SRA Code of Conduct - Ethical Dilemmas

Problems and perspectives of corporate lawyers and SRA Code of Conduct: some ethical dilemmas

Introduction

This essay offers a brief analysis of the SRA Code of Conduct with regards to commercial practice and ethical dilemmas faced by solicitors.

Starting from Richard Moorhead’s statement on the relationship between Code of Conduct and corporate practice, this essay provides a clearer picture of the entire scenario to conclude with some solutions.

To recall Richard Moorhead’s statement: “…the Code of Conduct is hopelessly silent on the problems of commercial practice and its principles are seen as either irrelevant or unchallenging1.
This research is divided into four main parts: first, after a short comment on Moorhead’s statement we will identify the research question; second, a focus on the SRA Code of Conduct and ethical responsibilities; third, the conflicting relation between legal profession and corporate business; finally, a conclusion with research outcomes.

1. A focus on the essay title

Moorhead's statement considers the SRA Code of Conduct not adequate to face the commercial practice issues, especially with regards to professional ethical dilemmas and mandatory principles. A couple of examples would give us a better understanding of the broader picture.

A top UK law firm as Clifford Chance is under investigation by the SRA over a controversial litigation funding deal about the multi-millionaire Excalibur dispute, which caused relevant distress to the client and serious professional misconduct. Lord Justice Christopher Clarke -judge of the High Court of Justice, Queen’s Bench Division, Commercial Court - affirms that claims were artificially elaborated and reversed engineered. It is not clear who was doing the reverse engineering, if the clients or their lawyers, however the judge describes legal advice by Clifford Chance as “replete with defects, illogicalities and inherent improbabilities”3.

Another important law firm as Allen & Overy, has been accused by a Crown Court judge and referred to the disciplinary body over allegations of putting substantial pressure on a key witness in a bribery trial3.

1.1. Research question

Based on the above, this essay sets out the following research question: What are the challenges faced by solicitors in corporate practice in relation to the SRA Code of Conduct and the management of ethical dilemmas? More specifically, is there adequate guidance in the Code of Conduct for solicitors in corporate practice? First and foremost, we need to introduce the SRA Code of Conduct and its Ten Principles.

2. The Ten Principles and the role of ethics

The SRA (Solicitors Regulation Authority) expects solicitors to act in accordance with its principles in all their activities when dealing with clients or the regulator. As clearly stated in the SRA Code of Conduct, there are ten mandatory principles which apply to all lawyers4. The Ten Principles offer an excellent starting point for our research to understand the SRA orientation on the subject, however they cannot offer a final solution to our research question.

As we can see, some recent updates have been introduced in the Code of Conduct to guarantee additional regulation for corporate law firms and specifically for in-house lawyers, however their application is still unclear, and the burden of decision will fall mostly on the individual5.

In support of Moorhead’s opinion on the matter, the former Ministry of Justice Nick Smedley is particularly concerned with the regulation promoted by the SRA for large firms and corporate solicitors, in fact, he suggested the creation of a Corporate Regulation Group within the SRA which would produce a more appropriate guidance in commercial practice6.

Before going any further, we should also provide a short definition of ethics applied to the legal practice. In simple words we want to ensure what is the right thing to do or how people should respond to a specific situation. We will not receive the answer to our problem from an ethical analysis, however it could provide us with tools that can be used to reach a reasonable answer7.

Some authors have identified four main ethical responsibilities for commercial lawyers: 1) responsibilities to the people and organisations that their own institution serves; 2) responsibilities to the legal system and rule of law; 3) responsibilities to the institutions in which they work and 4) responsibilities to public goods and private ordering. In some circumstances these responsibilities can be complementary and in others may conflict, that represents a typical example of an ethical dilemma in legal practice8.

At this stage, the urgency of this debate is in understanding the relation between ethical dilemmas and corporate solicitors.

2.1. Corporate solicitors and ethical dilemmas

Considering corporate solicitors as lawyers whose clients are mainly corporations (including banks, finance, or private businesses) we need to understand how this category is dealing with professional ethics.

A recent study based on a relevant number of interviews within the legal sector demonstrates a minimalistic approach to professional ethics by commercial lawyers9. The respondents gave different reasons in support of ethical minimalism such as i) infrequency of ethical dilemmas in most cases, ii) association between unethical conduct and criminality red line between what is acceptable or not in legal practice and iii) role of ambiguity as a shelter to the client’s best interest. Private and in-house corporate solicitors may have different approaches to ethical dilemmas, however the study demonstrated that they were very clear in analysing ethical issues not through the lens of professional principles, but from the social and economic perspective of the business10.

Another interesting study from the University of Birmingham goes even further evidencing an ‘ethical apathy’ in corporate practice. In other words, a lack of interest about ethics and more inclined to the figure of lawyer-technician who merely uses the law to assist his client. The authors confirm various reasons in support, but mostly are funded on principles of neutrality and non-accountability in legal advice11.

3. The conflicting relation between legal profession and corporate business

In recent times commercial law firms are increasingly operating on a national or international level. Technology and globalisation are factors of change in the legal market, raising considerably the economic pressures on firms. This change has improved transparency and competition in the legal market, on the other hand “short-term economic goals seem to have overwhelmed the ethical imperatives and duties, resulting in widespread public mistrust of lawyers as a profession”12.

The two episodes of malpractice mentioned at the beginning of the essay demonstrate a clear displacement from an ethical approach to legal practice (with respect of the role that lawyers should play in our society), to a short-term profit approach in which corporate lawyers’ main goal is client’s satisfaction at any cost (being neutral or disinterested on ethical approaches).

As evidenced by the study of Vaughan and Oakely, some corporate lawyers consider their role as mere technicians, or facilitators, where the concept of corporate lawyer providing professional judgement is progressively coming to an end13.

