The gleaming buildings that tower over London’s Square Mile are largely considered the preserve of the bankers who transformed the City into the world’s financial centre. The lawyers who share those spaces play a smaller role in the public imagination and yet their promotion of the English courts as the guarantors of international business is equally significant.
Many represent upstanding interests. But others have grown wealthy serving an international super-elite – oligarchs, dictators and their hangers-on – whose grudges are now routinely fought in British courts.
Successive UK governments have promoted London as the go-to place for resolving commercial disputes. They have advertised its reputation for fairness and capitalised on the legacy of empire that made London the centre of trade and English the global language of business, particularly in the world’s offshore jurisdictions. In doing so, they have made the UK’s legal services industry one of the largest in the world and opened the city’s courts to cases that can include no British parties.
The global super-rich who use the capital’s commercial courts tend to come from one region in particular. Ever since the breakup of the Soviet Union allowed a class of ultra-wealthy oligarchs to rise to political power, many have made London their home. While some maintained their ties to the Kremlin, others sought refuge from what they claim are aggressive and unjust moves to seize their wealth.
The city’s biggest law firms have welcomed both sides as a lucrative source of business. As well as the oligarchs themselves, clients include the state-owned banks, energy companies or debt collectors from authoritarian regimes that accuse exiled oligarchs of fraud or tax evasion. In four out of the past six years, there have been more litigants from Russia and Kazakhstan than anywhere else outside the UK.
The high number of cases involving foreign parties is not in itself problematic: it is a reflection of the English courts’ reputation for fairness and integrity, which is in stark contrast to the corruption that blights the former Soviet Union. But the disputes are generally rooted in the region’s post-Soviet struggle over power and money – and the dirty tactics common to undemocratic societies trickle into the English courts. In ignoring the political backdrop and adjudicating cases simply on their legal merits, the courts can lend a stamp of authority and legitimise the questionable methods often used to bring in evidence.
A key to this is the fact that illegally obtained evidence can sometimes be admitted in civil cases. Judges prefer to see whatever evidence will help them establish the truth of the matter. This has proved something of a clarion call for London’s private investigators. Hired by solicitors or their clients but operating without regulation, they are tasked with finding information to support their case or, better yet, harm the credibility of their opponent. Kompromat, as compromising information collected to discredit someone is colloquially referred to in Russian, has long been used by corrupt regimes to keep politicians and businesspeople in line and centralise power. It is now creeping into evidence used in Britain’s legal system.
In its report on Russian interference in the UK last year, the Commons Intelligence and Security Committee pointedly drew attention to the role lawyers and private investigators play in furthering Russia’s “nefarious” interests, as well as helping Russian tycoons to dig up dirt on their enemies and fight their lawsuits. The authors labelled lawyers “a key group of professional enablers”.
“The UK wants to be a leading centre for legal services … and that is always going to be a disincentive to have too much scrutiny or oversight,” Susan Hawley, head of the charity Spotlight on Corruption, told the Bureau. “Checks need to be bolstered so that important rules around allowing any information that might provide relevant evidence isn’t abused by people who might use very questionable behaviour in the course of litigation.”
“The lawyer of the world”
The Royal Courts of Justice on the Strand has all the gothic grandeur one would expect from the building that symbolises a centuries-old judicial system. But a short walk around the corner, in a courthouse tucked away on a quiet street, is where London’s commercial law industry makes most of its money.
The unremarkable facade of the Rolls Building belies the stories told inside its 31 courtrooms – tales of the wild capitalism that followed the fall of the Soviet Union – and the fact that this is where bitter accusations of fraud and money-laundering have been levelled at some of the world’s richest people.
Through the airport-style security, a central spiral staircase snakes its way up the vast multi-storey glass atrium. The £300m development and its three “super courts” – which are reserved for the very largest high-value disputes – were designed to make London a modern, global legal centre and a rival to New York, Hong Kong, Dubai and Singapore.
