Introduction to Legal Professional Privilege
Businesses involved in disputes often assume that communications with their lawyers will remain protected from disclosure, and in most instances, this assumption is broadly correct. Legal professional privilege exists as a key principle to protect lawyer-client communications, enabling parties to seek candid legal advice without fear of such communications being disclosed.
The protection afforded to legal communications is not unlimited, as in certain circumstances a party may argue that privilege has been lost due to wrongdoing. The recent High Court decision of Bourlakova & Ors v Anufriev & Ors [2026] EWHC 1747 (Ch) considered the circumstances in which a claim to privilege may be challenged, providing useful guidance for businesses conducting complex investigations or managing litigation risk.
The Iniquity Exception
Legal professional privilege protects confidential communications between a lawyer and client for the purpose of giving or receiving legal advice, while litigation privilege protects communications created for the dominant purpose of conducting litigation. The iniquity exception operates as a limitation on such protection, reflecting the principle that privilege cannot be used to conceal communications which further fraud or other serious wrongdoing. The courts apply the exception cautiously, as allegations of wrongdoing alone will not be enough to deprive a party of protection under privilege.
Bourlakova v Anufriev: Case Background
The proceedings in Bourlakova & Ors v Anufriev & Ors arose from a long-running dispute concerning assets held within the estate of late Russian oligarch and billionaire Oleg Bourlakov. The claimants, Mr Bourlakov’s widow and daughter, alleged that assets within the estate had been transferred and placed beyond their reach through a series of fraudulent transactions orchestrated by Mr Bourlakov and others, and they commenced proceedings seeking to recover those assets. During their investigation, the claimants instructed solicitors and specialist enquiry agents to gather information relevant to the claim.
The defendants alleged that some of the information obtained by the claimants had been acquired improperly, and sought disclosure of communications between the claimants, their solicitors, and investigators on the basis of the iniquity exception. As a result, the High Court was required to determine whether the alleged investigative conduct was sufficiently improper to deprive the claimants of privilege and, more broadly, where the boundary should lie between legitimate investigation and iniquity.
Judgment of the High Court
The court recognised that businesses investigating suspected fraud or misconduct often rely on external investigators to gather evidence, and the fact that an investigation uncovers confidential information does not on its own amount to wrongdoing capable of displacing privilege. The court rejected the defendants’ argument that the use of investigators and the acquisition of confidential information during the investigation were sufficient to engage the iniquity exception. In consequence, the court dismissed the application and held that the claimant’s privilege remained intact.
In considering whether the communications formed part of an ordinary solicitor-client relationship or had become tainted by wrongdoing, a key issue was the claimants’ belief of the lawfulness of the investigators’ conduct. The court found that the claimants and their solicitors genuinely believed that the investigations were being conducted lawfully. This belief formed an important part of the court’s assessment, highlighting the significance of a party’s state of mind when determining whether the iniquity exception applies.
A High Threshold for Challenging Legal Professional Privilege
More widely, the court confirmed that the iniquity exception is not limited to cases involving fraud or dishonesty, and can extend to other forms of conduct which are sufficiently underhand or improper, although the threshold for such claims remains high.
The court held that certain aspects of the investigator’s conduct could properly be regarded as unattractive, including investigators having eavesdropped on a conversation between the defendants and their lawyer. Such conduct is not automatically iniquitous. On the facts of the case, there was insufficient evidence to demonstrate the level of wrongdoing required to justify setting aside privilege.
The court’s decision is notable as parties in fraud claims and related commercial disputes often seek disclosure of privileged material by alleging improper conduct by investigators or advisers. The judgment in Bourlakova & Ors effectively demonstrates that the courts will scrutinise such allegations carefully, but will not deprive a party of privilege without clear evidence that the communications formed part of genuine wrongdoing.
Implications for Businesses and Internal Investigations
The decision will be welcomed by parties involved in complex commercial investigations, particularly where external investigators are engaged to gather evidence. The court was unwilling to adopt a broad rule that would treat the obtaining of confidential information as inherently iniquitous, recognising that such an approach could discourage the investigation of suspected wrongdoing.
The decision highlights the importance of conducting investigations within an appropriate legal framework. Businesses should involve legal advisers from the outset, clearly document investigative instructions and implement procedures for handling confidential or potentially privileged material. If privilege is challenged, the court is likely to closely examine the conduct, motivations and beliefs of those involved.
If you have any questions regarding legal professional privilege, internal investigations, shareholder disputes or commercial litigation, please contact the Dispute Resolution team at Herrington Carmichael.
