Minority of in-house lawyers face ethical challenges, SRA finds

Ethics: Balancing ethics with commercial imperatives and client needs is a challenge

In-house lawyers are generally able to withstand pressures on their independence but a minority report demands to act unethically, according to Solicitors Regulation Authority (SRA) research.

A survey of more than 1,200 in-house lawyers found that 10% said their regulatory obligations had been “compromised”, often due to heavy workloads – 16% described their current workload as “overwhelming”.

A further 5% said they had faced pressure to “suppress or ignore” information which could conflict with their professional obligations, while the same proportion said they had experienced “pressure from colleagues not to disclose information that was not in the best interests of the client”.

One lawyer said demands included breaching disclosure obligations, hiding data and using illegally obtained information for litigation.

Another said: “Requested to overlook severance payments to outgoing staff which fell outside delegated authority of awarding staff. Asked to overlook unlawful procurement.”

A third in said: “Strategic and policy decisions were frequently made by the executive management team to prevent disclosures.”

The most detailed comment came from a solicitor who said their employer was engaged in practices likely to result in breaches of their legal duties.

“It required me as a solicitor to report as an officer of the court. I raised concerns with the senior leadership and as a result had to leave the organisation.”

Researchers said: “This highlights that balancing commercial imperatives, client needs, and ethical obligations can be extremely challenging when working in-house.”

At the same time, most in-house solicitors did not feel they faced unique challenges or pressures in comparison to private practice. Some even said they thought private practice solicitors faced more ethical pressures.

The SRA said it found evidence that the in-house sector “adds considerable value to organisations and the wider legal community”.

The review continued: “It has a unique understanding of its client’s needs which helps it to connect the dots between legal advice and ethical leadership. However, it also faces a number of challenges.

“Many in-house solicitors described experiencing commercial and political pressures and professional isolation. We were also concerned that in most teams there were some weaknesses in policies and controls which would help them to oversee and identify risks.

“In particular, we noted that balancing regulatory responsibilities and independence while safeguarding effective working relationships could be challenging.

“These challenges may be exacerbated if in-house teams have limited resources and a lack of focus on ethics in day-to-day learning and work activities.”

Only 10% of in-house teams kept a policy setting out their confidentiality and disclosure duties or kept a central record of “actual or potential regulatory or ethical risks”. “

The SRA said the legal function should “make sure it is able to identify trends or patterns of risk and training needs”.

More than a third (36%) of in-house lawyers said they had explained to their employer that in certain circumstances their ethical duties outweighed their duty to them.

However, almost all (98%) said they “would feel comfortable saying ‘no’ if asked to advise on a course of action that was unethical”.

A similar majority (95%) said that the legal function was valued in their organisation. Only 14% said they had “no influence” over the ethical and legal direction of their organisation.

Researchers said that a quarter of junior in-house lawyers had not received any ethical training.

“However, although resources for learning and development varied in organisations, most in-house teams had access to a wide range of legal and non-legal training.”

Nearly two-thirds (62%) of respondents felt that managing workloads was currently their biggest challenge, with 16% feeling their current workload was overwhelming.

“This suggests that some in-house solicitors are regularly experiencing personal pressures and high workloads, which not only affects wellbeing but could lead to ethical risks if unmanaged.” Only 30% of senior leaders thought their teams would increase in size over the next 12 months and 15% thought they would decrease.

The research said only 20% of in-house teams had dedicated policies or procedures for ethical responsibilities. Those that did referred to whistleblowing, anti-slavery measures or conflicts.

“Few had their own separate policies to guide behaviours in the in-house team and only 30% had their own code of conduct.”

Paul Philip, chief executive of the SRA, commented: “The findings of this review are generally encouraging – most in-house solicitors appear to be able to serve their employers well while still upholding the high standards expected of them.

“Yet a minority struggle. We heard frequently that heavy workloads were a significant challenge. That is a problem if it means some in-house solicitors struggle to commit appropriate time to training or careful consideration of key decisions.”

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