LSB to urge regulatory action in bid to strengthen professional ethics

LSB: Project on rule of law and regulation 

A greater focus on professional ethics among law students and qualified lawyers, with stronger supervision by regulators, is needed to uphold the rule of law, the Legal Services Board has said.

It said regulators needed to enhance their monitoring of lawyers “to ensure professional ethics are being driven in practice and are sub-ordinating commercial and reputational pressures”.

These are among the emerging conclusions from the oversight regulator’s ongoing project on the rule of law and regulation, sparked in part by a range of high-profile matters that led it earlier this year to express concerns about the professional ethics of in-house and commercial lawyers in particular.

These included the role of lawyers in the Post Office scandal, governance failures at the Royal Institute of Chartered Surveyors for which a City law firm was in part blamed, the use of non-disclosure agreements to cover up misconduct in the workplace, tax avoidance and the leaked Pandora and Panama papers, strategic lawsuits against public participation (SLAPPs), and weaknesses in sanctions and anti-money laundering compliance.

A paper before this week’s meeting of the LSB’s main board said that, while there was evidence of lawyers championing the rule of law and promoting professional ethical practice, “these other matters have exposed the sector to the criticism that some lawyers have acted as ‘professional enablers’ which have exploited loopholes in the law and operated on the boundaries of legality”.

It stressed that these were not just issues for in-house or commercial lawyers though, saying the need to balance professional obligations applied to all legal professionals, “whether practising as sole traders in high street firms, in public sector organisations or at the Bar”.

An evidence review showed the LSB that there was “no comprehensive definition” of the rule of law; indeed, “it is still the subject of lively debate”.

No legal regulator has comprehensively spelt out what is required of lawyers to uphold the rule of law “in the context or circumstances they find themselves in”, and most do not have a core duty or rule that references it.

But the evidence indicated a “lack of professional ethical infrastructure and leadership” in large firms to drive decision making in practice, as well as a “lack of interest about ethics, particularly from corporate lawyers”.

Further, lawyers were “more strongly influenced by the principles of serving client interests and integrity than independence”, with ethics more focused on procedural compliance and legality.

The review identified shortcomings in the current regulatory infrastructure and the board was told that the executive’s “emerging conclusions and remedies” included the need to address the “ambiguity” around what upholding the rule of law meant for lawyers and how it should shape their actions.

“As a starting point all regulators should ensure that their codes of conduct/core duties include a principle specifically on upholding the rule of law, and supplement this by providing guidance on lawyers’ professional obligations to the rule of law.”

The paper said there needed to be a greater focus on this both pre- and post-qualification, including making professional ethics part of continuing competence obligations.

“Supervision and monitoring by regulators should be enhanced to ensure professional ethics are being driven in practice and are sub-ordinating commercial and reputational pressures,” it continued.

“In-house lawyers may need to be subject to enhanced accountability and support given evidence that they experience multiple, and possibly conflicting, spheres of influence that shape how they balance difficult ethical questions.

“Law firms and organisations need to show leadership on matters of professional ethics and create a safe space for discussion, learning and reporting conduct which may breach professional ethics. Threats to workplace cultures that promote professional ethics will need to be managed.”

The LSB is to continue its work on the project, including commissioning academic research “to inform a cross-sector discussion on what is required by legal professionals to uphold the rule of law and the conduct that may undermine it”.

The LSB’s first annual conference last week heard that the profession was “drawing the ethical boundaries in the wrong place” in its dealings with corrupt kleptocrats and oligarchs, and risked having reforms imposed on it as a result.

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