Matter of principle

As the Law Society drafts new professional conduct rules and Sir David Clementi reviews legal services regulation, the issue of ethics is at the forefront of debate. Nigel Hanson looks at what top firms are doing to embrace a truly ethical philosophy

Professional ethics are getting sexier. In an era where clients know a thing or two about corporate social responsibility, solicitors are asking themselves what it really means to be an ethical lawyer in an ethical law firm.


Firms of all sizes are reflecting on the benefits of adopting an enhanced ethical stance, beyond mere compliance with minimum standards. For some, ‘ethics’ stretch to encompass generous pro bono projects, ethnic minority recruitment, and declining to act for certain arguably unsavoury clients. Everyone realises public perceptions are shifting and ethics are becoming a big issue.


With the ink still drying on the Law Society’s redrafted Guide to the Professional Conduct of Solicitors, Exeter University last month hosted a two-day event grandly billed as the first international conference on lawyers’ ethics.


Following scandals that have hit corporate America, delegates warned that notions of professionalism might be ‘too elastic’ and lawyers’ moral fibre could be decaying under pressure to make a fast buck. But there was also optimism that law firms’ ethical profiles had potential to become successful commercial brands in their own right, capable of attracting clients as well as redeeming a profession troubled by complaints from clients.


This rosier view, which holds that ethics are a business opportunity in disguise, already seems to be a reality for some solicitors’ firms in England and Wales.


First, though, a quick look at the ethical storm clouds that academics have spied on the horizon.


Professor Robert Gordon, of Yale Law School in the US, an expert in legal history who has also worked at Oxford University, is gloomy about lawyers’ conduct. He says the high watermark of professionalism was reached between 1880 to 1960 and the tide has been slipping away ever since.


Lawyers are increasingly engaged in ‘legal terrorism’, he told the Exeter conference, with many corporate transactional lawyers now adopting the style of adversarial criminal defence advocates. Some lawyers regularly over-bill their clients and tax loopholes are being aggressively exploited to the detriment of the rest of the tax-paying community; as much as $50 billion (£27 billion) of revenue annually is being ‘subverted by professionals’ in the US alone.


The problem, he says, is fundamental: ‘Making money for partners in competition with other firms cuts across ethics. So many good brains are lined up on the anti-social side of the equation. Yet there are also tremendous reservoirs of public mindedness and idealism - thousands of lawyers who would love to escape to a more meaningful kind of practice if only they could find something to escape to.’


Randal Graham, a lecturer at the University of Western Ontario, in Canada, illustrated the complexity of ethics. He asked delegates to consider the conduct of a barrister who took a professional oath to ‘uphold the Queen’s interest’ and then engaged in non-violent, civil disobedience to disrupt a legislature. The audience was irreconcilably split over whether such conduct was ethical before Mr Graham revealed that the lawyer in question was none other than moral icon Mahatma Gandhi.


In the drive for clarity, the Law Society’s draft rules for the 21st century attempt to summarise solicitors’ core duties in a new practice rule 1. The ten core issues, dubbed the ‘ten commandments’, are identified as: integrity, independence, clients’ best interests, confidentiality, conflict of interest, competence, fairness, client care, supervision and management, and profession.


Following consultation, the 21 new rules are set to be endorsed by the Law Society’s Council in September and, subject to approval from the Master of the Rolls, launched early next year.


Society standards board chairman Andrew Holroyd says rule 1 tries to capture the essence of good conduct. ‘I think it sums up what it means to be an ethical solicitor,’ he says. ‘It’s an attempt to start with the high principles before moving through to what that means in practice in more detail.


‘We have been working on this rewriting of the rules to make them more ethical and make them flow from the core duties. The question is, to what extent are we regulating firms, and to what extent are we regulating solicitors? The individual has to have good ethics but also the law firm has to have a good ethical framework to deliver the product. There’s a client-care side to it as well. In my view, it’s about delivering an ethical service to the client.


‘I’ve never seen an incompatibility between high ethical standards and wanting to be profitable, but there has to be a balance because it can’t be profit at all cost.’ The partnership deed of national trade union firm Thompsons, for example, expressly states that it is not the purpose of the partnership to maximise profit.


