Three Big Law firms representing Russian banks sanctioned following Russia’s invasion of Ukraine—White & Case, Debevoise & Plimpton, and Latham & Watkins—have been trying to withdraw as counsel for months now, but it’s proving not to be so easy.
White & Case and Debevoise & Plimpton were granted permission to withdraw provided that substitute counsel file a notice of appearance by June 24. But, on that date, William H. Taft of Debevoise & Plimpton and Nicole Erb of White & Case jointly submitted a letter to Judge Gabriel W. Gorenstein stating that new counsel would be unable to appear on behalf of their client, Sberbank.
“Discussions among Sberbank and its prospective new counsel are ongoing, as they seek to identify a method to pay for legal services consistent with applicable sanctions and the continuing restrictions on Sberbank’s access to global financial networks,” stated the letter.
Latham & Watkins and its client, VTB Bank, have already missed two deadlines to get substitute counsel to file an appearance notice, and requested, in a letter addressed to Gorenstein, an additional two-week extension until July 7. In a previous request for more time, VTB stated that an agreement had been in place with Marc Agnifilo and Zach Intrater of Brafman & Associates. However, Brafman’s financial institution informed the firm it would not process any payments from Russia, according to the letter. Agnifilo and Intrater are exploring alternate financial institutions willing to accept payment while VTB continues to search for a firm willing to accept the engagement, according to the letter.
Jenner & Block, counsel for the plaintiffs, argued in its own letter to Gorenstein that the terms of the judge’s June 7 order should be enforced. That order stated that “Sberbank will be deemed in default” if new counsel was not in place by June 24.
“Now, more than three months after Sberbank of Russia first requested a short stay, its current counsel remains in the case, but Sberbank of Russia has nonetheless failed to participate meaningfully in discovery, producing not a single document in response to Plaintiffs’ merits discovery requests,” stated the letter submitted by Terri L. Mascherin of Jenner & Block. “Sberbank of Russia’s counsel cannot have it both ways: attempting to insulate their client from a default by remaining in the case but also refusing to participate in discovery, including the motion to compel essential for discovery to proceed.”
Gorenstein scheduled a discovery conference in the case for July 5 “to decide the matters raised based on the parties’ letters unless a party has shown good cause in advance of the conference why formal briefing should be required.”
The original complaint, filed by the family of Quinn Lucas Schansman in U.S. District Court for the Southern District of New York, alleged the banks provided ongoing and essential support to the Donetsk People’s Republic, a terrorist group operating in Eastern Ukraine. Schansman was killed on July 17, 2014, when a surface-to-air missile was launched at Malaysia Airlines Flight 17, a passenger plane traveling from Amsterdam to Kuala Lumpur, killing all 298 passengers onboard, including Schansman.
Since Russia invaded Ukraine and sanctions have gone into effect, it has become clear that dropping a Russian client and finding substitute counsel in ongoing litigation is not easy.
In April, Freshfields Bruckhaus Deringer submitted a request to withdraw from a different case involving another bank tied to the Russian state known as VEB Bank, asking the U.S. District Court in Washington, D.C., to allow another lawyer to take over its representation of the bank. In mid-May, Wesley Whitmyer, a Connecticut-based attorney, and litigator David Tobin, a name partner at Washington, D.C.-based Tobin, O’Connor & Ewing, submitted notices of appearance for VEB Bank, clearing the way for the Freshfields lawyers to withdraw from the case. Freshfields is no longer involved in that lawsuit.
And in March, a British Virgin Islands court refused to grant offshore law firm Ogier permission to withdraw from its representation of VTB Bank. The judge in that case famously told Ogier that “even pariahs have rights.”
Jenner & Block’s Mascherin, admitted pro hac vice, represented the plaintiffs and could not be immediately reached for comment. Likewise, defense counsel Taft of Debevoise & Plimpton and Christopher R. Harris of Latham & Watkins could not be reached for comment.
A firm spokesperson for White & Case declined to comment for this article.