News focus: 'Wagner mercenary' row highlights role of lawyers in SLAPPs

Revelations this week that the UK Treasury had approved the release of funds to allow the sanctioned founder of Russia’s notorious mercenary force Wagner Group to sue a journalist in London have dramatically turned up the heat under the simmering issue of SLAPP lawsuits.

On Wednesday, the prime minister told the House of Commons that the government is ‘looking at’ the granting of a licence by the Office of Financial Sanctions Implementation (OFSI) to Yevgeny Prigozhin to instruct lawyers in London. The matter was originally reported by investigatory website openDemocracy following an apparent leak of emails.

According to the openDemocracy report, following the granting of the OFSI licence, British lawyers flew to St Petersburg to interview their client, who was barred from travel to the UK. The report stresses that the OFSI was informed of every detail, including the £3,623.04 cost of business class flights. The London firm instructed in the case, Discreet Law, has stressed that it ‘at all times complied with… legal and professional obligations’. It ceased acting for Prigozhin in March last year.  

The revelations, which closely follow claims by tax law blogger Dan Neidle that he was threatened by lawyers acting for Conservative party chairman Nadhim Zahawi, gave new impetus to the campaign for a US-style anti-SLAPP law in the UK.

Tabling a private member’s bill on Tuesday, Conservative MP Bob Seely attacked large law firms for ‘legalised gangsterism’ in the conduct of oppressive litigation.

Meanwhile, a House of Lords committee heard that around 40 law firms are under investigation by the Solicitors Regulation Authority for alleged abuse of litigation. Appearing before the Communications and Digital Committee, SRA chief executive Paul Philip said he expected about half will have come to a conclusion by the middle of this year.

A ‘thematic review’ of the issue, originally due in November, would be published in the next few weeks, Philip said. However he rejected the committee’s suggestion that the regulator should ‘name and shame’ firms under investigation.

'The OFSI licence regime risks making UK sanctions against Russia so riddled with holes that it will be a laughing stock and it needs to be urgently reviewed'

Dr Sue Hawley, Spotlight on Corruption

The committee, which had earlier taken evidence from SLAPP campaigners Susan Coughtrie of the Foreign Policy Centre and Matrix Chambers’ Catrin Evans KC, wasted little time with its recommendations. In a letter to the lord chancellor yesterday, it called for the SRA’s law firm fining powers – which Philip had likened to ‘a peashooter against a tank’ – to be increased from £25,000 to £250m. (The regulator can already fine alternative business structures up to £250m.)

It also proposed the creation of a new SLAPPs defence fund, to be paid for ‘by wrongdoers’, more action from the regulator on abusive lawsuits, and greater oversight of law firms using ‘black PR’ and private intelligence agencies.

The committee also called for action over what it called a loophole in the anti-money laundering regime. Existing compliance checks are designed to prevent the laundering of money through transactional legal services, but there is little to prevent the use of dirty money to pay for legal advice. The committee noted the irony that, under the current regime, illegitimate funding could be used to pay law firms to silence journalists’ investigations into money laundering.

In another reaction to the Prigozhin revelations, Treasury minister James Cartlidge MP told parliament that the government is considering whether changes can be made to the OFSI licensing regime. Anti-corruption pressure groups called for details of the grounds on which the special licence was granted to Prigozhin’s UK law firm.

Dr Sue Hawley, director of the group Spotlight on Corruption, said: ‘The [OFSI] licence regime risks making UK sanctions against Russia so riddled with holes that it will be a laughing stock and it needs to be urgently reviewed. From helping sanctioned oligarchs have £500,000 expense exemptions, to allowing people like Prigozhin to use the legal courts to silence critics, the licensing regime desperately needs oversight and accountability as it is letting the side down.’

Whether this week’s outcry will lead to legislation remains to be seen. The Lords committee heard that the lord chancellor has yet to respond to a draft anti-SLAPPs bill submitted by campaigners in November. But Bob Seely’s Defamation, Privacy, Freedom of Expression, Data Protection, Legal Services and Private Investigators Bill was this week listed for a second reading on 24 March.

As a private member’s bill, it is almost certain to fail. However the government is under pressure to put something in its place. That something will surely include new muscle for the SRA.

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