More broadly, Mr Holroyd says the Society continues to be a force for good, leading debate on issues such as Guantanamo Bay detainees, identity cards, and the rights of cohabitees.


‘Being involved in law reform is part of the ethical role,’ he says. ‘We should be raising these issues. All firms should recognise this. We have a duty to society - it’s not just law firms, any business does - to work for the common good.’


Professor Julian Webb of Westminster University’s school of law, a commentator on professional ethics, is interested in the changes Sir David Clementi’s ongoing review of the legal services market may trigger. These are still ‘early days’, he says, because it is not yet clear whether Sir David will propose deregulation or a re-regulation, but he fears that a freer market with new players could see standards drop.


‘There’s a concern that the balance between ethics and regulation is quite a difficult one to achieve,’ he says. ‘There could potentially be a race to the bottom, due to competitiveness. People perceive that there’s a tension between ethics and competitive-ness. It may be difficult to say "no" to clients in commercial work - the clients increasingly call the shots. With a lot of money at stake, it may be tempting to play a game of only technical ethical compliance.’


However, Professor Webb is convinced an ethical outlook can increase profitability. ‘Ethics can become a marketable commodity that distinguishes solicitors and indeed barristers from less professionalised service deliverers,’ he says.


Sue Nelson, chairwoman of the Society’s training framework review group, has been reviewing how young lawyers are trained in ethics. Her team, including academics from Sheffield, Oxford and Exeter universities, is scheduled to present its final conclusions at the end of the year.


She says: ‘We’ve identified a concern among colleagues about the ethical standards of solicitors. So far, we have made rather bland statements like "any training framework must have ethics at its heart", but it’s quite difficult to put the detail on that.


‘We are trying to identify what, precisely, is the problem when people say that young lawyers don’t have any ethics any more. Unfortunately, there’s not a lot of research we can turn to, to see how lawyers’ ethics were in the past and how they are now.’


Written and oral tests are being considered to ensure solicitors do not merely pay lip service to standards.


Ms Nelson says: ‘People can say they would never mislead the court, then you put them in court and they think to themselves they have to represent the best interests of the client, and they walk right past the problem.’


Firms should be like families, she says, nurturing good conduct through mentoring, but increased commercialisation over the past 20 years has put pressure on indebted young lawyers to keep their jobs by hitting billing targets, sometimes by inflating time-sheets.


Ms Nelson explains: ‘The problem often comes from profitable firms who would like to be more profitable. Profit is often the driver of improper behaviour. Then there are the people who simply don’t know what they are doing is wrong.


‘What attracts people to be lawyers is often that they want to be soundly based in value-based work. The crunch comes when they move into the world of business.


‘Part of training is to put some sort of moral rigour into people so they don’t buckle when they are put under pressure, so they have confidence to refuse if they are asked by a boss to do something unethical, like back-dating something.’


The Society’s professional ethics guidance team provides free advice to solicitors on ethical issues. Some 17% of queries this year have been about money laundering, up from 10% in 2003. Other hot topics on the confidential telephone advice-line include conflicts of interest, accounting rules, practice start-ups and retainers.


The guidance team limits itself to advising on practice rules and principles, but practitioners often espouse a broader vision. The mission of Birmingham-based Public Interest Lawyers, for example, is ‘tackling abuses of power in international law, international human rights law and environmental law’. As a matter of principle in environmental work, it will not accept instructions from developers.


London firm Christian Khan generally declines to act for landlords or undertake debt collection. Partner Louise Christian explains: ‘We wanted to be on the side of the underdog, but because of cut-backs in legal aid it isn’t always possible.’


Over the years, Ms Christian has refused to act, on ethical grounds, for the National Front, the son of Rudolf Hess, Hitler’s deputy, and most recently, Saddam Hussein. She was approached indirectly on the legal grapevine to see whether she would join the former Iraqi dictator’s defence team, but turned down the request because of her long association with the Kurdish human rights movement.


Ms Christian says: ‘I think it’s a good thing to take on cases that you believe in. It doesn’t mean I don’t think Saddam Hussein should get the best representation, because I think he should, but sometimes you’re not the best person for the job if you have some fundamental objections or you have already made your mind up in some way.


‘It’s legitimate to say: "I’m not the right person to ask."’


In her view, the ethics of a law firm should be an expansive concept, extending to a caring management style and decisions such as whether to stock recycled toilet paper in the office lavatories.


