Jonathan Nelms, a Baker McKenzie partner in Washington, DC, who spent nearly three years toiling in the firm's Moscow branch, chooses his words carefully when describing the current state of relations between the US and Russia.

Jonathan Nelms

"I don't want to call it a new Cold War," says Nelms (pictured), whose firm has 120 lawyers in Moscow and St Petersburg.

But the relationship has chilled enough to have business consequences for Western law firms that have Russian outposts, according to Nelms and other partners at five different firms – most of whom spoke only on condition of anonymity.

A few years back, the firms' hires in Moscow were making legal industry headlines. Now, as US leaders spar with their Russian counterparts over Syria and other issues, Western firms in Russia may be happy to stay off the Kremlin's radar. If the geopolitics are bad, the economics for some of the firms aren't any better, particularly for those that represent clients in the price-depressed oil industry. Many are worried about losing both Russian and US clients.

The roster of US firms with Moscow offices includes, among others: Akin Gump Strauss Hauer & Feld with 27 lawyers; Latham & Watkins with 20 lawyers; Morgan Lewis & Bockius with 29 lawyers; Cleary Gottlieb Steen & Hamilton with 21 lawyers; and Baker Botts with 23 lawyers.

'A double whammy'

US-Russia relations have been perpetually rocky since the Obama administration imposed sanctions against Russia in response to the invasion of Crimea in 2014, and amid Russia's backing of Syrian President Bashar al-Assad. Tensions rose further when federal law enforcement agencies and Congress announced multiple investigations into allegations that Russians interfered in the November 2016 US presidential election.

On 6 April, US President Donald Trump ordered missile strikes on an airbase held by the Russian-backed Syrian government, in retaliation for an apparent chemical attack by Assad's forces. US officials later accused Moscow of attempting to cover up the attack.

"It's hard to tell what will happen since the weekend," Nelms says.

For the firms, the question is how far the tensions – not to mention sanctions – could erode zeal for cross-border business between Russians and their US and European counterparts. The worst-case scenario is a purge: the Kremlin could potentially bar many US concerns, including law firms, from operating within the country's borders. The government has already imposed restrictions on credit card and software companies.

A law firm partner whose firm has a Moscow office, and who travels regularly to Russia, summed up the mood of Russian clients and US clients with deals there: "It's bad."

The 2014 sanctions froze a significant chunk of Moscow-directed cross-border business, the partner notes. But the present atmosphere in DC – where all things Russian have become stigmatised by the political climate – has "poisoned" relations, he says.

Other partners whose firms do business in Russia echoe that view. Low oil prices, combined with the political battles over Russia in the US, represent "a double whammy" for international law firms in Moscow, one says. Another says US clients are staying away, because "they just don't want to get hauled before Congress".

On the Russian side, companies have shown some hesitation to use US and British law firms, but not enough to cease all relationships, one of the lawyers says. "So far, they don't hold that much against us. They are very polite and friendly," he says.

Nelms says his firm faces fewer risks of a negative Russian government response aimed at US law firms than its rivals. That's because Baker McKenzie has historically stocked its overseas offices with local lawyers, he says. Baker McKenzie also has focused on providing legal services to local clients doing local business, rather than international clients engaged in cross-border transactions and litigation – another reason Nelms expects his firm to escape any wrath that the Russian government or clients may aim at US and European lawyers.

"It's been a hallmark of this firm not to rely on expats but to populate our offices with local lawyers, including in leadership positions. We are homegrown. Maybe that's why we have weathered or managed better than others," Nelms says.

The local strategy seems to be spreading. "Everybody has gone more Russian," one of the international firm partners says. Now, he adds, the only American name in the office is often the name of the firm on the door.