The world has been focused on the news from Ukraine over the past week, and it’s easy to see why. For the first time ever, we are witnessing a war as it happens. The Vietnam War is known as the first televised war: I remember as a child watching reporters interviewing U.S. soldiers on the ground during nightly newscasts. And during the Iraq War, we saw “embedded” journalists traveling alongside troops as they made their way across the Iraqi desert toward Baghdad. But today, technology has enabled us to watch an unprovoked invasion of an independent country in real time: On the first day of the war, Google maps reportedly showed movement of Russian tank units, because Google wanted to alert drivers to traffic jams.
Yes, in real time we can follow tweets and Facebook posts and even have Linkedin conversations with Ukrainians witnessing missiles fall and buildings destroyed. One staffer at a prominent Ukrainian law firm told me in a Linkedin conversation on the first day of the invasion, “We remain calm, strong, trust our army and international community, and still hope for the good.”
And the international community, both legal and political, has responded—with sanctions and offers of pro bono representation. Will it be enough to repel Russia’s occupation of Kyiv? Most experts say that is unlikely. For obvious reasons, Ukrainian and international law firms, including Baker McKenzie, CMS and Dentons, have closed their Kyiv offices for now. But these global firms say they are still working remotely and assisting their Ukrainian employees in any way they can, including helping them relocate to neighboring countries.
And they’re not alone.
The humanitarian and refugee crisis is mind-boggling, as hundreds of thousands of women and children have already fled to Western countries, and the EU is expecting up to four million more. Some large U.S. law firms have stepped up, including Ropes & Gray, Akin Gump Strauss Hauer & Feld and Paul, Weiss, Rifkind, Wharton & Garrison, saying they are preparing to provide pro bono legal assistance.
But the aid isn’t just coming from the Global 200 law firms. KNP Law, a 20+ lawyer firm based in Budapest, for example, is on the front lines at the border assisting Ukrainians and is offering its services, pro bono, to help refugees settle in Hungary or other countries. It is also establishing an international network of lawyers willing to take on, pro bono, Ukrainian clients seeking asylum or immigration assistance. The firm says it has already received interest and commitment from more than 500 international lawyers but is also seeking assistance from large law firms to help prepare claims and resettle displaced Ukrainians. You can sign up here.
And then there are sanctions. Many experts have said the outcome of this war, at least in the long term, will depend on the response of the global community. That’s why Timur Bondaryev, founder and managing partner of Arzinger, one of Ukraine’s elite firms, called upon the global community to actively assist his country. The invasion, he said, “is not only about our country but about world security.”
The world is responding. Sanctions have been put in place against Russian oligarchs believed to be close to Russian President Vladimir Putin, as well as Putin himself. They’ve also been imposed on Russia’s main banks—an effort intended to cut off the country from Western financing. The U.S. also is freezing trillions of dollars in Russian assets. Some Russian companies, including the Russian state-controlled energy company that owns Nord Stream 2—the not-yet-operational natural gas pipeline between Russia and Germany—have also been sanctioned. The EU said it will ban transactions with the Russian Central Bank.
In addition, countries are barring Russia from the SWIFT system that facilitates international financial transactions. Norway’s $1.3 trillion sovereign wealth fund said it plans to freeze its assets in Russia and divest from the Russian market. European countries are financing the provision of weapons to Ukraine and have banned all Russian aircraft, including commercial aircraft and charged private jets, from all EU airspace. The British oil giant BP, which has worked in Russia for more than 30 years, said it would dispose of its 20% stake in the Russian state-controlled oil company—even though the move is expected to negatively affect its bottom line. And the sanctions keep coming.
Meanwhile, like BP, companies that do business in Russia are feeling the impact of sanctions and seeking advice from lawyers that specialize in sanctions and foreign trade practices. Some say they have been inundated with client calls to help them appraise the situation and their potential risk exposure. “Things keep changing very quickly,” Gibson Dunn & Crutcher international trade compliance lawyer Adam Smith told reporter Bruce Love last week, adding that even clients who do not directly trade in Russia are looking for advice—or if they’re not, they should be.
