Just as troubling to some Western observers is Russian President Vladimir Putin's use of military force to seize Ukrainian territory. It has revived long-suppressed suspicions that the rule of law in Russia is more mirage than reality, and that important decisions are driven by the agendas of the ruling elite, not predictable legal principles and laws.
"This is a major geopolitical crisis, which is fraught with risk right now," said Laura Brank, head of the Moscow office of Dechert L.L.P., the University City law firm, which specializes in cross-border deal-making. "In terms of how we are responding to it, we are taking, like most companies, a wait-and-see approach."
Brank opened Dechert's Moscow office in 2009 with a handful of lawyers, joining from another firm with a Moscow practice. Since then, she has helped engineer dozens of deals, ranging in value from hundreds of millions to billions of dollars, and the number of Dechert lawyers there has grown to 22.
To a degree, Moscow and the burgeoning deal climate there helped buffer Dechert from the fallout of the U.S. financial markets' collapse in 2008 and 2009. Brank said some deals may be similarly immune from the rising economic and political tensions between Russia and the West, especially if they involve only Russian companies, or Russian and other non-Western interests.
Mauro Guillen, director of the Lauder Institute at the Wharton School of the University of Pennsylvania, said Putin was walking a fine line between pushing Russia's territorial ambitions and maintaining commercial relations with the West.
"He doesn't want any of this to scare away investors," said Guillen, who focuses on management and international relations. "He wants to get as much as he can, both politically and economically, without overplaying his hand."
That threshold already has been crossed for some Western companies, said Brian Zimbler, head of the Moscow office of Morgan, Lewis & Bockius L.L.P., which is based in Center City.
Zimbler, who founded Morgan Lewis's Moscow office in 2012, said companies with long experience operating in troubled regions were staying with their plans for now. But others new to Russia are backing off.
"Our large multinational clients and clients with experience [operating in troubled regions] are not making any changes in their plan, and they understand that there are huge opportunities in a country with 143 million people," Zimbler said. "There is a second group of clients, companies that are new to this market, who said . . . 'I was not anticipating this crisis. Now, I am going to take a wait-and-see attitude.' "
What's tricky for American lawyers is the Russian system's reputation for political manipulation of the legal process. One way around that uncertainty is to make post-transaction disputes subject to international arbitration, or to the laws of a country with a well-established and trusted legal system, such as the United Kingdom.
But some problems can't be finessed. One of the first Western business leaders to make it big in the Russian market after the fall of the Soviet Union was investor William Browder, who made a fortune funneling U.S. money into the Russian energy sector. But Browder fell out of favor with Putin when a lawyer for his company, Hermitage Capital, came forward with evidence of a $230 million tax fraud involving Russian officials.
For his efforts, the lawyer, Sergei Magnitsky, was arrested and held in prison in pretrial detention for a year, where he died after being denied treatment for pancreatitis.
That kind of climate has made some law firms wary of doing business in Russia. Michael Pollack, who oversees the domestic and international expansion plans of Reed Smith, which has a 170-lawyer office in Center City, said the firm had chosen not to operate in Russia because its legal and political systems were so susceptible to corruption.
"If you end up on the wrong side of a controversy and someone from the government shows up and your lawyers are arrested," the problems suddenly outweigh potential gains, Pollack said.
For some, though, the current crisis might even generate business. Bruce Marks, a onetime state senator from Philadelphia who founded his own law firm, Marks & Sokolov, specializing in cross-border transactions and litigation in Russia and the United States and with offices in Philadelphia and Moscow, said the Russian takeover of Crimea had created legal problems for businesses there that must now adapt to Russian law. There also might be a flurry of deal-making by Ukrainian companies unsettled by the Russian actions that are seeking to sell.
"In times of crisis, there is always opportunity," Marks said in a phone interview from Moscow. "And one of the reasons I am here right now is to assess where some of the opportunities are."