Lawyers have been speaking for months of a tough environment for international firms in sanction-battered Russia, but no event has been as emblematic as the news in September that two of Akin Gump Strauss Hauer & Feld’s top Moscow partners have quit to launch an independent firm.
Heavyweight litigator Ilya Rybalkin and corporate veteran Suren Gortsunyan launched Rybalkin, Gortsunyan & Partners (RGP), bringing across 11 other fee-earners from their former shop – now left with just 18 lawyers in Moscow.
While the US sanction regime bars US firms from supporting Kremlin-linked oligarchs, speaking to Legal Business Gortsunyan said Russian companies were becoming increasingly less comfortable with instructing Western advisers.
The move has allowed Rybalkin – one of the top earners at Hogan & Hartson (now Hogan Lovells) before joining Akin Gump in 2010 – to continue servicing investment group Renova despite the inclusion of its owner Viktor Vekselberg among the sanctioned individuals on 6 April.
Rybalkin told Legal Business RGP has no other client affected by sanctions at the moment but would ‘consider opportunities and make informed decisions’ in future.
He spoke of a successful first month of life for the firm, which has been focusing on private equity, M&A, litigation, infrastructure and tax. He added he had amassed nearly 250 billable hours, received three referrals from US firms without a Russian base and two invitations to pitch from state-owned banks for ‘very interesting and high-stake litigation projects’. RGP aims to grow the team to at least 15 by the end of the year and has conducted several interviews with other lawyers at international firms.
However, Gortsunyan spoke highly of Akin Gump, describing it as ‘one of the most successful firms in the Russian market… It remains a well-established and profitable practice’, he added.
Yet the move is all the more significant against the backdrop of a series of ominous signs for foreign firms in the country ever since the invasion of Ukraine in 2014 triggered a row with the US and EU, and resulted in increasing scrutiny of Western firms’ activities with Moscow clients.
In May, Britain’s Foreign Affairs Select Committee’s strong criticism of Linklaters for its role in the $1.5bn initial public offering of energy company En+ Group, owned by sanctioned oligarch Oleg Deripaska, sounded a warning to all firms that more care is required when picking Russian mandates.
The list of sanctioned business owners is likely to grow soon, while some also fear international firms might fall victim to the Kremlin’s retaliations against the West.