Insights in Action: Measuring the Impact of Russia’s Invasion on the Legal Industry | Thomson Reuters Regulatory watch and compliance learning

Recent research highlights the various ways in which businesses have been affected by the escalation of events since Russia’s invasion of Ukraine in February, and regardless of the international scope, the majority of legal services clients say they have been affected by the ongoing conflict.

Since February, the Russian invasion of Ukraine has only grown in intensity, and there has been interest in trying to qualify the impact the ongoing conflict is having on the legal industry.

Reflecting these concerns, the latest research from Thomson Reuters Market Insights incorporates new findings that highlight some of the impacts buyers of legal services have experienced. In interviews with general counsel and legal decision makers from global corporations, interviewees were asked: “How has the escalation of events between Ukraine and Russia affected your business? » Although the belligerents of the conflict itself are located in Eastern Europe, the consequences of the war had a far-reaching global reach, according to those interviewed. Many companies that do business internationally have suffered some impact, with an assistant general counsel saying:

“It greatly [impacted us]. Simply being a global company, something like this will affect us on some scale.

The specific nature of the impact occurred in several ways, underscoring the complexity of the issues involved. Many companies have experienced significant changes in supply chains, pricing and increased volatility in the global economy. As one legal director put it:

“We had to change supply chains for some of the raw materials we used to get from Russia; and obviously, with everything going on, the cost to serve our customers has gone up. We have seen increases in fuel, which also means increases in our business expenses. So everything we thought we budgeted for at the start of the year, we’re almost off budget. We need to find new ways to fill the gaps. So that made our economy more difficult.

With so many key factors involved, the conflict has also increased the complexity for legal clients in managing the different needs within their business. As another legal director noted:

“There is a whole panoply of constraints, we have to do more checks, we can trade with fewer countries than before, so the business is impacted from the point of view of the simplicity of things, the fluidity of the process, everything to take root and become more bureaucratic.We take care of each aspect of the sale in more detail, we do more checks, more verifications, more analyses.

By looking at some quantitative data, research can provide an overall picture of the impact of conflict. He revealed that 66% of customers are directly impacted by the Russian invasion. And this whether or not they have international needs, which demonstrates the scope of the conflict in many different areas of the legal industry as a whole.

Even buyers with limited international reach experience conflict-related consequences due to the multiple facets of the conflict on the global economy and different business needs. Buyers with more local needs are still subject to inflationary pressures, potential regulations and increasing complexity. Law firms need to keep this in mind when evaluating strategic plans, as chances are their clients will have impact-related concerns, either directly or indirectly.

The research also looked at the specific nature of business impact to identify some of the key factors regarding the specific issues customers are facing. The research identified three main themes: I) economic volatility and inflation concerns; ii) supply chain and logistical disruption considerations; and (iii) the suspension of the activities of companies that operated directly in the affected region. These three themes remained consistent across the two main categories of respondents—those with international needs and those without; however, both groups cited different degrees of impact for each of these factors.

Among those without international needs, inflation and economic volatility were highlighted as the biggest impacts with almost a third (32%) of respondents citing this theme.

The second major issue cited by both groups – supply chain and logistics concerns – was seen as having an impact by the many companies that have expansive operations involving regionally impacted materials and logistics routes. affected. This has led to increased disruption in these areas, forcing companies to adapt in managing their current supply chains. “We’re a pretty escalation-sensitive company, as you can imagine, it’s construction,” said a legal director. “Anything that impacts petroleum, materials, lots of different things, impacts cost and delivery times.

The third major problem cited was the suspension of activities in countries, mainly those directly affected by the conflict. This theme was the most cited among businesses with international needs and highlights some of the most direct impacts we have seen as a result of the invasion. Speaking of operations in Russia and Ukraine, a chief lawyer said the impact was significant:

“Because we have stopped doing transactions in Ukraine and Russia. We don’t have the stores open; we closed them all. 500 stores closed in Russia and 130 stores closed in Ukraine. 10,000 workers in Russia and 1,400 in Ukraine.

Interestingly, the impact on clients’ legal operations was not felt as deeply, according to respondents. For example, the survey found that 80% of corporate legal departments say they have been affected by conflict, but they see no substantial impact in how they use legal service providers. For those who cited the change, it was mostly about seeking additional assistance in navigating the new policies, as one legal director noted: “We are relying more on law firms to ensure that we remain compliant in our business dealings.”

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