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Catching fraudsters: little-known litigation tricks (Part 6) - Obtaining information from fraudsters' lawyers

23 May 2022

Communications between lawyers and their clients are generally 'privileged' (ie confidential), which means that even the courts aren’t entitled to know the content of those communications. Fraudsters often try to take advantage of this fundamental legal protection by involving lawyers in structuring and moving their assets, so as to make themselves 'judgment proof', believing that the involvement of lawyers will ensure absolute secrecy. Lawyers therefore often have a great deal of information about their clients' assets, which would of course be helpful to victims of fraud, but can these victims access this treasure chest? Thankfully, in certain circumstances, yes they can. 

In Kerman v Akhmedova, Mr Kerman, a solicitor who acted for Mr Akhmedov in the UK’s largest-ever divorce feud, objected to a court order that he be cross-examined about Mr Akhmedov's assets on the ground of legal privilege. The judge rejected his objection. Three key points were considered:

First, Mr Kerman’s involvement in certain activities were as a “man of business", not as a man of law. For example, Mr Kerman had knowledge of Mr Akhmedov's banking activities and was involved in insurance arrangements for his art collection. The activities of people of business, not law, are not protected by legal privilege. 

Second, there is a 'fraud exception' to legal privilege. In this case, Mr Akhmedov's conduct in seeking to thwart enforcement of Ms Akhmedova's claim had been seriously iniquitous, meaning that this exception applied. 

Third, and most importantly in this case, Mr Kerman’s communications were with a third party, not his client. Communications between a lawyer and a third party can only be protected by legal privilege if they are created for the sole or dominant purpose of litigation – but here there was no ongoing or contemplated litigation.  

Mr Kerman therefore had to reveal information about his client's assets, helping Ms Akhmedova to enforce her £450m+ award. 

Fraudsters' solicitors are an all too often untapped source of information in fraud and asset tracing cases. Obtaining an order against lawyers has an obvious benefit, which is that the information they provide can be relied upon as being true – unlike information which might be provided by fraudsters. It is also a helpful pressure point if the lawyers who helped structure or move assets are the same lawyers instructed in any subsequent litigation. 

Other articles in this series:

 

Contact Darren Kenny and Oleksandra Vytiaganets for more information.

Further Reading