It’s stated so often but never questioned: everywhere you turn, in-house lawyers pay tribute to the holy grail of ‘being commercial’. But, as I will argue, such an approach raises substantive and troubling questions regarding the influence on the ethical compass that is supposed to be an in-house lawyer’s most important tool.
Once upon a time I was an in-house lawyer and during those years I was the senior counsel in two financial services organisations. I was the head of legal services at Cheltenham & Gloucester and legal director/company secretary at United Assurance. I had many career-shaping experiences as a lawyer, mostly very positive. I absolutely loved the opportunity to be immersed in my organisations’ ambitions. I wanted my teams to be a positive force and I encouraged all my lawyers to be close to all the key drivers of success – the people, the policies, the procedures, the politics – but I was also always acutely aware of the ethical framework within which we worked.
I regularly reflected on the ethics of the in-house role. What is the line between adviser and decision-maker? Does everyone see the line in the same place? These questions are even more relevant today and in my judgement they are less well considered and less well answered. I will share three, perhaps seemingly innocuous, examples from my personal experience to tease out these concerns:
1. It is obviously important for any lawyer to be credible. A credible lawyer, however, is someone who will attract requests for their insight and support. Very many times people would come to see me to ask if they could talk about something that troubled them on a personal level. It was quite flattering and it was also a verification of the trust they placed in both my role and my advice. I didn’t encourage these conversations, but neither did I turn people away.
2. During any day my status as an adviser could change from one meeting to the next. In a formal meeting with my executive colleagues my role was very clearly delineated. Typically there would be a lively debate and then the chief executive would say: ‘Paul, can we do this and be on the right side of the line?’ Everyone in the room knew there was a commercial imperative and a regulatory requirement. We are all searching for the right path. We all listened, we all debated and a collective decision was taken, but it was not my call. Consider a different situation, which was also typical: I might be in conversation with the newest recruit to the marketing team. I am presented with draft marketing copy and the question: ‘Paul, can I say this?’ This is not a peer-to-peer debate, more a question asked of the school teacher whose answer is final. I scribble some changes in the margin and my colleague goes away happy.
3. On an annual basis I was asked to define my personal and team objectives – always to be aligned to corporate goals and on which appraisal (career development) and bonus (remuneration) decisions would depend. It was frankly a tedious and often artificial game to play, but play the game I did if the status and money was to be earned by my colleagues.
It is perhaps hard to see the mischief in any of these three routine examples, but my concern then and even more so now is that there is mischief and especially so if the filters we use to judge potential ethical pitfalls are not properly applied or are not there at all. Let me explain some more:
First, the ‘confidential’ conversation: this was often about my colleague’s dispute with a neighbour over overhanging trees, but occasionally was about a business-related issue. I remember one colleague being concerned about a possible breach of capital adequacy rules because certain assets were not classified as high risk when she felt they were. I remember another colleague in tears in my office because he had just been required to sign off the eviction of a family when he felt we should have accepted their offer to repay loan arrears over time. You will immediately see the issue. Is it ever advisable for an in-house lawyer to have a so-called confidential conversation with a colleague? Can it ever be ‘confidential’ anyway?
Second, what about the conversation with my newly-recruited marketing colleague? Was I not just doing my job and showing a kindness to them? They came to me with a question and I took a few moments to explain that their words constituted a potentially misleading statement, and I wrote down the words I thought would be acceptable. My words. However, a few months later, those same words were being investigated by a trading standards officer in a criminal investigation. His view was that our advertisement was illegal. I was then in a position where I was advising my client about my words. Did I have a duty to my client to declare that they were my words and that I was now conflicted?
Finally, the annual round of objective-setting created two tensions for me. Firstly, I was creating a personal interest in commercial outcomes for individual lawyers on matters they would advise on directly and indirectly. Secondly, I was not able to incentivise risk assurance work (for example on knowledge management, compliance training, etc) simply because short-term business goals were targets that had significant financial consequences and always had priority. The objective-setting regime institutionalised behaviours in the lawyers that supported short-termism.
