Full disclosure – How to resolve the profession’s #MeToo problem

‘If you’re a partner and in control of someone’s career, that is an unequal relationship. Repeated drunken flings are not the work of a balanced, responsible partner. Could she have realistically said no? He was in control of her. He was her boss.’

So says one City employment veteran of the Solicitors Regulation Authority (SRA) prosecution and subsequent departure in October of Freshfields Bruckhaus Deringer restructuring partner Ryan Beckwith, following findings of sexual misconduct with a junior member of staff. It reveals uncomfortable truths about why, with its esoteric partnership structure and pressure-cooker working conditions, the legal industry is more susceptible than many to the fallout from #MeToo allegations and the behaviour that fuels them.

It has been more than two years since City law was dragged into the centre of the #MeToo saga, when Zelda Perkins in October 2017 revealed details of what she described as a ‘morally lacking agreement on every level’ – the gagging order drafted on behalf of Harvey Weinstein by Mark Mansell of Allen & Overy. While the non-disclosure agreement debate is distinct to the problem of sexual misconduct within law firms, power imbalance and a heightened emphasis on ethical conduct remain the threads that run through both, underpinned by the hardening attitude of the SRA and its broadened remit in holding the profession to account.

As recently as spring 2018, the Women and Equalities Committee, investigating sexual harassment in the workplace, lambasted SRA chief Paul Philip for a relationship with big City firms that MP Philip Davies described as a ‘cosy old boys’ network’ after it initially failed to launch an investigation into Mansell and A&O over the ethically-dubious gagging agreement. Fast-forward 18 months, the sneers over fireside chats seem a world away from the Beckwith prosecution and Mansell due to answer to the Solicitors Disciplinary Tribunal (SDT), even if that hearing, originally set for June and adjourned until December, has again been put on ice with no new date fixed yet. Also in the firing line in December is Baker McKenzie’s former London head Gary Senior over allegations that he sought to ‘initiate intimate activity’ with a junior member of staff in 2012 and then attempted to improperly influence Bakers’ investigation of a related complaint. With reports of sexual misconduct continuing to creep out of firms while the regulator tightens its grip with a new code of conduct, the lurid headlines show no sign of abating. Does the legal industry have a particular problem and what must firms do to address it?

‘Misconduct is not law firm-specific. It’s a consequence of power. That said, are law firms hierarchical? Yes. Do we need to be vigilant? Yes.’
Laura King, Clifford Chance

Power struggle

Laura King, Clifford Chance (CC) partner and global head of people and talent, addresses the thorny issue of whether law firms are particular breeding grounds for bad behaviour: ‘It could be surmised that there is something structural within law firms that lends itself to misconduct, but my view is that it’s not law firm-specific as we see these issues across all industries. It’s more a consequence of hierarchical power. All that being said, are law firms hierarchical? Yes. Do we need to be vigilant? Yes.’

While the consensus is that this is not a problem specific to the legal industry – the whole of the City is built on power imbalances – for many, the Beckwith case illustrates a typical pattern involving senior males and junior female colleagues. Says Ben Tidswell, chair of Ashurst: ‘There is always a risk where there are differences of position, and also stress and alcohol – that is a particular risk factor. Things are more likely to happen when you have that dynamic.’

While some feign horror at the volumes of alcohol documented in the Beckwith prosecution – ‘For God’s sake, Champagne at 10am? It’s not London in 1989!’ blusters one City partner – most concede that this was no outlier, with drinking cultures still prevalent in the Square Mile. One City regulatory partner went so far as to say they had never known of a case of alleged sexual misconduct at a law firm that did not involve alcohol.

Drinking may be a catalyst for unhealthy relationships, but many agree that the pattern is ingrained in the fabric of the law firm structure, more so at UK firms than at their US counterparts, argues a City partner who has worked at both. ‘In London there is a 1970s approach to alcohol and sexism that has been all but outlawed at US firms where there is a more puritanical approach to life. Younger people who eventually become partners see that this is how people behave.’

‘I am comfortable we are able to act quickly, in a matter of days. We won’t hesitate.’
Ben Tidswell, Ashurst

Others point to systemic failure within law firms that is open to abuse. Alexandra Mizzi, a senior associate specialising in employment law at Howard Kennedy, says: ‘If you are an ambitious senior associate, your career prospects are determined by the work allocated and the internal relationships you are able to forge with partners. In some firms, there is not much transparency about how work is allocated, which in itself creates a power imbalance.’

There are also questions over how likely someone in their twenties and heavily invested in making partner at a top City firm is to complain, but partnership and LLP adviser Corinne Staves at Maurice Turnor Gardner strikes a more balanced tone: ‘You could view it that partnership gives people power and there is always scope to abuse that power. However, partners are managers and owners of the business, and are therefore heavily invested in the firm’s success. You would hope that they have pride in that, and a desire to show leadership and engender trust.’

However, the deference accorded to partners creates its own problems. One partner at a US firm in London concedes that the consequence of never having anyone saying ‘no’ to a partner is arrogance. A female employment lawyer suggests that might easily fuel a lack of self awareness. ‘Some perpetrators don’t see themselves in the same way as a junior associate might. In their head, they are still a dashing 27-year-old, not a 47-year-old partner. They don’t think of themselves as dirty old men.’

