Unburden Lawyers from Scrutinising Clients’ Sources of Funds

A Rejoinder Antithesis to Mayowa Owolabi’s Thesis (Part 2)

Introduction

Last week, I commenced my rejoinder to the 24th June, 2021 This Day Lawyer write-up by Mr Mayowa Owolabi, in which he critiqued (albeit, wrongly), the unanimous Court of Appeal judgement anchored by Honourable Justice Chidi Nwaoma Uwa. The Court of Appeal had held that Lawyers are not required to scrutinise their clients’ accounts, to determine the source from which they were paid their professional fees for services rendered. Today, I will attempt to show that Mr Owolabi’s thesis sorely missed the point. This is the second tranche of my antithesis.

Mr Owolabi had agreed inter alia, that the Court of Appeal decision “accords with logic”. Having accepted the correct “lex lata” (the law as it is) position as put forward by the intermediate Court, it becomes incomprehensible how Mr Owolabi would simultaneously attempt (vainly though), to fault the same decision on an assumed “de lege ferenda” (the law “with a view to the future”). His thesis was merely in futuro; the law as he would have preferred it to be, so as to bring it to “par with applicable regulations in the United Kingdom”. Unfortunately, we are not yet there!

Mr Owolabi’s dissertation seems to suggest wrongly, that a Lawyer should go beyond the call of his normal duties and wear the garb of a “detective/whistle blower” over his client’s funds, just because he is being paid his earned professional fees by such client. Were this to be the correct position (God forbid), no Lawyer would ever earn fees. Even if a Lawyer were to inquire of a client the actual source of funds from which he was being paid, it is inconceivable that such a client would readily voluntarily disclose the true source, as being for example, criminal or illicit (even if it were so). Would such a Lawyer then still be accused of complicity, or held liable for having been misled and deceived by his client?

Mr Owolabi made reference superficially to the United Kingdom Proceeds of Crime Act, 2002, Money Laundering and Terrorist Financing (Amendment) Regulations, 2019, and the Terrorism Act, 2000, in drawing comparison to the state of affairs in the United Kingdom, via-a-vis the extant laws in Nigeria.

He further argued that law firms in the United Kingdom had been mandated to scrutinise transactions undertaken throughout the course of their relationship with clients, including the source of funds, to ensure that the transactions are consistent with the relevant person’s knowledge of the customer, the customer’s business and risk profile (Regulations 28 (S 11 (a) of the Money Laundering Regulations 2017).

Apart from Regulation 28 (S 11 (a) of the Money Laundering Regulations 2017), Mr Owolabi never cited any specific provision of the Proceeds of Crime Act, 2002, Money Laundering and Terrorist Financing (Amendment) Regulations, 2019, and the Terrorism Act, 2000, he relied so heavily on in his submission, to show a Lawyer’s obligation to become an investigative Policeman over his client’s funds. I have taken time to carefully study the provisions of the Acts he cited, and I submit unequivocally that, he appears not to have understood the gravamen, purport and import of the decision of the Court of Appeal. In relying on foreign legislations, he failed to highlight any specific aspect of the foreign legislation (Acts), that compel a legal practitioner to ascertain the very source of funds from which he would be paid by his client before receiving his fees.

For the avoidance of doubt, the case of F.R.N. v Chief Mike Ozekhome, SAN, borders on fees legally and legitimately received by Mike Ozekhome’s Chambers from an unencumbered and de-frozen account (by an order of court), for professional services duly rendered by the firm.

The Proceeds of Crime Act 2002, cited by Mr Owolabi, is an Act which establishes the Assets Recovery Agency; provides inter alia, for confiscation orders in relation to persons who benefit from criminal conduct; and allows the recovery of property which is or represents property obtained through unlawful conduct, etc. (See Section 330 (Part 7) of the said Act). Even then, this section provides that such persons (not Lawyers) must “know or suspect or has reasonable grounds for knowing or suspecting, that another person is engaged in money laundering in the course of a business in the regulated sector”.

However, Section 330(6) of the said Act provides expressly that a person does not commit an offence under the section if:

a. he has a reasonable excuse for not making the required

disclosure; a professional legal adviser or relevant professional

b. he is adviser; and i. if he knows the identity of the suspect mentioned in (1) and the whereabouts of the laundered property because of information or other matter that came to him in privileged circumstances; or

ii. the information or other mentioned in (2) came to him in privileged circumstances; or

iii. he does not know or suspect that another person is engaged in money laundering; and

iv. he has not been provided by his employer with such training as is specified by the Secretary of State by order for the purposes of this section.

Further, if every professional (the legal practitioner inclusive) were to enquire into the source of funds from which he would be paid before he accepts a brief, no transaction would ever crystallise. As noted by the learned Justices of the Court of Appeal, there is no law which mandates a legal practitioner to take such a step. And, my deep research has not thrown up any. In all the foreign Acts and Regulations relied upon by Mr Owolabi, there is no specific provision that mandates a person to go on inquiry or a voyage of discovery, into the source of funds from which he would be paid his professional fees.

