The Arab Spring, which began in Tunisia in December 2010 and then rippled through the Middle East during the next two years, has toppled regimes in Libya and Egypt and has sparked protracted periods of civil disobedience in Syria. As a result of the unrest, the U.S. government enacted or expanded economic sanctions against Libya and Syria in an effort to weaken the viability of those countries’ ruling regimes by reducing or halting the flow of money or goods from American businesses.
Although the sanctions against Libya were lifted following the overthrow of Muammar Qaddafi, the sanctions against Syria remain in effect, including recent provisions targeting the state-owned Commercial Bank of Syria and mobile phone company Syriatel.
While the geopolitical impact of the recently stiffened sanctions remains uncertain—Iran has also been slapped with new sanctions because of its nuclear ambitions—the impact for some lawyers within a niche practice area is clear.
“I’ve been practicing in the area since 1987, and there’s definitely been an uptick in clients seeking compliance counseling,” says William McGlone, a Washington, D.C.–based partner at Latham & Watkins.
McGlone and other practitioners who work in the field of export controls and legal sanctions say they have been scrambling to keep up with an increased demand for their services and expertise. “We have four partners and a senior counsel working full-time on these matters,” says Peter Lichtenbaum, a Washington, D.C.–based partner at Covington & Burling, who cochairs the firm’s international trade and finance practice group. “Companies are trying to figure out what this all means for existing business activity, and the more they read about new sanctions, government investigations, and hefty fines, the more they are willing to dedicate resources to ensuring that they are in compliance.”
Latham has represented as many as 200 companies across a wide variety of industries, including the technology and defense sectors, in the past 12 months. Latham’s McGlone declined to name firm clients, but says that in general his job is to ensure that a company has internal procedures to make sure products aren’t sold by a third party to prohibited end users and also to advise clients that want to invest in a foreign-based company that is doing business in a country that is the target of U.S. sanctions.
Covington’s Lichtenbaum saw a direct spike in his practice in connection with the sanctions briefly imposed against Libya in February 2011. “You had U.S. petrochemical companies that had become active in Libya following Qaddafi’s acceptance back into the global community, and they were trying to figure out what to do after the government imposed sanctions to support the uprising,” Lichtenbaum says. Following implementation of the sanctions, he advised companies on how to pay Libyan employees who were guarding plants and other facilities in the country. Additionally, Lichtenbaum and others say their practices have been boosted, in part, by clients seeking to obtain waivers for sanctions. For instance, Covington obtained a license from the U.S. Department of the Treasury’s Office of Foreign Assets Control, the agency that regulates and enforces U.S. sanctions, for a private equity firm client. The waiver allowed the client to use money owed to a Libyan entity that had invested in one of the private equity’s funds, to offset firm management fees.
U.S. sanctions have been matched by similar measures from foreign entities such as the European Union, and that has also generated additional work for lawyers like Lichtenbaum and McGlone. (E.U.–imposed sanctions are implemented independently by member countries.) Now, even the most pedestrian of transactions must be vetted against regulations in multiple countries. “There are more and more regimes with sanction programs, and there has been a dramatic [increase in the] need for advice,” says Beth Peters, a Washington, D.C.–based partner at Hogan Lovells and director of the firm’s international trade and investment group.
But it’s not just the possibility of government action that’s leading companies to seek out lawyers with sanction-related expertise. Companies are more careful about the public’s perception of their business dealings. “Today, the reputation concerns among companies are much more significant,” says McGlone. “Often we are asked to make judgments about whether a sale or investment involving a foreign company is something the public is going to frown on.”