Past high tide for the ethics deniers?

It’s been an interesting year or so in the lawyers’ ethics world. The Law Society President made ethics a priority but as a PR problem. The IBA have done similar. Ukraine and SLAPPs debates (most worryingly expressed, perhaps, in the Russia Report three years or so ago) have accelerated concerned about professional enabling. The SRA has issued two thematic reviews seeking to downplay ethics concerns on SLAPPs and latterly on in-house ethics. The latter, interestingly, and hearteningly is prompting concerted resistance. Cases like RICs, P&O, and in particular the Post Office Scandal suggest a tipping point may be in sight because practitioners with experience who have hitherto suffered in a very professional kind of silence have begun to speak up to say ethics is a problem. It is not a PR problem, or a problem for a few bad apples, it is a structural problem which faces many. They have one powerful lesson: it is not an admission of failure to speak of ethical problems. It is a signal of strength accompanied by a request for support.

I cannot do better than encourage you to read this excellent piece by Lucie Cruz for the Lawyer magazine (their Horizon emails are also a treat for those of you interested in the business of law).

Seriously, don’t worry about what follows here, just pop off and have a gander.

She tells us, “There’s a revolt brewing.

“Over 30 [GCs having] …signed a letter voicing their concerns about the SRA’s interpretation of their own thematic review. The letter challenges the findings by the SRA, arguing that it is common for in-house lawyers to face ethical challenges and pressure to compromise their regulatory obligations.”

Several of the findings in the SRA’s review that had been highlighted by the SRA as positive were actually a real cause for concern for this group and the story is littered with the horror stories of experienced in-housers. They “also “highlight that being put under ethical pressure to compromise their regulatory obligations is not a minority issue, and the regulatory support behind in-house lawyers is lacking.”

The absence of regulatory support from the SRA is a particular focus. “[T]he regulator should be supporting organisations to help issue support and provide tools.” As is the request that the “SRA provide more training and more support to in-house lawyers,” and various suggestions as to regulatory interventions that might help strengthen independence and reporting lines including a summary of professional duties is included in employment terms and “recommendations regarding things such as board engagement, reporting structure, and recording regulatory and ethics risks.” (our own take on this sort of thing was published some time ago)

Particulary interesting, not least because I have started to hear this mentioned positively in other lawyerly contexts is an interest in the FCAs approach to regulation.

“GCs highlight the disparities in the SRA’s regulation of in-house lawyers in comparison to the extensive support and guidance for those subject to other regulatory boards, such as the FCA.

“Working in a regulated business, you have very strict requirements under various FCA regimes,” says a senior in-houser. “The sad thing is – the FCA content is more helpful on most things than SRA content. The SRA information that is practical and that you can actually point to as a lawyer to guide integrity, codes of conduct, etc, is virtually non-existent.”

Of particular itnerest is the observation that “When The Lawyer spoke to GCs, the examples of times they felt compromised, or they had no choice but to resign flew in.”Some of the stories are toe-curling.

A GC of a PLC recalls: “In my first in-house role I discovered the CTO was lying to me and when I spoke to the CEO about it, he told me to go back to private practice as this is how the real world operates and I needed to be ‘commercial’. I quit the same day for ethical reasons.”

Another resigner made this telling observation, “They later hired someone junior into the role.”  Look around at recruitment now and you will understand.

The piece ends with an optimistic note:

Given the pushback from GCs, this might be the beginning of a long-overdue dialogue that will develop better training and guidelines for such a significant part of the legal profession.

One thought on “Past high tide for the ethics deniers?

  1. Great article Richard, and The Lawyer piece by Lucie is really concerning, but unsurprising.

    I remember being engaged by a company that decided to create an ABS and the COLP wanted me to review its compliance processes as he had been challenged by the CEO, who said he was not being commercial. When I went in the COLP told me he had decided to resign as the CEO would not accept that what he was asking the inhouse legal team to do was unethical.

    When I produced my report raising significant ethical and conduct issues the CEO scoffed saying I had no idea about being commercial; my retort was that when he decided to create the ABS he should have recognised that he was now to be regulated by the SRA and as such had no choice but to comply if he wanted the ABS to remain authorised!

    I eventually convinced the CEO that he had to act ethically and as a consequence was appointed to their new risk and compliance board as a non-executive!

    Many businesses see compliance as a business barrier and it needs the SRA to do what the FCA does, and that is to have regular contact with the CEO, Board and senior management team so they don’t forget their ethical and compliance positions!

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