01 Mar 2022

Kennedys to close Moscow office as pressure grows on firms to ditch clients with Kremlin links

Decision to pull out of Russia taken last autumn; Linklaters and White & Case latest to confirm reviews of client rosters

The Kremlin and Moskva river in winter

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Top 30 UK law firm Kennedys has signalled the closure of its Moscow office as pressure grows on international law firms to sever their links with state-controlled clients in the wake of Russia’s invasion of Ukraine.

Kennedys’ global senior partner, Nick Thomas, revealed today that the international insurance law specialist has been quietly winding down its small Moscow arm since last year.

At the same time White & Case and Linklaters joined Baker McKenzie in confirming that they are reviewing their Russian client rosters, with White & Case, like Bakers, revealing that this would involve some clients being dropped.

Thomas, said of his firm’s decision to pull out of Moscow: “We were uncomfortable with the direction the country was taking and made the decision to wind down our Moscow office last autumn. 

“We have already let go the small number of staff that were in that office, having taken the time to comply with local labour laws.”

Tony Williams, principal of Jomati Consultants and former managing partner of Clifford Chance’s Moscow office, said: “It looks like it is going to be very difficult for international firms to continue operating in Russia and I suspect quite soon you will see firms scaling back, closing or spinning out their offices to local teams.
 
“In the very short term, I’m sure the firms are in close contact with their people sorting out practical issues. They have a duty towards their Russian staff so that may have a bearing on what they say publicly. But there are also going to be lots of practical issues including how they are going to be paid and the difficulty of international travel.”

Pressure is, however, growing on firms to scale bake their Russia work. Notably, yesterday, UK prime minister Boris Johnson’s official spokesperson warned law firms to “think very carefully” about advising state-controlled companies with ties to the Kremlin. The comments followed the Foreign Office’s revelation that it had received legal letters by firms representing oligarchs and companies seeking to avoid sanctions.

Michael Evans, former EMEA head of communications at Bakers and a director at Byfield Reputation Counsel, said: “Previously acceptable business with many Russian clients is now subject to sanctions and firms should be judged on what they do now rather than past work. 

“Political pressure is only one part of the story – an awful lot of demand that firms take a clear public stance is coming from their clients and their people. These are the two most important stakeholder groups for any professional services business.”

Alongside White & Case, Linklaters and Bakers, firms that have a significant presence in Moscow include Clifford Chance, Freshfields Bruckhaus Deringer, Dentons, Latham & Watkins and Cleary Gottlieb.

Kennedys launched in Moscow in 2015 when it hired Clyde & Co’s former Russian insurance practice head Constantin Saranchouk and an associate to target high-value insurance disputes across the power and energy, construction and aerospace markets.  

Saranchouk, a Russian-qualified advocate, currently divides his time between London and Moscow and will be permanently based in London once the office closes.

News of Kennedys’ decision to pull out of Moscow follows the deal leading German firm Noerr struck last month to spin out its Moscow office to its local partners and the closure of King & Spalding's Moscow arm in May last year. 

Earlier this week, London-based arbitration specialists James Dingley and Baiju Vasani revealed that they were leaving Ivanyan and Partners and that its London office would close. US firms Sidley Austin and Venable also confirmed that they have ceased advising Russian clients caught up in sanctions. 

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