An event of interest to in-house lawyers and private practitioners which is of relevance to our ongoing project on ethical leadership and in-house lawyers is taking place early in the New Year.
Do Institutional Clients Threaten Lawyer Independence? Location: UCL Marquee (Main Quad), Gower Street, London WC1E 6BT, Wednesday, 13 January 2016 at 6pm. Seminar format discussion aimed at regulators, academics and practitioners. Book here
Dr Steven Vaughan will draw on research he has conducted over the last year to ask whether institutional clients threaten lawyers’ independence.
The relationship between large commercial law firms and their clients and the impact of these relationships on professional independence, ethics, standards and risk is of central importance to the effective regulation of the solicitors’ profession.
There has been a shift in the standard dynamic of lawyer-client relationships in large firms. Clients now hold significant power over their firms.
This is due to a complex of factors: increasing competition for legal services; the growth of General Counsel; the relative size of clients to their firms; and the ongoing impacts of the financial crisis.
From over 100 interviews with corporate finance lawyers and COLPS in 30 top 100 law firms, Steven will set out his concerns as to the potential for institutional clients to threaten lawyers’ independence.
In particular, his talk will focus on the private regulation of professional lawyers via contract (i.e. the use of law firm panels and outside counsel guidelines), and the practice of what he terms ‘shadow clients’ (whereby third parties – e.g. borrowers – pay the fees of, and have a powerful voice in the appointment of, their lender’s lawyers).
Download report prepared by Steven, with Claire Coe, for the SRA on ‘Independence, Representation and Risk’
Our survey of in-house lawyers will be closing by the end of the month. If you are an in-house lawyer and would like to participate in the survey but have not yet done so, please click on this link, leave your email and we will email you a link.
We will soon be arranging small ‘town-hall’ meeting with in-house lawyers to discuss the issues facing the in-house community shortly. These meetings will debate the role of the General Counsel, its ethical framework and then to suggest the principles that could guide the role. We are certain that in-house lawyers know best what the tough issues are and how they manage them. If you would like to know more about this please email r.moorhead [at] ucl [dot] ac [dot] uk.
This will be a facilitated forum for debate, a place to offer and share insight, to share resources and help shape the needs of the General Counsel as well as serving the interests of the profession and of business.
Many in-house solicitors should today be receiving an email from the SRA inviting them to take part in our research. If you get an invitation, we really hope you take the time to fill in the survey. We think it is both interesting and important and when you complete it we think you will be particularly keen to hear the results. It takes 15-20 minutes to do. We look forward to hearing your thoughts through the survey and afterwards in the discussions we will be hosting and participating in.
We are about to go live with our in-house solicitors survey. Invitees will very shortly (early next week we hope) be receiving an email inviting them to participate in our research. If you are an in-house solicitor, read on…
The SRA have agreed to contact in-house solicitors to enable us to reach as many of you as possible. If your usual temptation is to delete or file SRA emails for subsequent action, please do not do that over the coming days. They are sending out information in their general mailing this week and a specific email invite next week.
We really hope as many invited in-house solicitors as possible can respond. We want to build up as detailed a view as possible of how you and your organisations, see the role of in-house lawyers. The survey is invitation only to manage the survey as scientifically as possible. If you complete the survey we think you will see that the results promise to be both fascinating and very useful.
Although the SRA are assisting with invitations to the survey, for which we are very grateful, the research is entirely independent of them. Design, analysis and write up has been and will be conducted solely by the research team. As you will know if you have begun to follow our work we plan a national debate on the issues in a series of forthcoming townhalls and a practitioner focused white paper on what lessons this work yields. All information is confidential. No participants will be identified.
Anyone interested, keep you eyes on your inbox.
Welcome to the blog for the Ethical Leadership for In-House Lawyers Initiative. We explain a little more about it here. The blog is particularly aimed at in-house lawyers and those with an interest in developing best practice in the sector. We encourage you to sign up for the blog. Email and RSS feed links are in the menus on the right.
The Ethical Leadership Inititaive for In-House Lawyers was prompted by the Centre for Ethics and Law recently published its report on Legal Risk: Definition, Management and Ethics.
The report raises key questions about the role of in-house lawyers in balancing commercial and professional considerations; the readiness of in-house lawyers for the complex leadership and management tasks involved in legal risk management; and the extent to which professional ethics are embedded within those teams.
Professor Richard Moorhead, Director of the Centre for Ethics and Law said:
Growing evidence (Times Newspapers, GM, Standard Chartered Bank etc), our research and some anecdotal commentary suggests that the role of GC is under increasing pressure. Their professional ethical boundaries are not as well drawn as may be necessary for the increasingly sophisticated world of in-house work.
Steven Vaughan, Birmingham University Law School, who co-authored the research said.
One of our respondents told us, “In-house legal management is in its infancy.” What is also clear is that the more-for-less challenge, and the need to be commercial and influential within a business context can pose significant ethical challenges for in-house lawyers. They and their businesses are not always well prepared for such challenges.
Paul Gilbert, one of the leaders of the Ethical Leadership Initiative with the Centre for Ethics and Law, said:
It seems fair to assume that no one relishes more regulation, and more regulation of in-house lawyers/lawyers may be inappropriate anyway, but it is interesting to note that there are no qualifications needed to be a General Counsel, no commonly accepted guiding principles for the role and no requirements on business to create an environment in which it is appropriate to employ in-house lawyers.
Key Findings include:
- There was no shared sense of the correct approach to legal risk.
- The in-housers we spoke to were not always clear or confident about their approach, or the best approach, to legal risk management
- There is a clear divide between those who take a, ‘I know it when I see it’ approach to legal risk and those who deliberately applied systems, foresight, thematic and strategic thinking around legal risk.
- Those interviewees with the most developed systems seemed most likely to see cultural dimensions to legal risk, with some emphasising the need to be authentically committed to the spirit as well as the letter of the law as part of a business commitment to compliance, legality and business ethics.
- There is a need for in-house teams to reflect on the extent to which processes of legal risk engage rigorously in assessment, mitigation, communication, monitoring and overall evaluation of legal risk management. Many of our interviewees did not have well developed approaches to each of these elements of a risk strategy.
- Some aspects of risk management may lead to overconfidence and approaches to mitigation which shift risk from the company to third parties, with the potential to raise questions about the appropriateness of this in certain circumstances.
- There is the potential for risk management to change risk appetite by altering perceptions of, and appetites for, risk. In general, risk management increased the appetite for risk because it increased confidence that risk was both understood and manageable. This opens up for debate the question: is risk management as robust as such confidence suggests?
- Objectivity and independence are necessary for risk assessment to be accurate and useful to the business but are in tension with the pressures on in-house lawyers to be commercial team players. These tensions are both overt and implicit. There are overt pressures and implicit biases at work which may sometimes undermine objectivity.
- Appetite for legal risk involves accepting, even welcoming, tolerance for conduct which may be, or even may be likely to be, unlawful. This is sometimes in tension with the professional obligation to promote the rule of law and the guidance to solicitors that they must treat the public interest in the administration of justice as definitive of conflicts between professional obligations.
- Such tensions also impact on corporate interests: there are relatively recent, serious conduct risk examples of allegations involving lawyers in and/or instructed by Standard Chartered Bank, the News of the World, Barclays, The Times newspaper, BNP Paribas and General Motors.
- The extent and nature of these public interest facing obligations are neither understood, nor well-articulated in professional practice generally, nor in-house practice in particular.