As Law Firms Push to Drop Russian Clients, Some Say Not So Fast

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Plaintiffs are decrying potential delays involved in law firms ditching sanctioned clients mid-litigation
Leaving clients in court is ultimately up to a judge, and timing matters

Several major law firms have said they will stop working for sanctioned Russian companies after the invasion of Ukraine. But some lawyers suing Russian banks in U.S. courts are raising alarms, saying their adversaries’ retreat could wind up delaying justice for their own clients.

In one of the cases, lawyers for family members of an American killed in the 2014 downing of a passenger plane over eastern Ukraine said Monday that sanctioned Russian bank Sberbank was improperly looking to stall the case to find new counsel.

Sberbank’s attorneys at White & Case and Debevoise & Plimpton on Friday said they will stop defending the bank, which is fighting claims that it helped facilitate the attack on the Malaysian Air jet. The plaintiffs do not directly oppose the firms’ bid to withdraw but accused the bank of using the opportunity to hold up their New York federal lawsuit.

In another case, law firm Freshfields Bruckhaus Deringer last week asked a federal appeals court in Washington, D.C., to pause a case over the return of Jewish texts from Russia while its client VEB, another sanctioned Russian bank, finds new counsel.

The plaintiff, Jewish organization Agudas Chasidei Chabad of United States, is pressing for information about VEB’s assets, as the religious group determines how to force Russia to return thousands of sacred books or pay a $150 million judgment. It is fighting Freshfields’ request in part because it is unclear how long it will take VEB to secure new lawyers.

“This is VEB’s problem. It’s not our problem. It’s not the court’s problem. VEB has got to find a lawyer,” the group’s lawyer Steven Lieberman of Rothwell, Figg, Ernst & Manbeck told Reuters.

Representatives for Freshfields and Debevoise & Plimpton had no immediate comment on the cases. A White & Case spokesperson declined to comment.

Lieberman said law firms take risks representing certain clients, including certain Russian entities. “Just like a criminal defense lawyer who defends a drug dealer — you run the risk of the U.S. government might seize the drug dealer’s assets. It’s a risk the lawyer takes,” he said.

But the number of law firms willing to take on such clients from Russia has quickly dwindled amid global sanctions and overwhelming criticism sparked by the war in Ukraine.

Most international law firms operating in Russia have announced the closure of their Moscow offices by now, and several said they would no longer work for entities with ties to current Russian leadership. While there are smaller law firms and lawyers specializing in representing sanctioned clients, none has publicly stepped in to replace a larger firm in ongoing litigation since the war started.

In U.S. federal courts, judges have the final word over law firms’ efforts to withdraw from a client’s case. In other legal matters that don’t require a judge to sign off, the burden falls on law firms to make sure their exit complies with ethics rules and doesn’t harm their former clients.

Ethics rules generally require U.S. lawyers to make sure clients don’t face a “material adverse effect” if they decide to stop representing them. Failure to do so could lead to disciplinary complaints, but malpractice lawsuits are less likely without evidence of actual harm to the client, experts said.

Renee Knake Jefferson, a law professor with the University of Houston, said timing is important as judges weigh lawyers’ requests to exit a case, particularly if a trial or another key proceeding is imminent.

(Reporting by Jacqueline Thomsen and Mike Scarcella. Editing by David Bario.)