The mere receipt of professional fees by a legal practitioner does not, without more, make the fees proceeds of unlawful activity or impose upon the lawyer an obligation to investigate the source of the client's funds.

The Federal Republic of Nigeria v. Chief Mike Ozekhome (SAN), (2021) LPELR-54666(CA), is an important Nigerian Court of Appeal decision concerning legal fees, money laundering, ex parte freezing orders, and whether a lawyer has a duty to investigate the source of a client's source of income. 

Facts of the Case 

The matter arose from an investigation into alleged misappropriation of funds connected with an arms-procurement transaction. The EFCC had obtained an order freezing certain bank accounts associated with Ayodele Fayose, then Governor of Ekiti State.

Subsequently, the Federal High Court sitting at Ado-Ekiti made an order unfreezing Fayose's account. Fayose thereafter transferred ₦75 million from that account to the account of Mike Ozekhome's Chambers as professional legal fees.

The Federal Republic of Nigeria subsequently obtained an ex parte order freezing Ozekhome's Chambers' account for 120 days, essentially on the basis that the ₦75 million was allegedly connected with proceeds of unlawful activity. Ozekhome applied to have the order set aside. The Federal High Court discharged the freezing order before the 120 days had elapsed. The Federal Republic appealed.

The central question

One of the major questions before the Court of Appeal was whether a legal practitioner under a legal obligation to investigate the source of money paid to him by a client as professional fees? The Court of Appeal answered this question essentially in the negative, in the circumstances of the case. 

Decision of the Court of Appeal

The Court of Appeal, Lagos Division, dismissed the appeal and upheld the decision of the Federal High Court. The Court recognised that the lower court had jurisdiction to discharge/set aside the ex parte order before the expiry of the 120-day period, particularly where the order had been obtained without proper disclosure of material facts or where circumstances subsequently demonstrated that the order ought not to continue. 

More importantly, the decision dealt with the position of professional fees paid to lawyers.

The Court held, in substance, that a lawyer receiving professional fees from a client is not automatically required to investigate whether the client's money originated from unlawful activities merely because the client is under investigation or because allegations have been made against the client.

Why the case is important. 

The case is particularly significant for legal ethics and the lawyer-client relationship. It supports the proposition that a lawyer should not automatically be treated as participating in a client's alleged criminal conduct merely because the lawyer receives professional fees from that client.

The Court also considered the statutory framework governing designated non-financial institutions under Nigeria's money-laundering legislation and the position of legal practitioners under that framework.

The principle in the case 

The principle one can take from the case is that the mere receipt of professional fees by a legal practitioner does not, without more, make the fees proceeds of unlawful activity or impose upon the lawyer an obligation to investigate the source of the client's funds.

The big question is, do we use this asgood law in Uganda the fact that we have the Anti- Money Laundering Act Cap 118 and the Protection of Sovereignty Act, 2026?