U.K. law firms’ somewhat murky links to Russian money are coming under scrutiny like never before.
On Tuesday some lawyers, including CMS partner Geraldine Proudler, were named in U.K. Parliament as among those advising clients with links to the Kremlin. Many large firms have been exposed as key advisers to Russian state-back entities.
Accordingly, firms including Linklaters and Hogan Lovells, are now publicly stating that they are reviewing their Russia-related work. Bryan Cave Leighton Paisner and Dentons have been slightly less emphatic and effectively just said they are reviewing the situation regarding sanctions.
But are these ‘reviews’ just a cop out for firms that don’t want to commit to dropping clients?
Quite possibly. And yet there may also be more going on behind the scenes.
Fears of a cyber attack are very real among law firm leaders who are weighing up the awkward balance of speaking out about Russia’s invasion of a democratic state and creating fresh problems for themselves.
Could speaking out, as many no doubt want to do, attract the unwanted attention of hackers? And could there be other repercussions to firms saying what they really think?
The answer is clearly ‘yes’. Some partners do not want their leadership to be too forthright.
And maybe, even in the face of war, commercial concerns still outweigh all other considerations. One London partner said: “Clearly you need to be wary of taking on new Russian businesses, particularly those close to the state. But it’s not appropriate to ditch clients mid-way. People should think hard matter by matter. It doesn’t pay to be too radical.”
Even firms keen to take an ethical approach, can face obstacles.
Firms that have Chinese practices may have partners there who feel differently about the conflict. They might not want to risk alienating them with too strong a political statement.
Firms that have Moscow offices may have lawyers and staff who could be physically endangered by public criticism of the Russian regime. And firms that employ Russian nationals outside of Russia will want to make sure they do not feel ostracised.
Then there is the matter of clients. Not all private Russian companies are necessarily supporters of the Putin regime. Firms that want to carry on working for them would not be supporting the actions of the Russian military by doing so, even though the optics do not look good.
White & Case, Baker McKenzie, Sidley Austin and Ashurst are among those to have announced they are severing ties to at least some Russian clients. Credit to them. But many firms will have to stop working with clients that are hit by government sanctions anyway so it is unclear which decisions are based on ethics alone at this stage.
The headache facing law firm leaders is that while some may privately want to voice support for Ukraine, they feel the sensible thing for the business is to remain in the background, stay apolitical and advise who they like. It is a bit like the situation in Hong Kong in recent years.
And yet with their links to Russia, firms are unable to avoid attention. So far, many firms are holding back on announcing their stance. But as more firms start to speak out there will come a tipping point when it is more problematic to remain silent than to say something.
If nothing else it sends a bad message to staff, clients and wider society to be the one firm that said nothing while all others did. Are these firms really more concerned about client connections than they are about war?
At the moment, firms that are refusing to say anything include: Freshfields Bruckhaus Deringer, Herbert Smith Freehills, DLA Piper, CMS and Clifford Chance. These are all firms with clear links to Russian state-backed entities.
There are risks on trying to shut down all communications on the matter. Norton Rose Fulbright has certainly raised a few eyebrows across the industry, and internally, by discouraging its lawyers from commenting publicly on sanctions. Not only is this an emotive time for everyone, but also isn’t it a lawyer’s job to comment on how sanctions may affect business?
It appears fairly likely that more firms will feel they have to speak out some time soon. What is the very least they can say? “We are looking into it, reviewing the work we do.” Yes it is a cop out, but it is better than staying silent.
Law firms may hate to venture into politics, but in this highly-politicised world, there may soon be no choice.