A call for moral banking lawyers…

After Hour DepositoryHaving written with David Kershaw about Lehman Brothers and the need for public interest obligations of lawyers, specially transactional lawyers to be strengthened; as well as about concerns surrounding Standard Chartered bank (£), I was particularly interested to see this speech from Sharon Bowles MEP, a Lib Dem and Chair of the European Parliament’s Economic and Monetary Affairs Committee (also a former Patents Attorney and Trade Marks Agent).  The key section follows:

It seems to me that integrity is also connected to complexity. Complexity can be used to hide lack of integrity, and complex sets of rules also push towards gaming the rules, and probably not a thought as to whether or not that is victimless. That reinforces the points I have made on society and ethics and
professional training.

All the rules that we are making have the objective of keeping banking and investment stable for the general good. Rules are complex because modern banking is complex – even more complex that it needs to be – and because we are on a treadmill of trying to draw a precise line between the proper and improper for the sake of ‘legal clarity’ which really means opening the door to legal arbitrage – or gaming.

My ideal world would have far simpler rules, far harsher enalties for transgression, and be able to rely on stronger ethical codes not just in banking but in the professions that surround them – the accountants and lawyers -otherwise they drag one another down.

So in just the same way as there is now long awaited planning for action against aggressive tax planning, there should be action against regulatory avoidance in other financial areas.

Put bluntly as I have before, good banks need good lawyers. Moral banks need moral lawyers, and that morality is not defined solely by words on a page, interpreted purely to yield advantage to a bank against the intended greater good. Many lawyers, even within a bank never mind as outside consultants, see that sole focus on the benefit of the client as precisely their
duty. As with a more general ethical code counteracting ‘dominance’ this needs to be addressed.

My proposal, as I said earlier, is to put a duty of care for the common regulatory good on to banks and their professional representatives, with penalties for circumvention of the ‘pith and marrow’ or basic intent of a regulation. I have my plans about where to try this in EU law, but there is nothing to stop the UK from doing it. It is a change of thinking and focus, but
I believe it is central to the restoration of confidence in the integrity of banks, financial services and the City in general.

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About Richard Moorhead

Director of the Centre for Ethics and Law and Professor of Law and Professional Ethics at the Faculty of Laws, University College London with an interest in teaching and research on the legal ethics, the professions, legal aid, access to justice and the courts.
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3 Responses to A call for moral banking lawyers…

  1. Lawyers truly concerned about their so called “ethics” might considering reforming the family courts by operating under criminal court procedures and also fighting for their clients.
    Michelle Freedman, a barrister with 10 years’ experience representing parents in the family courts writes: “Clients are like lambs to the slaughter. Every client I met filled me with sadness (except of course in cases where there was obvious abuse and not in the Local Authorities’ and court’s interpretation of the word). I would sit with desperate mothers and / or fathers with their eyes wide open in worry repeatedly asking me what I thought the outcome to the case would be. How to relay to the client that the reality is that the children will most likely be made subject to care orders and ultimately adopted. How to tell the client that we are merely going through a kangaroo court process whereby the majority of children are taken from loving parents once the machine (i.e the court process) has been switched on.”

    “Throughout proceedings clients would genuinely believe that ‘justice would prevail’ and the courts would see that the children are better of at home with mum and dad. As any other barrister, and for good reason, I told parents that there is no certainty in proceedings…. I did not have the heart to crush their spirits from the outset. I truly believe that we are living in tragic times at the moment.”

  2. Richard Moorhead says:

    I have had this comment from a practitioner who could not post it up due to technical problems…

    This raises many interesting and in some ways easy and in some ways difficult to answer points . A few brief very comments.

    First .. I wonder why are there almost no discussions about these sorts of issues with undergraduates during their time studying corporate or banking law—I have had half a dozen law students spending time working with me here over the last few months , I suggest they would find this a lot more stimulating than much of what they appear to be told to learn, and perhaps as useful.
    Second.. Ms Bowles is right that we need to look again at enforcement of legal rules. We don’t need yet more rules ; we need existing rules to be clearer ( not all rules need to be as complex as they are ) and enforceable and enforced. Having been writing about this ,with many others for the last five years or so, perhaps some politicians are finally beginning to pick these points up.. We know that a lot of business related law is not fit for purpose. It would be good to redo it from scratch ; but that is not possible.
    Finally, morality and responsibility ( whether applicable to lawyers in banks or lawyers anywhere else or indeed across the professions and elsewhere ) seems to be a key to this discussion. I would like it to be debated much more widely throughout the professions. Consider the Walker Report published in November 2009. Walker makes many of these points , although perhaps in different terms; I wonder what has really changed – certainly from an outsider’s perception , not a lot. In simple terms the question ought not to be have I complied with a particular set of rules, but whether , having done or not done something , I can look at myself in the mirror the next day.. many will laugh at this ; ask a lot of law students , they seem to get it.

  3. Pingback: Independence Day? SRA Risk Outlook Sends Signals to the City | Lawyer Watch

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