, legalistic statements when asked if they will sever ties with Russia. Then there’s the business of Tory MP Bob Seely exercising parliamentary privilege to allege that lawyers from Harbottle & Lewis, CMS and Carter Ruck, plus a barrister from Matrix Chambers are ‘amoral for working with Putin allies.’”
  • “Many international law firms have an office in Moscow, and we asked the majority – based on Legal 500’s Russia directory – what their plans are in and for the region. As a quick preface, we also spoke to the Solicitors Regulation Authority, which said (our words not theirs) that it’s not an option for law firms to ditch their office in Russia BP-style. But lawyers can speak up against the Ukraine invasion. They can decline new instructions. They can end relationships with Russian entities. And in many cases they are obliged to. So, are they?”
  • “Allen & Overy, which has 24 lawyers in Moscow and advises companies including VTB Leasing and AerCap, has issued an unequivocal statement condemning the actions taken by Russia. The magic circle firm is reviewing its Russia-related portfolio, and says that it will refuse new instructions and stop all Russia-linked work that goes against its values.”
  • “While Morgan Lewis didn’t pass public judgment on the invasion, spokesperson told us: ‘Across our global offices we are and will remain in full compliance with the sanctions regimes outside of Russia where we practice, including with respect to ceasing and declining client representations.'”
  • “Similarly, White & Case said: ‘We are reviewing our Russian and Belarusian client representations and taking steps to exit some representations in accordance with applicable rules of professional responsibility. Our Moscow office is open and continues to operate. We are complying fully with all applicable sanctions, and we continue to closely monitor this rapidly evolving situation.'”
  • “A more heartfelt statement came from DLA Piper, although it’s unclear how big the statement is on teeth. A spokesperson said: ‘We have watched in dismay and disbelief at the invasion of Ukraine by Russia. We stand with the people of Ukraine and our thoughts are with them and all those in the region, and beyond, who are affected by this tragedy. We are closely monitoring the rapidly changing situation and providing support to our people and their families wherever we can. We are of course complying fully with all applicable sanctions worldwide and are urgently reviewing all Russia-related client engagements to ensure we do not act in a way that conflicts with our values.'”
  • “And a slightly less committal Hogan Lovells said: ‘We can’t comment on specific client relationships but we continue to closely monitor the situation and the fast-evolving laws and sanctions globally and to align our client work, and our operations, accordingly. That may mean ceasing work where appropriate. We continually evaluate our operations and portfolio of work and any new client mandates to ensure we are complying with sanctions requirements and local government guidance, including the advice from UK, U.S. and other governments. Our thoughts are with all those people affected by the situation in Ukraine, including many of our own colleagues who have relatives in the region.'”
  • “Bryan Cave Leighton Paisner said: ‘As with most multinational organizations operating in the region, we have been closely coordinating to navigate the complexities of the situation. We are adapting to comply with applicable sanctions and responding as required in the circumstances. Due to confidentiality, we are not able to share more.'”
  • “We’ve got nothing back from Eversheds Sutherland, Akin Gump, Dentons, Latham & Watkins, Cleary Gottlieb Steen & Hamilton, Clifford Chance and Dechert, all who have offices in Moscow.”

(on Monday): “Law firm Norton Rose Fulbright to exit Russia over Ukraine invasion” —

  • “Norton Rose Fulbright is ending its operations in Russia, becoming the largest law firm so far to exit the country since Russian forces invaded Ukraine and triggered waves of international sanctions.”
  • “The 4,000-lawyer firm said in a statement early Monday that it is closing its Moscow office ‘as quickly as we can, in compliance with our professional obligations,’ calling the wellbeing of its staff in the region a ‘priority.'”
  • “The London-founded firm Linklaters on Friday said it will also leave Russia and will decline to represent any entities under the influence of the country’s current regime.”
  • “Two other major law firms with a Russia presence, CMS and Baker Botts, have said they are reviewing their future in the country. Swedish firm Mannheimer Swartling last week suspended its Russian operations and is determining whether it can leave the market.”