As the Russian invasion of Ukraine continues, the world continues to watch on in near-unanimous bewilderment. Many hope for a swift conclusion; however, the is a growing fear that the conflict will escalate into the most consequential humanitarian crisis and military conflict since World War II.
The conflict has already spilled over onto the world stage in many ways. Historic sanctions imposed by the West on Russia’s government and its various wealthy associates, in addition to the indiscriminate shelling of Ukrainian cities, have resulted in a growing number of civilian casualties, with businesses and individuals from across the globe facing a barrage of legal and moral imperatives to respond or intervene. Since the start of the invasion, many large companies, including Starbucks, Apple, McDonald’s, and Netflix, have moved to cease operations in Russia indefinitely. More corporations will likely follow suit in the absence of a sudden resolution.
The conflict in Ukraine has put virtually all businesses and their owners in a tragically fraught position, and this has been particularly true for law firms. As Business Insider pointed out in a recent article, legal institutions are facing the same pressure as corporate retailers to cut ties with Russian clients. However, they also need to navigate a much more complex set of obligations and ethics rules in order to sever those relationships without facing potentially devastating financial and legal consequences. Moreover, law firms share the responsibility of making sure employees working from Russian or Ukrainian offices are safe and coordinating relocation efforts and remote arrangements to minimize the disruption of time-sensitive casework for their clients.
As the Russia-Ukraine conflict appears increasingly likely to usher in a new era of international law and relations, it is becoming increasingly important to keep track of how the legal industry responds. And while the situation continues to evolve by the minute, here are a few responses we have seen and expect to see repeated as the crisis unfolds:
Ensuring Employee Safety, Compensation, and Data Security
Fortunately, the bulk of local and international law firms with offices in Ukraine have been quick to shutter their buildings and usher employees to safety, according to a report from Reuters published shortly after the start of the invasion. With most employees either evacuated or sheltering in place, firms must now take on the task of securing sensitive data and maintaining operations through temporary remote arrangements, which will likely precede more permanent relocation efforts depending on how the conflict plays out.
Naturally, the use of technology is and will continue to be critical to the success of these efforts. The ability of law firms to leverage technology, whether to boost data and network security or remain productive in a remote environment, has been bolstered by their experience integrating such tools throughout the COVID-19 pandemic. Over the course of the ongoing conflict, law firms will need to utilize this experience, including their newfound technological expertise, to ensure secure communications with their employees in Ukraine and protect sensitive client data through external servers and enhanced software solutions geared toward improving cybersecurity.
However prepared firms may be, the unprecedented and increasingly unpredictable nature of Russia’s actions thus far suggests that legal professionals will be working tirelessly for the foreseeable future, attempting to strike a delicate balance between protecting their employees and serving and retaining clients.
Cutting Ties with Russia (Wherever Possible)
As if protecting the lives of employees wasn’t challenging enough, many international firms have faced increasing pressure to cut ties with Russian businesses and so-called oligarchs, essentially being forced to weigh the loss of revenue from wealthy clients against the possibility of significant reputational damage. But as mentioned earlier, despite the clarity of ongoing sanctions and the relatively unambiguous moral implications of aiding further acts of Russian aggression, intentionally or otherwise, the complex mechanics of the legal system and legal representation make some relationships more difficult to dissolve than others.
One of the problems, as legal expert Ronald Minkoff told Business Insider, is that law firms, and particularly those based in the U.S., must adhere to various rules of professional conduct laid out by the courts, including the need to honor their obligation to a client while a lawsuit is still active, at least until receiving formal approval from a judge to withdraw their representation. Fortunately, through the application of transparency and generosity, law firms still have the opportunity to navigate this situation in good faith. Wherever relationships with sanctioned clients cannot be terminated immediately, law firms can still provide an honest disclosure of their predicament to both their clients and the public and can even offer a tangible expression of solidarity by donating the proceeds of their work with Russian-based clients to organizations leading humanitarian efforts in Ukraine.
As I mentioned in my recent Blackletter Podcast, it is also important to note that in February of this year, the U.S. Departments of Commerce and the Treasury, through BIS and OFAC respectively, imposed severe prohibitions and requirements on companies that directly impact both U.S. and foreign companies, which effectively prohibit U.S. companies from doing business with more than 70% of Russian financial institutions and impose license requirements on exports to Russia. Companies need to consider screening transaction parties and postal codes when exporting, among a host of other precautions.
Donations, Pro Bono Work
As crucial as it may be right now to take strategic action in the interest of self-preservation, it is perhaps even more critical for law firms to participate in providing critical support to Ukrainian civilians, military operations, and institutions. This is why law firms around the world, including our own, continue to focus on initiatives surrounding monetary donations and organize pro bono representation for civilians and non-government organizations as they navigate complex immigration protocols and seek employment and financial stability in foreign countries.
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