What then is to be done? In my view it is crucial that we raise awareness of our blind spots. The filters through which we see our worlds must reveal and not obscure our blind spots.
The standing joke for a legal team has always been that it is ‘the department that says no’ or the ‘sales prevention team’. The constant low-level criticism of a legal team is that they are ‘not commercial enough’. General counsel (GCs) exhort their teams to be commercial, to be business people, to be ‘less lawyerly’. Eminent voices on significant platforms can be heard to say the biggest compliment they have ever been paid was not to be seen ‘as a lawyer’.
It should be a privilege and not a right to employ in-house lawyers. We must do more to create appropriate environments for in-house lawyers.
All of this is well-intentioned. It is at a quite plausible level. It is, however, utter hogwash. It creates our blind spots and does not reveal them.
We have allowed the vocabulary to become so lazy, so imprecise, so lacking in meaning, that literally a generation of lawyers has been given half-baked platitudes that we have dressed up as strategic exemplars. It is just so wrong.
The role of the in-house lawyer is so difficult to get right. It is the hardest job in the legal profession to do really well. We take talented people from law firms where they have constant peer support, precedents and know-how to die for, and the checks and balances of decades of practice experience behind them. We then place them in hard-nosed commercial environments, often in subordinate roles to the people they must advise; we strip them of much of the peer support they are used to, throw work at them that is outside their expertise and with minimal tech/library/precedent solutions. We do this and then say ‘be commercial’.
Added to this mix we have now been through a global economic crisis where we have exhorted lawyers to ‘do more with less’ or (implicitly) lose their jobs. Frankly, we have stored up a mess. We are poorly led, poorly regulated and poorly served by the wider profession. My views on the mental health and wellbeing of lawyers in our profession, and on the failure of many law firms to address inefficiency in the way lawyers work because of their financial self-interest are all relevant and linked to this issue. We need to do four things:
1. The role of the in-house lawyer is often crucial in many businesses. It should, however, be a privilege and not a right to employ in-house lawyers. We must do more to create appropriate environments for in-house lawyers, and we must discuss and embrace our ethics. Look at the extraordinary lengths to which the Solicitors Regulation Authority has gone to police alternative business structures; yet in-house lawyers work in a de facto multi-disciplinary environment with minimal regulation and support. Should there be a ‘fitness to employ lawyers’ test for businesses to pass? Let’s at least have the debate.
2. We must define the role of the in-house lawyer more precisely. Where are the hard edges? Where are the lines we do not cross? As a gnarly GC, my instincts are sound, but a junior lawyer new to in-house has no such hinterland. Should not every in-house team induct their newly appointed in-house lawyers with an explicit statement of their responsibilities and expected behaviours as lawyers, and how they will be supported to achieve the standards required? Can we not have an annual declaration of compliance with our ethical rules?
3. We need a serious debate on the role of the general counsel. What are they responsible for? What is not in scope? What are their responsibilities as leaders of lawyers in their organisations? Should regulators be able to rely on the GC to assure ethical behaviour on the part of all the lawyers in the business?
4. Given all that has happened in banking in the last few years, I do not think we are far away from GCs going to prison. We have all seen the examples of traders ‘bantering’ and what that now means for some of them. We know business people can be extradited to the US to wear orange suits for years for technical breaches of regulations in the UK. Are we so far away from seeing a GC being asked under caution how it could possibly be the case that the commercial shipwreck of a deal they oversaw was using a map they had drawn and a course they had set? We need to make this threat an important part of the mindset of every GC.
Serious, important, respected people in the in-house community have got to put ethics on the agenda, treat concerns respectfully and with care, and help to lead opinion. We need a credible working group that engages the whole community of lawyers, regulators and other stakeholders; we need thorough research and we need to define the guidelines that properly support the next generation of in-house lawyers if we are to fulfil the potential for such a wonderful career.
Paul Gilbert is chief executive of LBC Wise Counsel. To read his blog click here.