After the building was completed almost a decade ago, one of the first notable cases to be heard within its walls involved Roman Abramovich, the reclusive billionaire and owner of Chelsea Football Club, who had been accused of making threats to his former business associate Boris Berezovsky and forcing him to sell his shares in a Russian oil company. Legal fees for the case, which concluded in 2012, were estimated at up to £100m. The judge ruled in favour of Abramovich.
Other cases that year involved the metals magnate and Kremlin associate Oleg Deripaska and the exiled Kazakh oligarch Mukhtar Ablyazov, and helped to lift the annual profits made by London’s top 100 law firms over the £5bn mark. That figure has since risen to £8.3bn, and last year London’s commercial courts enjoyed a record caseload despite the pandemic.
Britain’s legal services industry is second only to the US in terms of the money it takes in fees. It employs at least 350,000 people and contributes more than £20bn to the economy.
This breakneck expansion has been actively supported by the government. As justice minister, Ken Clarke said in 2011 he wanted to make the UK the “lawyer of the world”. His successor Chris Grayling said that he was “determined to help British law firms and barristers compete in the global race and develop a presence that is equal to their world-class reputation”.
In 2013, Grayling joined his Russian counterpart at a relatively small conference hosted by the St Petersburg International Legal Forum in London to drum up customers for Britain’s elite lawyers. The event took place at Lincoln’s Inn, one of the world’s oldest and most prestigious professional bodies of judges and lawyers, and perhaps symbolised Britain’s ancient institutions opening their doors to this new business.
Clarke and Grayling got their wish – half of litigants in commercial cases last year were not British, according to data from Portland Communications. Some of London’s largest firms have hired lawyers whose expertise lies in the complex fraud cases from the former Soviet Union. Many are bilingual, speaking both English and Russian, and split their time between the two countries. About 20 such firms now have offices in Moscow or St Petersburg.
The hunt for kompromat
London’s commercial dispute industry runs deeper than its law firms: private intelligence companies are just as integral. Away from the theatre of court, investigators hired by solicitors or their clients hunt zealously for evidence that will help the case. An investigation published by the Bureau and The New York Times reveals how one of London’s major law firms, Hogan Lovells, worked with the private intelligence company Diligence to pursue cases on behalf of the Russian and Kazakh state, while relying on invasive surveillance and, at times, questionably obtained evidence.
The thriving industry of today can be traced back to 1997, when an employee at the University of Warwick dropped a cash box with a faulty lid on her wrist and, in seeking compensation, unwittingly wrote the rulebook for decades of disputes between duelling oligarchs.
The employee claimed the accident had caused her a disability. Posing as a market researcher, an agent hired by the university’s insurance company gained access to her home and secretly videotaped her, with seemingly little injury to her hand. In court, the judge decided the evidence could be admitted. While illegal methods should generally not be used, he said, the need to “uncover unjustified, dishonest and fraudulent claims” was greater.
The effect of this decision, said Peter Ashford, a solicitor and expert in the admissibility of illegal evidence in civil disputes, can be seen today in how “the English courts are fairly sanguine about how the evidence was obtained. It’s wrong to say they’re not bothered, but it’s balancing the greater good. And the greater good is justice – the ultimate decision has to be the right one.”
An analysis by law firm Brown Rudnick for the Bureau found that since the Warwick ruling, English civil cases have often been open to taking unlawfully obtained evidence into consideration if the judge believes it is in the interests of justice. While various other jurisdictions have imposed blanket bans on such evidence, UK judges prefer to “see it, read it and put whatever weight they want on it”, Ashford said. While the court has the power to pass the documents over for criminal investigation, it is a power not frequently exercised.
This approach has fuelled the rise of the lucrative private investigation trade and added a chilling note to London’s transformation into the home of high-value commercial disputes. The investigators hired to work on these cases operate in the shadows and – despite government promises of greater supervision after the phone-hacking scandal a decade ago – their sector is almost entirely unregulated.