The Beckwith case is a very public example of how that dynamic plays out, but lower-level inappropriate behaviour towards women is still common, according to those interviewed. One female solicitor, who now works in-house, says harassers are not always at partner level. She recalls an incident at a Christmas party held by the firm she trained at in 2017 involving a drunken male associate in the corporate team she had planned to qualify into four months later. ‘He started touching me as soon as I arrived at the party, first of all around the waist. I thought it was weird as we weren’t particularly friendly. He got more and more drunk and the touching got even more inappropriate.’

‘Some perpetrators don’t see themselves in the same way a junior associate might. In their head, they are still a dashing 27-year-old. They don’t think of themselves as dirty old men.’

The offender then asked her back to his home before pinching someone else’s bottom, at which point a partner asked him to leave. ‘In any other scenario I would have told the guy to fuck off, but I thought as an associate he might have some sort of sway over my future,’ the solicitor recalls. She and the other woman reported the incident to HR, who spoke to the associate and advised the women they should have called him out at the time. ‘I’m not sure how well the process was handled, but what would the alternative have been?’ she says.

A senior associate at a City firm recalls a mortifying incident involving a major client of the firm. ‘A client tried to feed me ice cream at a celebratory dinner. I didn’t really know what to do. I didn’t say anything to my colleagues and I had no particular desire to rake it up after the event. I was 25 at the time. In professional services, you’re always told that the most important thing is to keep the clients happy.’ However, she believes her firm would have backed her if she had chosen to take the matter further.

The Beckwith example

There is little doubt that the regulator has used the Beckwith example to sharpen its teeth ahead of future prosecutions. As an early foray into the uncharted territory of sexual misconduct, many were concerned by the SDT’s assertion that no findings were made as to whether the complainant, Person A, consented to the sexual activity, though consent implicitly underpins the allegation: ‘[Beckwith] knew or ought to have known that Person A had not allowed him into her home with a view to sexual activity taking place.’ Much of the testimony and cross-examination touched on Person A’s ability to give consent.

‘I have been here 27 years and it’s not the firm I recognise.’
Claire Wills, Freshfields Bruckhaus Deringer

The £35,000 fine and £200,000 in legal costs resulting from the SDT’s decision that Beckwith breached principles two and six of the solicitors’ code of conduct, by failing to ‘act with integrity’ and ‘in a way that maintains the trust the public places in you and in the provision of legal services’, is viewed as a lenient outcome for a tribunal unversed in ascribing sanctions in such cases. The SRA made noises that it planned to appeal the decision, given the landmark nature of the case and subject to a review of the SDT’s written judgment.

Nevertheless, the headlines have provided a jolt to wake the profession up to the SRA’s new stance. On a personal level, people who know Beckwith were surprised, given his reputation in the industry and at the firm for calling out inappropriate or misogynistic behaviour. As a former restructuring peer at a US firm in London puts it: ‘Beckwith is not a ‘lads, lads, lads’ kind of person. Part of what he offered the firm was morale and keeping the team together. Now that’s lost. What an idiot.’

The case has no doubt made law firms alive to the culture of high-billing teams, which are prone to pressure-cooker atmosphere and drinking cultures. Predictably Freshfields’ reaction seems to have been to put as much distance between it and the lurid headlines as possible. London managing partner Claire Wills says: ‘Personally, I have been here 27 years and it’s not the firm I recognise, but I encourage everyone to speak up if they see something inappropriate.’

Another veteran partner said he had been contacted by associates asking that work events should be allowed to continue. Wills points to the ongoing firm-wide programme to improve culture and behaviour (see box, ‘Cleaning house’, below), which has resulted in a set of principles – ‘Show respect, be there for one another, be positive role models, and be open with one another’ – as a strategy for heading future issues off at the pass. Plans for a conduct committee, currently under consultation, could establish new enforcement protocols that mean partners who receive a final warning about their behaviour could face an automatic fine equal to 20% of their profit share for 12 months. The model is similar to those which have been successfully rolled out in professional services, such as accountancy and consultancy firms.

‘There isn’t a managing partner in the City that doesn’t have this at the forefront of their mind.’
Ray Berg, Osborne Clarke

While such initiatives have been welcomed, there have been claims that some staff would have liked more forceful internal messaging at Fleet Street amid the Beckwith headlines to reassure that Freshfields was tackling harassment robustly. The firm also refused to comment on claims that it self-reported another complaint regarding personal conduct to the SRA earlier this year.

Mitigation game

‘There isn’t a managing partner in the City that doesn’t have this at the forefront of their mind,’ says Ray Berg, UK managing partner of Osborne Clarke. Law firm leaders may have historically been slow in recognising the importance of addressing misconduct, but reputational risk has shot up the agenda thanks to firms being dragged into the unwelcome spotlight.

The damage, even by association, can be far-reaching. One partner at a City firm recalls some lawyers from Bakers interviewing to leave because they felt allegations of misconduct were not being addressed robustly: ‘It is a sign of the times. No one wants to be associated with this kind of behaviour.’

