In-house lawyers’ ethics: “Bright spots amid the gloom”

Moorhead: Reasons for optimism

The largest study of the ethics of in-house lawyers ever undertaken has shown a “gloomy picture” of lawyers wedded first to the commercial objectives of the companies they work for, with the public interest second or nowhere to be seen.

However, the authors found grounds for optimism in the fact that a small number of their sample were able to recognise and promote ethicality despite working under pressure, as well as their confidence that, with the right encouragement, more could join this group.

The research, compiled into a report, Which way is the wind blowing?, was carried out by law professors Richard Moorhead and Steven Vaughan in collaboration with flexible legal services provider Lawyers on Demand.

Over five years they surveyed 400 in-house lawyers and conducted 67 in-depth interviews.

The authors highlighted the issue of non-disclosure agreements as an example of how lawyers were caught between the conflicting demands of satisfying employers, while also keeping in mind broader rule of law considerations.

They acknowledged the difficulties in-house lawyers faced trying to be ‘team players’ who were not risk averse, while at the same time being expected to uphold ethical standards: “To succeed, their solutions must be both legally acceptable and organisationally useful.”

But they stressed that a lawyer’s professional rules were clear that, where a conflict between a client’s interest and the public interest in the administration of justice existed, the latter should have priority.

Unfortunately, their research found the interviewees “hazy, sometimes very hazy” about the contents of their code of conduct. A fairly typical response was “I don’t know what those professional obligations are. What are they?… I’ve never read the SRA Handbook”.

From this standpoint of widespread ignorance of professional ethics, the survey found 45% of lawyers had been asked to advise on a proposal whose ethicality was debatable and 39% had been confronted with a proposal whose legality was in doubt.

A third agreed they were sometimes asked to advise on something that made them feel uncomfortable ethically.

Indicating the pressure they were under, eight out of 10 agreed their legal department had been criticised for inhibiting or slowing commercial decisions.

The research found no correlation between size of team and ethical pressures, although those working in the public sector reported more ethical pressures than those in business.

The report concluded that the more commercially minded the in-house lawyer, the less likely they were to perceive problems as moral ones.

The academics pigeon-holed the lawyers surveyed into categories, with most, dubbed the “coasters”, either not being tested or did not test themselves with ethical dilemmas in the course of their work.

At one end was a small group (12%) the authors labelled “champions” – twice as likely to work in public service than business – who “despite being under significant ethical pressure, saw moral issues in their work and didn’t shy away from engaging with those issues”.

They were balanced negatively with a similarly sized group, labelled “comfortably numb”, whose moral compass caused the authors serious concern. “These lawyers were the worst at spotting moral issues and, frankly, didn’t care even when they did,” they observed.

Although overall the authors found the data they collected “paints a rather gloomy picture”, they nevertheless remained optimistic due to the ethical bright spots encountered by the research.

Possible improvements to ethical performance of in-house lawyers included: “The narrow framing of legal tasks can be discouraged; resources can be committed into improving the ethical environments; [and] there may be institutional protections to be stimulated through relationships with non-executive directors and careful management of incentives”.

Both academics were among a team that published proposals on improving the position of corporate lawyers earlier this year.

Simon Harper, co-founder of LOD, commented: “The role of ethics and wider purpose seems finally to be front of mind for businesses, from our very largest to those in growth stage, and increasingly what customers care about too.

“For many lawyers, this is a reminder of why they chose their vocation in the first place and so they’re well positioned to put themselves right in the middle of this welcome trend.

“By ourselves, lawyers aren’t the solution to any such ‘crisis in capitalism’ that businesses might be perceiving.

“Nevertheless, of all senior roles, in-house lawyers are right up there in their ability to influence their employer to consider ethical effects and broader constituencies – not just shareholders but the wider community, employees and the environment.”

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