In March 2023, the Solicitors Regulation Authority (SRA) conducted a thematic review covering more than 34,500 in-house solicitors working in England and Wales, based on input from more than 1,200. The review highlighted the role that in-house solicitors play, not only in the leadership of the varied organisations who employ them, but also in guiding and advising such organisations to try to ensure that they behave "legally, fairly and ethically".
The SRA acknowledged that, whilst the in-house solicitor role provides opportunities to influence positively the strategic direction of the organisation, inevitably it also creates challenges because, as a regulated individual, a GC for example must still balance their organisation's best interests with the public interest .
When considering the safeguarding of in-house solicitors' "independence", the SRA review stated that the lawyers surveyed had indicated their independence was "highly valued" by their organisations. This led the SRA to conclude that, overall, in-house teams were resilient to the commercial and business pressures that could impact on their freedom and ability to provide objective advice.
Following the publication of the results of the SRA thematic review, 30 GCs signed a letter in which they stated that, contrary to the SRA's findings, the reality is that it is common for in-house lawyers to encounter pressure from their organisations to compromise their regulatory obligations. The GCs addressed the isolation felt by many who, having given what the business considers unpalatable advice which has been rejected, feel that there are only two options available to them - namely to conform and compromise their regulatory obligations, or to resign.
The SRA has recognised that organisations who employ in-house lawyers need to fully understand their lawyers' regulatory obligations, and to recognise that, just as solicitors in private practice must balance their clients' needs with the public interest, so must in-house lawyers, since they are bound by the same ethical code. The Regulator has issued draft guidance for organisations employing solicitors, at the heart of which is the concept that in-house teams should treat the organisation as the client rather than their employer.
The draft guidance aims to raise the awareness in organisations of the rules and principles to which all lawyers must adhere wherever they work. The Regulator has focused on certain core duties which all solicitors owe to their clients and the public, namely to act with independence, honesty and integrity and in the best interests of the client.
Unfortunately, there is obvious scope for conflict between these principles and the strategy of some organisations, and the message from the SRA to the employers of in-house teams is that solicitors must deliver the "right advice", no matter whether that is uncomfortable or runs contrary to the organisation's strategy. The guidance goes further and also suggests that in-house lawyers must have the freedom to raise concerns where appropriate, referring to concepts such as empowerment, and stating that solicitors who find themselves in this position should not be disciplined or "punished".
By way of illustration, the guidance has appended to it six case studies, dealing with scenarios ranging from bribery to work place culture and the terms of NDAs for exiting employees.
These are all issues that solicitors in private practice may also encounter in the course of their work for clients, but surely it is idealistic to imagine that the challenges faced by an in-house solicitor are comparable, when they are in effect tendering advice to their employers.
The challenge for the SRA in implementing the guidance will also be that it has no power to sanction the organisation as an unregulated entity. The result is that the in-house lawyer could be sanctioned for bowing to the internal pressure from the organisation, but that the organisation can effectively act with impunity from a regulatory perspective.
Whilst it is obviously a step in the right direction for there to be focus on such a large body of lawyers, they inevitably face different challenges compared with lawyers in private practice, and unfortunately it appears realistic to conclude that this is not the last we have heard on the issue. With employers of in-house teams being outside of the SRA's jurisdiction for regulatory purposes as unregulated entities, the pressure will inevitably remain on the solicitors to maintain the right balance and ensure that they meet their regulatory obligations, managing the attendant tensions along the way.
This article was first published in the Law Society Gazette, 7 June 2024.
