Untouchable clients

Another headache for law firms is how the sanctions impact their client relationships. While firms can continue to advise highly lucrative clients like Rosneft on most matters, anything involving capital raisings over 90 days, or the development of shale, or deepwater and Arctic oil projects, are strictly out of bounds. The same applies to any debt raisings for the named Russian banks.

‘For the most part we’ve found we’ve been able to continue helping clients on what they’ve been doing,’ says Wright. ‘The biggest impact has been on all the work that we do for the Russian state-owned banks on their capital raisings.’

Firms acting for these banks would also have to recoup their legal bills within 30 days if they don’t want to fall foul of the new restrictions on long-term credit.

Several firms also had strong relationships with some of the designated individuals who were put on the US Treasury’s original sanctions list in March 2014. Putin’s judo partner, the oligarch Arkady Rotenberg, was a regular client of Hogan Lovells’ Moscow office. Though Hogan Lovells said it was ‘not commenting on specific client matters’, this relationship will almost certainly have been affected after Arkady and his brother Boris were included on the US Treasury’s sanctions list for being ‘members of the Russian leadership’s inner circle’.

While some clients are pragmatic about being turned away and appreciate that their lawyers’ hands are tied, others rail against the fact that such relationships, often cultivated over many years, can end so quickly.

‘Clearly there are various firms around this market that unfortunately have had to step away from one or two mandates because of the way the sanctions have impacted,’ says Allen. ‘Naturally this is a very sensitive issue, although we have found Russian clients to be very understanding.’

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