Navigating Rapid—And Necessary—Exits from Russia

The impact of the February 2022 invasion of Ukraine by Russia cannot be overestimated. The people of Ukraine have demonstrated incredible bravery and resilience, but the losses—to lives, infrastructure, and the economy—have been devastating.

Within hours of the initial attacks, nations across the hemispheres placed significant sanctions on individuals and companies with operations and relationships in Russia, froze the assets of highly placed Russian oligarchs, and issued severe restrictions on the flow of cash and assets with ties to Russia.

Almost immediately, virtually every business with operations in or conducting business with Russia was required to make significant decisions, including, for some companies, navigating an exit.  The decision to pursue this strategy raised significant challenges. Under enormous time constraints and legal and political pressures, Crowell and our clients from across dozens of industries worked together around the clock to execute a complex plan that would enable them to leave Russia as soon as possible.

A response that matched the speed of the invasion

The speed with which the United States, European Union, United Kingdom, and their allies issued—and changed—sanctions against Russia created enormous challenges. Within the first few days of the conflict, these governments had issued thousands of pages of new regulations and rules concerning financial and business dealings with Russia. These continued to change, literally by the hour, for months. Almost all of the communications and documents created during this period had to be time stamped to the minute. In fact, in many cases, the very rules that lawyers were discussing with a client, in real time, were rewritten during their conversations.

We were there with our clients at every step, starting well before the invasion as some clients sought to prepare for the worst. That shifted into the highest gear during the initial days of the invasion, when clients immediately contacted Crowell for assistance in first understanding, then reacting to, the ever-changing landscape. Within weeks—and typically after daily, sometimes hourly, calls between our teams and clients’ legal departments, businesses, and C-Suites—many companies had made the decision to fully divest themselves of their Russian operations.

Withdrawing operations from a country is no easy task under even the best of circumstances and, perhaps thankfully, few companies had recent experience in doing so in reaction to armed conflict. Worse, not only was the sanctions landscape ever-escalating, but the Putin-led government launched a series of countermeasures—ranging from limits on outflows of capital and equipment to potential civil and criminal liability for everything from intentional bankruptcy to compliance with anti-Russian sanctions—designed to make the effort to leave the country as difficult as possible.

Close collaboration and incredible commitment achieve necessary results

The focus on developing, negotiating and finalizing solutions to each client’s particular circumstances was an all-hands-on-deck, around-the-clock effort, bringing together a team of lawyers from across virtually all of our practices and offices. At first, this focused on Crowell’s deep bench of economic sanctions and export control practitioners, but unwinding everything from contracts to operations creates risks across the legal spectrum, and we quickly realized that a cross-practice comprehensive solution was necessary to assist our clients in managing risk in an integrated manner. Overnight, we had teams of attorneys from a range of areas, including, international dispute resolution, financial services, labor and employment, advertising and brand protection, government contracts, white collar and regulatory enforcement, aviation, insurance, and many other areas to assist with the complexities of each client’s situation.

Within a few months, Crowell had helped a number of companies navigate successful exits from Russia. The efforts were prescient: not only did the sanctions continue their one-way escalation, but the Russian countermeasures had expanded to the point where withdrawals were extremely difficult.  The result is that many companies that did not act quickly find themselves with lingering exposure, despite their best efforts to wind-down, a year later.

For Ukraine, the past year has been a test of resolve and resilience. For our clients that divested their businesses and investments in Russia, or are still in the process of doing so, the past year has been a testament to the value of collaboration. The effort has required a commitment to service, hard work and the diverse knowledge of lawyers and professionals from across the firm.