#46 The Legal Profession This Week - The Russia-Ukraine Conflict and Law Firms Part 3​

By Dheepa​

The Russia-Ukraine Conflict and Law Firms - Part 3

According to a report by Law.com, law firms in London are now bracing themselves for a dramatic slowdown in transactional work. Already adversely impacted by rising inflation, M&A and capital markets activity is now lower than in the last two years combined due to geopolitical tensions from the Russia-Ukraine war.

IPO activity has been particularly affected, with current proceeds from IPOs at only $93.7 million compared to $3.9 billion in the same period last year (Refinitiv). Many listings are expected to be pushed back to the second half of the year. Burger King and New Day have postponed their IPOs while Mishcon de Reya has also shelved plans for its listing on the London market. On the M&A side, deal value in February was down 63% compared to last year (Law.com). It seems that the markets are waiting out the escalating war, at the very least until there is confirmation that the conflict is self-contained within Russia and Ukraine.

On a related note, while many law firms have now chosen to close their Russian offices and drop their Russian clients, increasing scrutiny is being placed on work for Chinese clients that involves Russian businesses. Law firms with a strong Asia presence have long benefited from China’s diplomatic relationship with Russia. For example, in 2021 Dechert acted for China Petroleum & Chemical Corporation (Sinopec) in its purchase of a 40% stake in Russia’s Amur Gas Chemical Complex. In 2018, Freshfields Bruckhaus Deringer advised Japan Tobacco on its US$1.6 billion acquisition of one of Russia’s largest tobacco companies and, just as recently as last month, Baker McKenzie was advising a consortium of Tokyo based banks on a credit facility for Russia’s Irkutsk Oil (Law.com)

While many Asian countries - Japan, Singapore, South Korea and Taiwan - have now instituted sanctions against Russia, China will not be joining their ranks. This leaves room for firms to continue work on deals with Russian elements, even if not explicitly acting for Russian clients.

‘Business as usual’ – the notable deals and cases which went ahead this week:

Magic Circle duo Freshfields Bruckhaus Deringer and Allen & Overy are acting on Apollo Global Management’s bid for publishing company Pearson. Freshfields is advising Pearson while Allen & Overy is acting for Apollo.

Freshfields previously acted for Pearson on the sale of the Financial Times to Japanese group Nikkei and its stake in the Economist to Exor (The Lawyer).


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