In addition, my learned friend wrongly suggests that by virtue of the provisions the Proceeds of Crime Act, 2002 and other similar laws in the United Kingdom, Solicitors are required to become “whistle blowers” who must disclose suspicious activities on their clients’ account. I humbly submit that, if he had calmly studied the provisions of Section 330(6) of the

Proceeds of Crime Act, 2002, and Regulations 28 (14) and (15) of the Money Laundering, Terrorist Financing and Transfer of Funds Information On The Payer), 2019, he would have discovered that legal practitioners are not required to disclose privileged information concerning their clients’ funds.

In any event, the case of CBN v Regd Trustees, NBA (CA/A/202/2015; unreported) which was cited with approval by the same intermediate court, has settled this issue per adventure. In that case whose facts Mr Owolabi admirably gave, the Court of Appeal emphasised (ruling in favour of the NBA) that the provisions of Sections 5 and 25 of the Money Laundering Act (MLA), in so far as they purport to apply to Legal Practitioners, are invalid, null and void, for being inconsistent with Section 192 of the Evidence Act, 2011. This section of the Evidence Act protects privileged communication between a Lawyer and his client. Lawyers are therefore, as held by the two divisions of the Court of Appeal (Abuja and Lagos), to be exempted from the provisions of the MLA. Were this not the case, the noble profession would have been saddled with the fate of market men and women, artisans, bricklayers, frozen fish seller, tailors, hairdresser, etc. Let us all collectively and individually defend our noble profession please.

A Legal Practitioner is Entitled to His Professional Fees That a Legal Practitioner is entitled to his professional fees, is the correct position of the law. In ASCA BITUMEN CO. LTD v ISAH (2016) LPELR40778(CA), the intermediate court held:

“Rule 18(1) and (2) of the Rules of Professional Conduct for Legal Practitioners, 2007, provides as follows: “18(1) A client shall be free to choose his Lawyer and to dispense with his services as he deems fit, provided that nothing in this rule shall absolve the client from fulfilling any agreed or implied obligations to the Lawyer including the payment of fees. (2) The Lawyer shall ensure that important agreements between him and the client are, as far as possible, reduced into writing, but it is dishonourable and a misconduct for the Lawyer to avoid performance of a contract fairly made with his client whether reduced into writing or not. “The relationship between a Legal Practitioner and his client, is contractual. See Edozien v Edozien (1993) 1 SCNJ 166 at 189; Mosheshe v N.S.P. Ltd. (1987) 2 NWLR (Pt. 55) 110 at 119 and Adewunmi v Plastex Nig. Ltd. (1986) 6 SC 214 at 223. The agreement bounds only the client and the legal practitioner, but not a third party. The Respondent was not a party to the agreement entered into by the Appellant with the Legal Practitioner, engaged to defend her in the trial court and in this court. The Appellant had the choice to defend the suit through her employees, or to contract a Legal Practitioner to defend her in the Lower Court or in this appeal. Rule 21(1) of the Rules (supra) further provides as follows: “21(1) A Lawyer shall not abandon or withdraw from any employment once assumed, except for good cause. “A Lawyer is an employee once engaged by the client, and not a party in litigation. Rule 24(1) of the Rules (supra) further provides that: “24(1) It is the duty of a Lawyer to accept any brief in the Court in which he professes to practice, provided the proper professional fee is offered unless there are special circumstances which justified his refusal”. I do not fathom a situation where a client engages or employs the services of a Legal Practitioner upon the payment of a professional fee, and saddles the opposing party with the refund of the fee when that party was not a party in the agreement between the Counsel and his client”. Per TUR, JCA. (Pp 27-28). Paras. A-F) (More on this next week, by God’s grace. (To be continued).

“MR OWOLABI’S DISSERTATION SEEMS TO SUGGEST WRONGLY, THAT A LAWYER SHOULD GO BEYOND THE CALL OF HIS NORMAL DUTIES AND WEAR THE GARB OF A “DETECTIVE/WHISTLE BLOWER” OVER HIS CLIENT’S FUNDS……”

The Serious and the Trivial “In Nigeria, an innocent citizen will drive 10km alone and meet 10 checkpoints; bandits will drive 100km with 300 kidnapped children, and meet no checkpoint at all”Anonymous.

“Why do Nigerian leaders ask Nigerians in diaspora to invest in Nigeria, while they invest their loot abroad?Anonymous.

“Rivers do not drink their own water; trees do not eat their own fruit; the sun does not shine on itself, and flowers do not spread their fragrance for themselves. Living for others is a rule of nature. We are all born to help each other. No matter how difficult it is….. Life is good when you are happy; but much better when others are happy because of you.- Pope Francis.

THOUGHT FOR THE WEEK

“Our attitude towards life determines life's attitude towards us”.