Business and professional ethics are increasingly under public scrutiny in the wake of a series of corporate scandals. This is both good and bad news.

Peter Montagnon

Peter Montagnon

The bad news is the unfair presumption on the part of the public that all involved in a given activity are guilty of unethical behaviour when in fact most try hard to do the right thing. The good news is that business and professional leaders are spending more time and effort in understanding and addressing the pressures that lead people to behave badly. 

So we should not beat ourselves up about the state we are in, but seek to learn from past experience. Where the law is concerned, two sorts of pressure stand out. The first is typified by internal competition for business as people seek to secure their position in the firm. The second arises from relations with customers. Should any self-respecting firm take on a client it believes to be dodgy?

Some might argue that these pressures are peculiar to the legal profession. In fact they are not much different from those facing a commercial company. Both need to ensure that the incentives within their organisation will drive people to do the right thing. Both need to recognise the reputational impact from dealing with doubtful customers.

A sensible approach in both cases is to start with values. An organisation’s values drive the way its members behave. Ethical values, which certainly include a determination to deliver real value to clients rather than extract it from them, will encourage good behaviour. A leader­ship which condones dishonesty, bullying and cheating on clients will produce the opposite effect.

Leaders have to set a good example, but they also have to ensure that the values they have espoused are spread throughout the organisation so that people know they will be protected for doing the right thing and punished for cutting corners, even if they have delivered outstanding results in the short term.

It is often difficult for those in charge to understand the pressure their employees are under. One of the biggest risks of scandal arises when people face targets that are impossible to deliver, with the prospect of severe punishment when they fail. This can easily apply to law firms where the pressure to generate fees can be acute. People need to be stretched, but not so far their only choice is to cut corners. Defining the limit is an important leadership responsibility.

As to the suitability of clients, on the one hand, there may be some with whom a firm simply does not want to do business. On the other hand, everyone has a right of access to the law. To decline to take on a client just because the public is baying for blood is not exactly an ethical response either.

One answer is to be open to all comers but to offer only advice that is consistent with the firm’s values. We all know of law firms that are notorious for procuring juicy damages for libel, or extravagant divorce settlements, or for getting celebrities off misdemeanour charges. A firm should ask itself whether it wants such a reputation.

Nowadays it may not be enough to advise a client on what is lawful. Most tax avoidance schemes adopted by multinational companies are lawful, for example, but they can also carry the risk of severe reputational damage. Perhaps lawyers need to advise clients on the possible consequences of their chosen approach.

This suggests the need to develop longer term relationships in a world that has become highly transactional. No one can pretend that the challenge is easy, or that the other ethical challenges raised above are easy. Yet a firm looking for a secure long-term future cannot afford to duck them.

The good news, as reported above, is that firms seem increasingly willing to grapple with the issues.

Peter Montagnon is associate director of the Institute of Business Ethics.