News focus: Counsel of woe - in-house solicitors under pressure on ethics

In-house solicitors now account for one-fifth of the practising profession. But how do in-house solicitors support an ethical culture in their organisations and what challenges do they face in meeting their professional obligations? Questions such as this have come to the fore again amid allegations made over the role of in-house legal teams in the Post Office Horizon scandal. No impropriety has yet been established.

To find some answers, the Solicitors Regulation Authority surveyed more than 1,200 in-house practitioners and conducted in-depth interviews. SRA chief executive Paul Philip said the findings, published on Wednesday, were generally encouraging. ‘Most in-house solicitors appear to be able to serve their employers well while still upholding the high standards expected of them.’

However, he said that ‘a minority struggle’.

The review found that overall, in-house solicitors are in a good position to withstand pressures that could affect their ability to provide objective and impartial advice.

One senior leader described working in-house as a marriage, not a fling: ‘It can be hard to maintain independence when you are an employee, particularly if you feel like you’re going against the will of the organisation. This dynamic can make you feel more vulnerable as it’s harder to walk away.’

However, many in-house teams did not have dedicated policies and controls to record and report legal risks or manage conflict and confidentiality. Just one in 10 teams kept a policy setting out confidentiality and disclosure duties. Nine in 10 in-house teams did not keep central records of actual or potential regulatory or ethical risks.

The SRA said in-house teams may struggle to manage conflicting duties and ethical and regulatory risks without adequate safeguards.

One respondent recalled being pressured to progress a project as ‘standard business practice’ where there were bribery and other financial risks. The legal team instructed external lawyers so that the law firm’s regulatory and compliance teams were involved to vet the project.

Some 16% of senior leaders experienced challenges in managing pressures to act in the interests of someone other than their employer. For instance, solicitors had to consider whether interests aligned or diverged from associated joint venture companies, international subsidiaries and senior shareholders.

One respondent had to remind someone from another team trying to instruct them ‘that we are here to protect the council – not act according to their personal wishes’.

Most respondents said they felt comfortable advising their employer they could not take an unethical course of action. However, one in 10 respondents said their regulatory obligations had been compromised trying to meet organisational priorities. And one in 20 experienced pressure to suppress or ignore information that could conflict with their regulatory obligations.

One respondent said disclosure obligations were breached, data was hidden and illegally obtained information was used for litigation.

Another had to resign: ‘The organisation I worked for was engaged in practices I considered were likely to result in breaches of their legal duties. It required me as a solicitor to report as an officer of the court. I raised concerns with the senior leadership and as a result had to leave the organisation.’

While some of the anecdotes are alarming, the review also contains examples of good practice.

One broadcasting company has a portal (a ‘legal front door’) where instructions are risk-rated. High-risk matters are flagged to supervisors. The general counsel said: ‘We act as a mini-firm of a solicitors first and foremost… We’re clear our advice is for the employer not the individual colleague. We’re very clear we cannot sign off documents we have not reviewed if we’re not part of the decision-making process.’

The review, which also contains checklists and links to further guidance, is essential reading for the 34,500 in-house solicitors currently working across 6,000 organisations.

‘Recent highly public investigations have highlighted the risks that can arise if the client’s best interests are not balanced with the public interest,’ the SRA said.

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