The regulatory clampdown that includes stricter reporting obligations to ensure sexual misconduct is classified as serious misconduct for the first time (see box below) is progress but needs to be galvanised by internal training. One partner involved in training at law firms believes many lawyers are not still not attuned to the risks. ‘You need to make sure people are having conversations around what is and isn’t acceptable. We asked a roomful of lawyers if they thought putting your hand on a person’s knee is a crime. They all said, “Of course not!”, but it is a crime if the hand on the knee is unwanted,’ says the partner.

Partnership and employment adviser Sarah Chilton at CM Murray says firms have a duty of care to their employees. ‘Firms should think about carrying out risk assessments before work events. Harassment can also be a health and safety issue. In addition, mental health problems can arise after an incident of misconduct both for the victim and alleged perpetrator. There are also practical solutions, like restricting the amount of alcohol that’s available. Don’t top up people’s glasses so frequently.’ Some concede that there is an unofficial practice prevalent among City firms of emailing staff before drinks events warning them not to drink too much and urging partners to leave events before 10pm.

‘Nobody is safe from this. There are no hiding places, no sweeping it under the carpet – that doesn’t happen anymore.’

Some partners voiced concerns about possible adverse effects posed by reporting obligations, with one noting that the stringency could put off some victims. ‘Traditionally people went to the HR department and said: “X has done something, but I don’t want you to do anything. I just wanted to let you know.” HR wouldn’t tell the general counsel [GC]. Now it’s become a regulatory issue you need to report it to the SRA.’

Chilton also concedes that obligations to report could be seen as taking away power from the victim. Tidswell, who has recent experience of the sacking of Ashurst board member Bernd Egbers for misconduct, says speed of execution is key. ‘Escalation is exceptionally important. The GC and regulator are concerned there is timely information passed on when something is known about. They will question whether you take it seriously if you don’t act quickly. I am comfortable we are able to act quickly, in a matter of days. We won’t hesitate,’ says Tidswell.

Similarly, as law firm leaders find themselves under increasing pressure to tackle diversity concerns head on, there is an extra incentive to avoid association at all costs. ‘It is very difficult to present yourself as diverse if one of your partners is up before the SDT for sexual misconduct,’ one female senior associate wryly puts it. Jonathan Bond, HR director at Pinsent Masons, agrees. ‘Law firms in general may also be experiencing commercial reasons for addressing this. Clients are asking for data on how many tribunals the firm has been involved in, how many it’s lost, how many sexual harassment cases the firm has had.’

There are mixed views on how valuable anonymous whistleblowing hotlines, such as Expolink – a third party anonymous hotline used by CC – are to firms in cases of serious misconduct. One issue is the difficulty of launching proper processes if the accused does not know who their alleged victim is, while another is the argument that it runs counter to efforts to promote openness and transparency at the firm.

Many defend inter-firm relationships as a natural consequence of spending most of the time at work. No firms have gone so far as to impose a blanket ban on internal relationships, while most have policies of disclosure to HR if one person is more senior than the other. Several employment specialists flag the difficulty of imposing bans on office relationships, which could result in gender and age discrimination issues. ‘If you keep the senior person and remove the junior person, are you then making a habit of exiting females? Or the senior person could say they are being exited for being old,’ says one employment partner.

Others advocate a contingency approach for misconduct akin to the disaster planning many firms have in case of cyber attacks or terrorism scenarios. ‘Firms should have a plan in place before they get the legal press banging on their door asking for comment, and have to deal with the SRA and questions from their insurers at the same time,’ notes one regulatory partner.

‘Firms should do risk assessments before work events. Harassment can be a health and safety issue.’
Sarah Chilton, CM Murray

The overriding message is that a sea change has already taken hold in the profession, especially in how firms deal with unacceptable conduct from high-performing partners. One Ashurst partner is sanguine that the days of protecting rainmakers are over. ‘Our process has been tested with Bernd Egbers. He was a board member, high-profile and outwardly successful. Steps were taken very quickly. Nobody is safe from this. There are no hiding places, no sweeping it under the carpet – that doesn’t happen anymore.’

Accountancy is another profession where the partnership dynamic can breed similar behaviour, but in terms of tackling the issue it seems that the auditors have been more proactive than legal. An article published in Accountancy Age a year ago revealed that the Big Four had released data about the number of partners dismissed because of bullying and sexual harassment. Deloitte went first, saying that around 20 partners had been let go in the previous four years for those reasons, followed by PwC (five partners), EY (five partners) and KPMG (seven partners). Other firms outside of the Big Four (including Grant Thornton and BDO) also disclosed statistics.

Whether this apparent contrast speaks to the concentration of the accountancy profession or a more proactive attitude to addressing harassment is debatable, but it cannot be doubted that the law has a very significant #MeToo problem and the process of addressing it has a long way to run yet. That process, backed by a newly-emboldened regulator, will profoundly change the profession. LB

nathalie.tidman@legalease.co.uk

muna.abdi@legalease.co.uk