Law firms increasingly screening clients against ESG values

Bunch: Firm has red lines for clients

The increasing extent to which clients are being screened against environmental, social and governance (ESG) issues was laid out at a Law Society conference last week.

Martin Bunch, managing partner of London firm Bates Wells, argued that law firms implementing ESG “is really important for the future of our profession” and for ensuring law firms were “successful and sustainable”.

He added: “Both clients and employees are looking for businesses which are really, truly looking into ESG and trying to do better.”

In 2015, Bates Wells became the first UK law firm to become a B Corporation, the movement which aims to balance profit with purpose.

Speaking at the Law Society’s Future of Work conference in London, Mr Bunch explained that the starting point for deciding which clients to take on was having “a clearly defined set of values and purpose” – decided by the whole firm, rather than just management.

“We were lucky that we had a purpose that we took from our B Corp status – which was about making a positive impact on society and the environment, and [that] became the purpose of the firm.”

This helped the firm to set where its red lines were and Bates Wells’ risk and reputation committee tests new clients against them.

As an example, he explained that Bates Wells would act for a fossil fuel company on a green project.

Fellow speaker Natalie Cooksey, data privacy counsel at City firm Travers Smith, agreed that young lawyers wanted to work for a firm “that has ESG in mind”.

She went: “So we’ve been thinking about the type of clients we take on.” This was also influenced by the Law Society’s guidance on climate change, published earlier this year, that makes clear that it is a valid reason to refuse to act for clients.

Ms Cooksey said Travers Smith now used a range of different providers to ensure it was “screening [clients] as broadly as possible” to check for any ESG issues.

“If there are any red flags from ESG perspective… then we have an escalation process that goes right up to the top level. The senior partner and managing partner will look at those potential new clients and consider whether it is sensible for us to take them on, bearing in mind… the impact that will have on our reputation.”

Ms Cooksey stressed that these were not necessarily easy decisions – “we’re a business and you could possibly argue either way whether we take them on”.

The discussion that followed identified a difference between contentious work – where there could be access to justice issues – and non-contentious matters when it came to turning down clients.

Mr Bunch said there would always be some firms that, on a matter of principle, would act for clients that others would not.

He added that there were a lot of charters and organisations that law firms could join to support and burnish their ESG activities.

But he warned: “If you try and sign up to everything and don’t achieve them, people know that you’re not achieving them and therefore the whole expression of who you are and what you’re about tends to be inauthentic.”

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