Global law firm confirms Russia exit after spin-off causes confusion

People hold a large Russian flag. REUTERS/Zorana Jevtic

Join now for FREE unlimited access to Reuters.com

Register

  • Eversheds Sutherland said it has no particular financial interest in the new firm of its Russian lawyers
  • Other law firms have announced Russian spinoffs and more are expected

(Reuters) – A leading international law firm this week denied rumors it had failed to deliver on its promise to leave Russia, after its former Russian lawyers highlighted their association with the firm to relaunch under a new name.

Lawyers from Moscow and St. Petersburg who worked for 4,000-lawyer Eversheds Sutherland formed Birch Legal, the latest spin-off of a global law firm in Russia since the invasion of Ukraine. Following its launch on Monday, Eversheds said Birch Legal would “meet the needs of [Eversheds’] international customers”, and the Russian company announced that the Eversheds office in Russia had always been a limited liability company “and only the name of the company has changed”.

This sparked media coverage suggesting that Eversheds, the product of a merger between UK and US-based law firms, hadn’t really left Moscow behind despite claiming to have. have done. Eversheds responded on Wednesday with a new statement calling the 40-plus-year-old lawyer Birch Legal one of its international referral partners and saying he would not benefit financially from the Russian firm’s work.

Join now for FREE unlimited access to Reuters.com

Register

A spokesperson for Eversheds said the firm had exited the Russian market altogether and that the language on Birch Legal’s website referring to Eversheds as its “official partner” was inaccurate. Birch Legal partner Mikhail Timonov initially agreed to speak to Reuters, but did not respond to follow-up requests.

Birch and other formerly foreign law firms are reemerging as independent firms after all of the country’s major international law firms announced their intention to withdraw since February, citing the war in Ukraine and the waves of sanctions that resulted.

Tony Williams, an industry legal adviser at Jomati Consultants who once headed the Moscow office of law firm Clifford Chance, said he believed Eversheds and other big companies were planning to exit Russia altogether. He said while moral and reputational considerations are taken into account, there are also financial reasons, describing Russian legal work as a “much more fringe game” for big business in recent years.

The country’s legal market was already becoming more Russian before the war in Ukraine. Global companies came in strong and started to establish themselves from the 1990s, but domestic Russian companies have increased their dominance more recently, especially after sanctions triggered by Russia’s 2014 invasion of Crimea .

The current invasion of Ukraine abruptly completes this process.

“The supply of international law firms in the Russian market has literally collapsed and all but disappeared,” said Vitaly Mozharowski, partner at new Moscow-based firm Alumni Partners. Another post-invasion spin-off, Alumni Partners is made up of almost all of the Russian lawyers formerly of the transatlantic firm Bryan Cave Leighton Paisner, as the new firm’s website prominently announces.

Mozharowski predicted at the launch of Alumni Partners earlier this month that other small firms and boutiques will soon be formed by former associates of law firms leaving Russia. BCLP’s former Russian clients included Russian oil producer Gazprom Neft and sanctioned lender Sberbank.

Other law firms have announced plans to create similar spin-off firms, including Baker McKenzie, Dentons, DLA Piper and CMS.

How eager will global companies be to return if the geopolitical tide shifts? Jomati’s Williams said record earnings recently posted by major US and international companies suggest they won’t feel pressured, at least as long as the current regime is in charge.

“Why go to a much tougher market when you can make that kind of money from home?” said Williams.

Join now for FREE unlimited access to Reuters.com

Register

Our standards: The Thomson Reuters Trust Principles.

Jacqueline Thomson

Thomson Reuters

Washington, DC-based Jacqueline Thomsen covers legal news related to politics, the courts, and the legal profession. Follow her on Twitter at @jacq_thomsen and email her at [email protected]