So much has happened in the last week following Russia’s invasion of Ukraine that it is difficult to appreciate the magnitude of the situation facing London’s legal market.
In the space of just five days almost all of the industry’s biggest players have had to release political statements and reconsider their relationships with those highly-lucrative clients that are backed by the Russian state.
It is not hard to know who the main firms are in this space. The links between Russia and London’s financial and legal industry have been clear and obvious for a long time. Maybe that’s why the legal advisers to the largest Russian state-owned enterprises is a bit like a simple list of the largest law firms. Linklaters, Herbert Smith Freeshills, Freshfields Bruckhaus Deringer, DLA Piper, Allen & Overy, CMS, Hogan Lovells, Norton Rose Fulbright, Clifford Chance, Bryan Cave Leighton Paisner, Dentons, Ashurst, White & Case, Baker McKenzie, Cleary Gottlieb Steen & Hamilton and Skadden Arps Slate Meagher & Flom. The list goes on.
Cue an awkward set of conversations among leadership teams across the industry. Do we want to alienate such important clients of the firm? Aren’t we apolitical? Where do we stand on sanctions?
Ashurst, Fieldfisher and Morgan Lewis & Bockius decided the sensible thing to do was to delete any reference to their work related to Russian state-owned clients from their websites. Presumably those firms wanted to minimise their links without having to publicly say so. Only this attempt was spotted by Jack Womack.
Once a few firms started to denounce the war and say they were cutting ties with Russian clients or at least reviewing the work they do it became difficult for others to hold back. Then CMS partner Geraldine Proudler was among lawyers named in Parliament on Tuesday by a Member of Parliament speaking out against solicitors working for Russian clients and the pressure mounted further. By Wednesday more than half of the list of firms had made some kind of statement and it became a race for firms to avoid being the last one.
That race appears to have been lost by CMS. Clifford Chance became one of the last to join in earlier today.
Look at the statements and they vary significantly. In fact, some firms have said little more than they will abide by sanctions – err, they have to do that – and will review the work they do – they probably have to do that too and it is hardly radical.
But the fact that all of these firms have made statements and many have taken a clear stance of cutting ties with Putin’s regime is a hugely significant moment. It is now hard to imagine Russian money pervading the U.K. financial system like it did before and law firms will find it difficult to have the strong Russian connections they once enjoyed without some tough questions being asked.
Not only could this revenue stream be coming to an end but there are calls from people within the industry for firms to have a clearer approach on ethical decisions too.
This is not just a case of losing a few Russian clients. The whole system of being able to act for anyone under the argument that everyone is entitled to legal representation is being questioned. What about firms that have links to other sanctioned regions, such as Myanmar, and links to other authoritarian governments, such as China?
Advising companies in certain sectors – such as tobacco, arms and big oil – or providing certain kinds of services – such as tax and lobbying – could come under scrutiny too. After all, the idea of ethics committees might sound pleasant, but such bodies could quickly become rather inconvenient to commercially-minded firms.
Yet with so many firms keen to differentiate themselves through their purpose and values it is easy to imagine a legal market that makes decisions in a very different way to how they are made today.
And when firms look back to when it all started to change, they will think of this week.