She is particularly proud of her firm’s racial mix. It has two ethnic minority partners out of a total seven and, as Ms Christian says, there is ‘a good racial mix throughout the firm’.


The mix has not been achieved by a specific recruitment policy, or by particular reference to the minimum requirements of the Solicitors Anti-Discrimination Rules 2004, but because the number of ethnic minority applicants is high as everyone feels comfortable working there.


Ms Christian’s pro bono work, representing Guantanamo Bay prisoners with fellow human rights solicitor Gareth Peirce of Birnberg Peirce & Partners, boosts the firm’s reputation and keeps it in the public eye as it shoulders its staple caseload of Legal Services Commission-funded work.


‘The pressures on staff are enormous, as are the pressures on me,’ says Ms Christian. ‘That’s why I’m cautious about talking about ethical organisations - because I’m running an organisation in which there’s a huge amount of stress.’


City firm Clifford Chance is also aspirational in defining the ambit of its ethical vision. Dozens of its lawyers, young and experienced, provide night support to community law centres in Tooting and Bethnal Green, in London. And a rotating team of 12 trainees works with not-for-profit west London organisation Law For All.


The firm provides free advocacy for the National Autistic Society at special educational needs tribunals and helps victim support groups with appeals to the Criminal Injuries Compensation Board.


In addition, staff are allowed time off for charity fundraising events and voluntary work, such as story-reading in local schools.


Internationally, the firm’s Amsterdam office recently provided a lawyer free of charge on secondment to a UN agency in Bosnia.

Smyth: millions spent on pro bono work

Michael Smyth, a partner and head of public policy at the firm, says the outlay on pro bono work in London alone runs to many millions of pounds a year.

He says the community support work is popular among lawyers and good for business in that many of the firm’s clients are engaged in similar projects. ‘We don’t do it because we are saints,’ he says. ‘We do it because it’s an opportunity to give something back. It also helps us interface with our clients - it’s a virtuous circle.’


Mr Smyth adds: ‘There’s an obvious commercial motive for any law firm to adhere to high ethical standards. The highest ethical standards are just non-negotiable.’


This has translated in the US to a growing trend among larger law firms to designate a senior partner as the firm’s in-house counsel. A key role is acting as an arbiter on other partners’ ethical issues.


Clifford Chance global human resources director, John Barnard, says ethnic minority candidates comprise more than 20% of the trainees taken on by the firm annually. He says: ‘We are mindful that our firm does go through recruitment to the best standards. I think there’s a legitimate expectation and responsibility for a firm like ours to be seen to be an ethical recruiter and an accessible organisation.’


Ethics is equally important to middle-market firms. Darbys, a 16-partner, mixed provincial practice based in Oxford, prides itself on links with the community and declares on its Web site that it has ‘always been interested in more than the bottom line’.


Partner Jim Astle says that in endeavouring to provide a broad legal service, there is a constant trade-off between making money and providing a service to the public.


‘The tension between ethics and profitability is ever present in a firm such as mine,’ he says. ‘Its accommodation involves a constant process of balancing, negotiation and compromise.’


Besides undertaking lucrative commercial and property work, the firm has ensured full service is also provided in less profitable areas such as family and crime, although the partners have reluctantly axed the firm’s loss-making legal aid immigration work.


‘We believe we can provide a legal service for all sections of the community,’ says Mr Astle. ‘That may mean some or all profit-sharing partners are financially less well off than they would be in a specialist firm. They have to weigh against this disadvantage the ethical satisfaction of providing an all-round service and the practical advantage of not depending on one type of work.’


Mr Astle says money ultimately determines the quality of service any firm can deliver. Efficiency dictates that legally-aided clients, for example, are dealt with by several different fee-earners.


‘Can one put one’s hand on one’s heart and say with all conscience that the legally-aided client gets the same quality of service as the corporate client?’ he asks.


However, overall the ethical approach has worked commercially.


‘Curiously, in spite of - or perhaps because of - the ethical decision to serve a wide range of needs, we have grown and grown, and become more profitable,’ he concludes.


With new conduct rules, Clementi and a possible training shake-up in abeyance, ethics look set to continue being big news and big business.


Nigel Hanson is a freelance journalist