'Uncertainty' Surrounds UK Restrictions on Russia-Related Legal Services, Law Firms Say
A new U.K. law that could prevent lawyers from providing certain legal services in the context of Russia sanctions is causing uncertainty within the legal industry, law firms said. Baker McKenzie said the legal community is working with U.K. authorities to “clarify the scope of the new sanctions measures,” but “in lieu of any imminent published guidance, businesses should assess” their in-house legal teams, particularly if they’re providing legal advisory services from the U.K.
U.K. lawyers had previously been able to broadly advise businesses on whether their activities complied with various Russia-related sanctions, but the law “now restrict[s] UK lawyers in what they can advise in that regard,” Pinsent Masons said in a July 7 client alert. The firm said British lawyers can’t provide “legal advisory services” to “non-UK persons in relation to, or in connection with, any activity that is prohibited under” the U.K.’s Russia sanctions if that activity was “done by a UK person or taking place in the UK.” The firm also noted that the term “legal advisory services” is “broadly defined,” and could include lawyers who act on behalf of a client, provide advice on a commercial transaction or negotiation, or prepare a legal document.
The law may lead to “uncertainty” and “unintended consequences” for the legal industry, Stacy Keen, a sanctions lawyer with Pinsent Masons, said in the alert. Keen said she hopes the U.K. issues guidance to address questions around the new restrictions, which took effect June 30 (see 2306290015).
The law includes certain carve-outs, the firm added, and U.K. lawyers will still be able to represent clients in proceedings before administrative agencies, courts or in certain other proceedings. Lawyers will also be able to provide legal advice to non-U.K. companies about whether their activities violate U.K. sanctions, the firm said. But it also said the carve-out doesn’t mention whether U.K. lawyers can also provide similar legal advice to non-U.K. companies about other sanctions regimes, such as those imposed by the U.S. and the EU.
Herbert Smith suggested this omission, “at first blush,” appears to “restrict UK lawyers/firms” from helping EU companies comply with EU sanctions regimes. The firm said this “would seem a bizarre outcome from a restriction which is being badged by the Government as a measure” to limit Russia’s ability to support its war efforts. “It is to be hoped that this and other issues with the drafting of the new restrictions will be addressed during the wind-down period,” Herbert Smith said, which lasts for three months.
Keen said “many” in-house and external legal teams are “regularly” asked to advise non-U.K. portions of a business about whether a certain activity complies with sanctions regimes “beyond the UK or on the exposure to risk under those regimes.” But the new law risks curtailing the ability of law firms to give these companies “a holistic view on sanctions risk until UK sanctions risk has been assessed -- even if those restrictions do not apply to relevant activity or UK specific advice has not been requested -- if at all.”