It’s high time to crack down on London lawyers protecting Putin’s oligarchs

Firms pushing back on sanctions tarnish the City’s excellent legal sector

LUCY BURTON

BANKING EDITOR28 February 2022 • 6:00am

The dramatic showdown between Chelsea FC owner Roman Abramovich and his business rival Boris Berezovsky in 2011 was exactly the sort of lucrative dispute the Government would have dreamt of attracting to its shiny new Rolls Building just after opening the £300m London court that year.

With billions of pounds at stake, the legal fees were thought to be around £1m on the first day alone as lawyers battled it out in a packed courtroom.

Jonathan Sumption QC, representing Abramovich, who relinquished the running of Chelsea this weekend amid calls for him to be sanctioned, had described his pay as “puny” years earlier. After this, he was said to have pocketed the highest fee in British legal history. 

The drama played out not just in the London courtroom but also on the streets of the capital. Four years earlier, Berezovsky had served Abramovich a writ in the luxury goods store Hermes while out shopping on Sloane Street with his bodyguards, allegedly handing him the papers with the words “I have a present for you”.

The high-profile lawsuit which followed is one of just many blockbuster Russian disputes that have taken place in UK courts over the years, with oligarchs repeatedly choosing to settle their feuds in London. From divorces to libel claims, City lawyers have filled their boots. 

But some of the lawyers who have been cashing in on Putin’s inner circle may have now clocked that greed comes with a price. As the Government launches another round of sanctions against Moscow, this weekend blocking certain Russian banks from accessing the Swift international payment system and restricting the Russian central bank’s international reserves, attention is turning to what the corporate world is doing.

The London law firms which have long had relationships with Russian oligarchs are the central focus. Liz Truss, the Foreign Secretary, has argued that some City lawyers are now holding up sanctions against their oligarch clients by threatening legal action.

Labour MP Ben Bradshaw, one of those briefed, said Truss had called oligarch lawyers in London “very litigious” and told MPs she had received several warning letters from them. He called on the Government to name and shame these firms. 

The Government should not only name and shame these firms, but finally crack down on the alliance between London lawyers and pro-Putin oligarchs which has made MPs feel queasy for years.

Politicians called for a cleanup of the legal, accounting, property and public relations industries ­alleged to be part of a London “laundromat” almost two years ago, alarmed that law firms were able to work for bad actors without having to disclose their connections and accusing these advisers of “promoting the nefarious interests of the Russian state”.

The report, by parliament’s intelligence and security committee (ISC), added that the arrival of Russian money had resulted in a “growth industry of enablers – individuals and organisations who manage and lobby for the Russian elite in the UK”. 

The committee said it had also created a private security industry developed to service the needs of the Russian elite, in which British companies protect oligarchs, seek compromising information on their competitors and provide litigation support. 

It is not just politicians which have sounded alarm bells. Around the same time as the parliamentary report raised concerns, a study by foreign policy think tank the Henry Jackson Society accused lawyers of being “pin-striped enablers” of murky money, allowing UK courts to be exploited so that dirty cash can be laundered out of Russia.

And an investigation by The New York Times and the Bureau of Investigative Journalism last year revealed how London’s courts had become a powerful weapon in disputes between tycoons of the post-Soviet world, accusing some top City law firms of turning to unregulated private intelligence firms in these cases “to use borderline methods for deep-pocketed clients”. 

Such criticism appears to have fallen on deaf ears. If Truss is right and some London lawyers are pushing back against sanctions, then sadly even a war won’t make certain advisers row back. There have been hints in recent years that lawyers are little fussed by the criticism. When the Guardian called London law firm Olswang, now part of CMS, in 2013 after it emerged that it was acting for a former Russian police officer accused of murder, it alleged that it was simply told by the company’s spokesman: “I probably won’t get back to you.”

MPs claimed that Linklaters also refused to explain its involvement after a parliamentary report in 2018 singled out the Magic Circle law firm for its role in the 2017 flotation of ­energy firm En+ on the London Stock Exchange, which was controlled by billionaire and Kremlin associate Oleg Deripaska. Neither law firm responded to a request for comment. Deripaska denied taking instructions from the Kremlin.

Of course London’s legal industry is one of the best in the world, attracting the ultra-wealthy because of its reputation and the ability of its lawyers. The firms pushing back on sanctions or knowingly acting for dubious clients are in the minority, but it tarnishes a whole sector.

Shadow foreign secretary David Lammy was right last week when he said that the best way to defend the rule of law is to follow it. “If we are to be credible champions of international law, our leaders must practice the laws they set at home,” he said. Concerns about the ties between UK courts and dirty money have been there for years. It is a tragedy that nothing was done earlier.