Now that the illegal, unprovoked Russian invasion of Ukraine is in its ninth month, lawyers at Big Law firms are finding themselves shifting their focus to the enforcement of sanctions against companies and entities doing business in Russia.
“The Russian sanctions are remarkably broad and were enacted with incredible speed,” said Mike Casey, partner at Wilson Sonsini. “We expect to see a massive uptick of enforcement activity in 2023.”
In the early days of the invasion, companies and their lawyers clambered to understand the thousands of new economic sanctions and export controls targeted at Russia from all sides. Now, they’re focused on avoiding hefty fines and even potential criminal charges as governments around the world step up the enforcement of their restrictions.
The U.S., for one, has banned “new investment” in the Russian Federation by any “United States person, wherever located.” It has also significantly restricted various exports to the country and its ally Belarus, and has prohibited anyone in Russia from accessing a wide range of business services. In addition, the Department of Commerce recently raised the financial, administrative, and criminal penalties for those who violate export control.
In a September 15 alert to their clients, Casey and two other lawyers at Wilson Sonsini put out a warning that companies were facing an “unprecedented and dizzying array” of Russia-focused sanctions and export controls, and they needed to be aware of U.S. agencies and foreign governments increasingly and aggressively investigating potential violations.
According to Castellum.AI, a compliance screening company, since the invasion began on February 24, U.S. agencies and foreign governments have together sanctioned in excess of 9,000 businesses and individuals.
But law firms are getting creative with ways to track the growing lists of sanctions. For instance, Akin Gump Strauss Hauer & Feld has offered clients subscriptions to its Russia Trade Controls Resource Center, which tracks changes to Russia-focused sanctions and export rules.
Of course, there is another option altogether: Rather than dealing with the headache of trying to comply with ever-changing, ever-intensifying sanctions, companies are more willing now to pull up stakes and leave Russia completely than in previous situations in which the U.S. has acted alone in imposing sanctions.
“Our clients are trying to get out of Russia, and that hasn’t always been the case,” said Paul Marquardt, a Davis Polk partner based in Washington.