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People hold a large Russian flag. REUTERS/Zorana Jevtic
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(Reuters) - A prominent international law firm this week swatted down rumors it had not followed through on its promise to exit Russia, after its former Russian attorneys highlighted their association with the firm to relaunch under a new name.
Attorneys in Moscow and St. Petersburg who worked for 4,000-lawyer Eversheds Sutherland formed Birch Legal, the latest spinoff from a global law firm in Russia since the Ukraine invasion. After it launched on Monday, Eversheds said Birch Legal would be "servicing the needs of [Eversheds'] international clients," and the Russian firm advertised that Eversheds' Russia office had always been a limited liability company "and only the company's name has changed."
That sparked media coverage suggesting that Eversheds, the product of a merger between UK and U.S.-based law firms, had not truly left Moscow behind despite claiming to have done so. Eversheds responded with a new statement Wednesday calling 40-plus lawyer Birch Legal just one of its international referral partners, and saying it will not benefit financially from the Russian firm's work.
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An Eversheds spokesperson said the firm had completely exited the Russia market and that language on Birch Legal’s website referring to Eversheds as its “official partner” was inaccurate. Birch Legal partner Mikhail Timonov initially agreed to speak with Reuters but did not answer follow-up requests.
Birch and other once-foreign law offices are reemerging as independent practices after every large international law firm in the country announced plans to exit since February, citing the war in Ukraine and resulting waves of sanctions.
Tony Williams, a legal industry advisor with Jomati Consultants who once ran the Moscow office of law firm Clifford Chance, said he believed Eversheds and other big firms intend to exit Russia fully. He said while moral and reputational considerations factor in, there are also financial reasons, describing Russian legal work as a "much more marginal play" for big firms in recent years.
The country's legal market was already becoming more Russian before the Ukraine war. Global firms arrived in force and began to grow their footholds beginning in the 1990s, but domestic Russian firms have increased their dominance more recently, especially after sanctions sparked by Russia's invasion of Crimea in 2014.
The current Ukraine invasion is abruptly completing that process.
“The international law firms offering on the Russian market has literally collapsed and practically almost disappeared,” said Vitaly Mozharowski, a partner at newly-formed, Moscow-based Alumni Partners. Another post-invasion spinoff, Alumni Partners is made up of nearly all the Russian attorneys formerly with transatlantic firm Bryan Cave Leighton Paisner, as the new firm's website prominently advertises.
Mozharowski predicted when Alumni Partners launched earlier this month that more small practices and boutiques will soon be formed by the ex-partners of the law firms exiting Russia. BCLP's former Russian clients had included Russian oil producer Gazprom Neft and sanctioned lender Sberbank.
Other law firms have announced plans to create similar spin-off practices, including Baker McKenzie, Dentons, DLA Piper and CMS.
How eager will global firms be to return if the geopolitical tide changes? Jomati's Williams said record-breaking revenues recently posted by large U.S. and international firms suggest they will not be feeling any rush, at least while the current regime is in control.
"Why go to a much more difficult market when you can make that sort of money at home?" Williams said.
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