Office closures in Russia are ‘incredibly difficult’ for major law firms

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Global law firms that announced plans to close offices in Russia after the invasion of Ukraine now face the challenge of achieving their goal while complying with labor, immigration and sanctions laws.

Employers who want to fire employees during a shutdown must navigate a Russian law that generally prohibits the firing of certain categories of workers, such as single mothers, according to labor and employment law firm Littler Mendelson. .

Those who want to help Russian lawyers leave the country and work elsewhere are limited to traditional routes such as tourist visas and asylum applications, the firm said. Russia has not put in place the same emergency measures to help Ukrainian emigrants.

“It’s an incredibly difficult situation,” said Amsterdam-based Littler Mendelson shareholder Stephan Swinkels. “We are in unprecedented times.”

At least 25 law firms announced plans to close their offices in Russia in the weeks following the Feb. 24 invasion, some of which said they were converting outposts into independent operations. Many cited the shock of Russian leader Vladimir Putin’s military actions against Ukraine in taking action.

As of April 4, a total of 1,430 civilians have been recorded as killed in the Russian invasion, according to the United Nations statistics. More than 10 million Ukrainians have fled to neighboring countries or are believed to be internally displaced.

Companies mourning the Ukraine tragedy have also expressed a sense of loss by severing ties with colleagues in Russia that, in many cases, date back decades.

Agnieszka Fedor, head of the labor law group at Sołtysiński Kawecki & Szlęzak in Warsaw, Poland, said she was saddened to have tried to contact colleagues at Russian law firms after the war began.

“Some of them didn’t respond,” she said in an email. “Some of them seemed ready to talk,” but only on WhatsApp and Telegram messaging apps.

Even those lawyers then stopped communicating and “disappeared”, Fedor said. “Like they don’t exist. And some of them are good colleagues of mine. Very surprising. And sad.”

Business closures

Britain’s Linklaters’ March 4 announcement that it was closing its Moscow office and “liquidating” its operations in Russia sparked a chain reaction of similar pledges from companies within days and the weeks that followed.

Allen & Overy, also a UK-based company, announced its “liquidation” on March 10 and said it “will be managed in accordance with all legal, regulatory and professional obligations”.

The firm said in a statement updating its progress that the “vast majority” of its 55 people in Moscow, including 27 lawyers, are Russians “and have no plans to leave” the country.

“We are doing everything we can to support them and where possible we will redeploy them to work with other A&O offices,” Allen & Overy said.

Dentons announced March 14 that it will spin off its Moscow and St. Petersburg offices, which will operate as an independent business. The offices have more than 250 people.

“We will continue to support our employees and customers through the transition,” the company said in a statement updating its progress. “After the separation, the Moscow and St. Petersburg teams will continue to serve the legal needs of clients in Russia under a new name and brand.”

Baker McKenzie in a March 15 statement said it would transform its offices in Russia, with 260 people, into an independent law firm. A spokesperson declined further comment.

Piper DLA said on March 14 that it will no longer have offices in Moscow and St. Petersburg and will “transfer Russian activities to our team there”. A company spokesperson declined to provide any further comment.

Spokespersons for Clifford Chance, which said on March 10 it was closing its operations in Russia, and Freshfields Bruckhaus Deringer, which made a similar announcement on March 9, did not respond to questions about the status. of their efforts.

A spokeswoman for Linklaters declined to comment. American companies such as Baker Botts, White & Case and Morgan, Lewis & Bockius also declined to comment.

More than 1,250 lawyers and staff in total are affected by the office’s actions in Russia, according to announcements from 25 firms.

Law firms and other employers wishing to carry out mass closures or layoffs in Russia should be aware that the country’s labor laws “impose significant obligations on them”, according to Littler Mendelson. customer advice. There must also be written notices to employees and government agencies, he said.

Failure to follow the procedures may result in the reinstatement of the employee by a court and the ordering of the employer to pay the average wage for the period of forced unemployment, the notice said.

As for employee compensation in Russia, “there is no easy answer,” said Littler Mendelson. “The multilateral network of sanctions imposed by some, mainly Western, countries, coupled with the Russian government’s counter-sanctions, has severely restricted cross-border payments.”

Will they be back?

Companies leaving Russia are likely calculating whether they can ever return there, David Wilkins, director of the Center on the Legal Profession at Harvard Law School, said in a written statement.

Those decisions “will likely depend on what peace deal is reached, if any, and whether companies are able or willing to start working with Russia again,” Wilkins said.

While severing ties with Russia is a complex task, companies are realizing that continuing their operations there carries risks, said Ralf Peschek, partner at Wolf Theiss in Austria.

“For law firms, this is a very difficult situation,” Peschek said. “If they stay in Russia, they could lose customers. And they may face reputational risk.

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