And what of foreign law firms—and companies—in Russia? In a Q&A with correspondent Anne Bagamery, Armando Ambrosio, a resident partner in the Moscow office of the Italian firm De Berti Jacchia Franchini Forlani Studio Legale, who provides legal, tax and consulting services to Italian and Russian clients, talked about the outlook for business in Russia under the growing list of sanctions. Ambrosio said he expects there will be a lot of obstacles to doing business in Russia, especially due to the financial sanctions. Clients are scared. Some pending projects will likely be delayed, and at some point, some companies—and international law firms—may decide to shutter their doors in Russia if the situation becomes too difficult, he said.
Isn’t that the point of sanctions—to hobble Russia’s economy? Maybe. But the other question is, does Putin care.
Other News—Where to Grow?
Meanwhile, international law firms continue to look for markets where they can increase profitability and grow. It became increasingly clear last week that two markets that have their attention are the U.S. and Asia.
U.K. firms have been seeking opportunities in the U.S., and last week Simmons & Simmons announced it has opened its first U.S. office in Silicon Valley, hiring the head of Osborne Clarke’s Silicon Valley office for its launch—a lawyer who is a data privacy, cybersecurity and technology law specialist. The move follows that of fellow U.K.-based firms Freshfields Bruckhaus Deringer and Allen & Overy, which also expanded to the U.S. West Coast in recent years.
Allen & Overy, meanwhile, announced last week it is hiring five partners from Goodwin Procter for its U.S. intellectual property litigation practice—a move that will give the firm an office in Boston. The Boston office could tie in well with the firm’s recent expansion into California, as it connects its technology and life sciences practices, U.S. managing partner Tim House told reporter Dan Packel.
Breaking into the U.S. market is neither easy nor cheap, however, And the cost of moving into the expensive, but potentially lucrative, market became apparent as Freshfields Bruckhaus Deringer and Linklaters both said they have matched the most recent increase in the associate pay scale for its U.S. lawyers. The new pay scale, part of the ongoing pay war for U.S. law firms, gave senior associates another bump in salary.
But perhaps the potential for the most growth in the legal market is in the Asia Pacific—at least for the firms that play their hands well. And several global law firms made it clear last week that they are hoping to position themselves for growth in the region.
While discussing the 2021 firm financials of U.S.-based O’Melveny & Myers, which reported gross revenue reaching a record $911 million, O’Melveny chair Bradley Butwin said the firm’s Asia capital markets practice, which handled nine IPOs on the Hong Kong stock exchange last year, may have been among the firm’s busiest. The firm also grew its corporate capabilities in China, and added two prominent M&A attorneys in South Korea, he said.
McDermott Will & Emery, which crossed the $3 million barrier in profits per equity partner and saw its revenue jump over the $1.5 billion mark for the first time, also has set its hopes in Asia, firm chair Ira Coleman told reporter Patrick Smith. McDermott had shuttered its Seoul office in 2019 and its mainland China office in 2020, but it relaunched in Asia last year with an office in Singapore, where its practice areas and expertise are more closely aligned to the firm’s core practices. McDermott’s Singapore office has since hired several partners and lawyers.
And then there is Herbert Smith Freehills, whose strategy for the next five years focuses largely on the firm’s Asia business, firm CEO Justin D’Agostino told reporter Hannah Walker. The firm has eight offices across Asia, plus four affiliations and associations, and its Asia business currently accounts for approximately 14% of the firm’s revenue. By 2025, D’Agostino said he and the rest of HSF’s senior management want to see that increase to at least 20%. “So much work is coming out of and into APAC,” he said.
This is not to say it’s getting easier to do business in Asia. In Hong Kong, international law firms are quietly reassessing their business strategies because of the increasing control China has over Hong Kong. And, now that Hong Kong has imposed dramatic COVID-19 restrictions on residents as it confronts a surge in cases that is overwhelming hospitals, there is an expectation that even more ex-pat lawyers will leave Hong Kong and not return, further depleting the talent pool, according to Law.com International’s Jessica Seah.
I urge you to read Jess’s Asia Legal Briefing from last week. She called it “Hard Truths”—an apt name and a painful reminder of all that is going on in the world.