As solicitors one of our core principles is to act with independence and this is embodied in the Code of Conduct in a number of ways. For example, solicitors are expected to uphold the constitutional principle of the rule of law and to act in a way that upholds the trust that the public places in us and behaving in a way which lacks independence is likely to place us at risk of breaching these principles.
The Solicitors Regulation Authority (“the SRA”) also expects solicitors to act with integrity in all of their dealings and again in extreme cases solicitors who do their clients’ bidding without properly considering the nature of those instructions could find that they are the subject of unwanted regulatory scrutiny.
The SRA has in the past expressed concern that solicitors who represent clients whose business is particularly valuable to their firm can find themselves in a difficult position if the client instructs them to do something which potentially conflicts with their professional obligations. The SRA has therefore reminded the profession of the importance of acting with independence in such situations notwithstanding the obvious tension that this can create especially for solicitors working in an in house legal team where the instructions come from their employer. The possibility for conflict between the commercial needs of the business and the legal adviser’s regulatory obligations will inevitably be even greater.
This issue has been highlighted by a recent thematic review conducted by the SRA of in house legal teams. In its survey the SRA asked over 1200 in house solicitors what the main issues that affected them were and in response 10% said that they felt that they had been forced to compromise their regulatory obligations to meet the needs of the businesses for whom they work.
This is a worrying but arguably not surprising statistic. In times of economic downturn the pressure on businesses necessarily increases and the need to “get the deal done” will likewise increase. Alternatively, if a solicitor is working in house for a business which itself is the subject of scrutiny, there is a risk that they could be asked to suppress information in a way that is again at odds with their regulatory duties. In fact 5% of those who responded to the SRA’s survey said that this had been their experience.
The SRA described the results of its survey as “generally encouraging” but this has provoked an outcry from a number of GCs of large and reputable companies, who have posted their response on social media. These GCs say that the SRA has seriously underestimated the ethical challenges faced on a daily basis by many in house lawyers and has called for measures to be put in place by the Regulator to help to support those who find themselves in such situations.
One of their suggestions is that the SRA should regularly issue reminders to the Boards of companies with in house legal functions to remind them of their employees’ professional obligations in an attempt to support the lawyers in that organisation. Such steps may go some way to alleviating the pressure on in house lawyers. There is no doubt, however, that the Boards of such organisations will have to have regard to their own duty to ensure that there are proper and transparent governance measures in place to enable in house lawyers the freedom to tender impartial and independent advice and that their advice is heard by the decision makers in their organisations.
In house lawyers should also be protected in the event that they feel that they have to raise issues about the nature of their instructions from the business or the way that their advice is received.
Without this there will inevitably be a risk that some in house legal teams will continue to feel the pressure referred to in the SRA’s thematic review and the isolation that this pressure could bring.
SRA prosecutions involving in house lawyers are still relatively rare but, as the Regulator turns its focus on these teams, those organisations that have an in house legal function should consider the negative publicity that such prosecutions bring with them and recognise that there is also a valid business reason for providing the necessary support to in house solicitors to fulfil their roles and at the same time comply with their professional obligations.
Clare Hughes-Williams and Catrin Davies are both partners specialising in lawyers liability issues and have extensive experience in defending solicitors and law firms in SRA investigations and prosecutions”