Bugging homes, tracking cars and even offering witnesses money to testify are all techniques some British investigators are known to have used to help their clients overcome an adversary. Brown Rudnick’s analysis found that the use of surveillance evidence – proportionately to the case – has even, on occasion, been seen to have met encouragement from the courts.
It may well be that such evidence, regardless of how it came to the surface, can help judges get closer to the truth. But this level of leniency raises pressing questions about the integrity of Britain’s courts and legal services, and whether they might at times be wilfully ignoring whatever dubious acts may have helped bring that evidence to the courtroom.
In certain cases, according to Ashford, there is now so little doubt about whether dubiously gathered evidence will be admitted by a judge that many opponents do not waste time putting up an argument.
This in turn means that such details may go unmentioned in court documents, ensuring that there is almost no way of quantifying just how widespread the phenomenon is. It is known to be seeping into the system – indeed, many lawyers spoken to by the Bureau believed it to be a growing trend. We simply do not know by how much.
The nuclear option
The flood of cash has widened the ambit of the civil courts. This is particularly noticeable in the growing power of English courts’ global asset-freezing orders, a tool once described by a judge as a “nuclear weapon” because of how difficult it is for a defendant to extricate themselves from one. This type of order, which imposes restrictions on a person’s assets regardless of where they are in the world, was designed to stop illicit flows of money. In the UK, it can be used far more broadly – far more powerfully – than in most other countries.
While in an ordinary fraud case this is perfectly valid, the political undercurrents behind the giant cases from the former Soviet bloc raise questions about whether the English courts are allowing forces from undemocratic societies to sideline opponents.
Litigants from post-Soviet states come to the UK for the “good stuff about the system … there is rule of law, there is an independent judiciary and they will get a fair hearing,” said Michael Redman, managing director of the litigation funder Burford Capital. “I think some of the bad stuff is where it becomes a tool in a wider battle … and that’s where the courts have potentially exposed themselves to reputational damage for granting worldwide freezing orders in the first place.”
These orders attract clients with deep pockets. “They bring a lot of money to [London]”, said Filip Saranovic, a law lecturer in commercial law at Southampton University, who believes the checks within the system mean it functions well overall. In his opinion, “it’s an open secret that one of the reasons why the scope [of worldwide freezing orders] has been expanded so much is to bring more and more cases to London”.
A force for good?
Earlier this year, Boris Johnson set out his vision for “global Britain”, a plan he hopes will make the UK a safer, more prosperous country and preserve its standing on the international stage. One way in which this can be achieved, according to a government report outlining the strategy, is through “legal diplomacy” – promoting the UK’s legal services abroad to ensure the values that underpin our system remain the “global standard”.
It aligns with an economically strong post-Brexit Britain, which is undoubtedly tied to a successful legal services industry. While there are still challenges ahead, so far at least, London’s commercial courts appear to have been resilient to the threat posed by leaving the EU. A dip in litigants from Europe has been offset by a boom in those from the US and Russia.
Britain’s lawyers can be a “force for good” in the world, the government says in its report. But in doggedly promoting London to an international business clientele, the UK must balance the need to maintain standards in the UK’s democratic institutions. It was Johnson’s government that blocked and delayed the publication of the parliamentary report into Russian influence in the UK that would later highlight MPs’ fears over the role of lawyers and private investigators.
London has long been known as a playground for the international super-rich. But beyond the luxury townhouses, fast cars and Knightsbridge shopping sprees, there are questions about another way they spend their money – in the gleaming towers and glass-fronted courtrooms of the City.
Reporter: Ben Stockton
Finance editor: Franz Wild
Global editor: James Ball
Investigations editor: Meirion Jones
Production editor: Alex Hess
Fact checker: Alice Milliken
Legal team: Stephen Shotnes (Simons Muirhead Burton)
Illustration: Daniel Stolle
Our Enablers project is funded by Open Society Foundations and out of Bureau core funds. None of our funders have any influence over the Bureau’s editorial decisions or output.