3.1 ‘Work needs to be done’14

Using Moorhead’s words work needs to be done to improve this scenario. Not only to implement the SRA Code of Conduct on corporate practice, but also to change corporate practice and governance more in depth.

During this research, I have come across numerous suggestions and ad hoc regulation to implement this vacuum, however I strongly believe that two elements could make a real difference in the long term: a) law schools’ approach to legal education and b) promoting strong ethical values in the firm (e.g. ‘do the right thing’ culture). Considering the first point, learning of ethics is crucial to the education of future lawyers. As lawyers make choices in their daily activities, so students should be ready on how to do that as well. In other words, it is necessary to start educating young lawyers to ethics from day number one in law schools to offer them necessary tools to elaborate decisions, promoting critical reasoning, and pondering ethical dilemmas. Ethics courses, legal clinics, moot courts and an interdisciplinary approach to ethics constitute real examples to promote this change15.

Secondly, a strong firm culture based on ethical values of a more responsible profession could bring lawyers to strike a better balance between economic and professional success. It is necessary to focus on what is the right thing both for their law firms and for our society. A more ambitious firm policy that promotes a long-term vision in business, empowering and rewarding the firm’s lawyers that want to pursue this target, would lead us into a new era in corporate legal practice16.

4. Conclusion

Given the research question in this essay (see 1.1 above) the answer is fourfold:

  1. The social role played by lawyers in achieving the rule of law is progressively eroded. The prevailing approach to commercial practice posits a real threat to the legal professionalism, shifting into the ‘legal-technician’ paradigm17;

  2. The gold rush to the highest revenues in corporate law firms has produced a different spectrum of ethical dilemmas in legal practice. A more neutral approach to legal advice and a ‘ethical apathy’18 attitude is taking over between corporate law firms;

  3. The Code of Conduct is currently unable to satisfy commercial practice needs. We can clearly observe lack of appropriate guidance for corporate solicitors;

  4. The role of law schools in education and a strong law firm culture focused on ethical values could reset the balance in favour of a more ethical professional model.

List of Sources

1 Richard Moorhead, Corporate Lawyers: Values, Institutional Logic and Ethics, Centre for Professional Legal Education and Research Working Paper 07/2015, University of Birmingham, quote from page 14.
2 Quote from [2013] EWHC 4278 (Comm). See also Richard Moorhead’s blog available online at https://lawyerwatch.blog/2014/01/15/excalibur-raises-serious-professional-conduct-concerns-for-clifford-chance/
3 Richard Moorhead, Corporate Lawyers: Values, Institutional Logic and Ethics, Page 2. More details on this case are available online at https://www.thetimes.co.uk/article/allen-and-overy-lawyers-put-pressure-on-witness-before-bribery-trial-vv3glsmtk59
4 The Ten Principles that underpin the SRA Code of Conduct are: “1) uphold the rule of law and the proper administration of justice; 2) act with integrity; 3) not allow your independence to be compromised; 4) act in the best interests of each client; 5) provide a proper standard of service to your clients; 6) behave in a way that maintains the trust the public places in you and in the provision of legal services; 7) comply with your legal and regulatory obligations and deal with your regulators and ombudsmen in an open, timely and co-operative manner; 8) run your business or carry out your role in the business effectively and in accordance with proper governance and sound financial and risk management principles; 9) run your business or carry out your role in the business in a way that encourages equality of opportunity and respect for diversity; and 10) protect client money and assets”. Full content available online at https://www.sra.org.uk/solicitors/handbook/handbookprinciples/content.page
5 J. Adams, S. de Gay, SRA Handbook: how does it apply to in-house lawyers?, Practical Law UK, 2018, Page 1.
6 J. Herring, Legal Ethics, Oxford University Press, 2014, Page 87.
7 As sustained by R. Hursthouse quoted in J. Herring, Legal Ethics, Oxford University Press, 2014, Page 4.
8 B. W. Heineman, W. F. Lee, D. B. Wilkins, Lawyers as Professionals and as Citizens: Key Roles and Responsibilities in the 21st Century, Harvard Law School, Center on the Legal Profession, 2014, Page 11.
9 R. Moorhead, Corporate Lawyers: Values, Institutional Logic and Ethics, Page 3.
10 R. Moorhead, Corporate Lawyers: Values, Institutional Logic and Ethics, Pages 5-7.
11 S. Vaughan & E. Oakley, ‘Gorilla exceptions’ and the ethically apathetic corporate lawyer, Legal Ethics, 2016, Page 1.
12 B. W. Heineman, W. F. Lee, D. B. Wilkins, Lawyers as Professionals and as Citizens: Key Roles and Responsibilities in the 21st Century, quote from page 37.
13 Steven Vaughan & Emma Oakley, 2016, Page 60.
14 Richard Moorhead, Corporate Lawyers: Values, Institutional Logic and Ethics, quote from page 14.
15 J. Beca, Teaching Legal Ethics to law Students: Why, What, How and Who Might Teach, Asian Journal of Legal Education, 2015, Page 1.
16 B. W. Heineman, W. F. Lee, D. B. Wilkins, Lawyers as Professionals and as Citizens: Key Roles and Responsibilities in the 21st Century, Page 40.
17 S. Vaughan & E. Oakley, 2016, definition taken from page 74.
18 See note n.11

Marco is postgraduate in Law (cum laude) from the University of Turin (Italy). He holds an Advanced LL.M. in Law and Digital Technologies at Leiden University (The Netherlands) awarded LExS Scholarship 2014. He is now based in Bristol working in finance. He's currently attending the second year of the GDL with a part-time course at the University of Law in London Bloomsbury, with the aim of becoming a commercial lawyer in the field of IT and Data protection.

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