Solicitors facing ethical disclosure decisions “need more SRA help”

Moorhead: Key figure in lawyer ethics debate

The Solicitors Regulation Authority’s guidance on disclosing confidential information “inappropriately discourages” lawyers from reporting serious misconduct and risks of harm, it has been claimed.

A paper from Exeter University urges the regulator to rewrite the guidance – first issued in 2019 and updated only five months ago – so as to provide better support for solicitors facing demands which raise ethical issues.

The paper was authored by Richard Moorhead, professor of law and professional ethics at Exeter; Graeme Johnston, a former partner with City giant Herbert Smith Freehills and now chief executive of Juralio, a technology company providing software that helps people map their work; and Jenifer Swallow, a former general counsel to tech companies and ex-director of LawtechUK who is now a business and legal adviser to companies.

It comes against the background of lawyer involvement in wrongdoing rising in the public consciousness.

The Legal Services Board has highlighted issues such as the Post Office scandal, 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.

Earlier this year, it expressed “very significant concerns” about the professional ethics of in-house and commercial lawyers.

The Exeter paper said a critical issue for lawyers was what to do when they faced ethical pressure, such as becoming aware of, or being asked to advise on or facilitate, unlawful activity, or being pressured to behave in unprofessional ways.

“We believe that proper, accurate and constructive guidance, and support from the professional regulators can help reduce these problems significantly.

“Such guidance should cover critical issues on advising independently and objectively, being clear who the client is including in employer-client relationships, and reporting up within the client and, occasionally, reporting out in ways which properly balance professional obligations to uphold the rule of law and the best interests of the client.”

The writers said their discussions with lawyers in private practice and in-house “suggest that the boundaries and issues in this area are not clearly understood”. There were related problems with handling of legal professional privilege, and solicitors “asserting confidentiality and privilege to protect reputation and wrongdoing, sometimes inappropriately”.

They identified a host of problems with the SRA’s current guidance on disclosure of confidential information.

These included appearing to get the law wrong by insisting that solicitors must have information which “is sufficiently detailed or compelling enough for you to form an opinion that a serious criminal offence will occur”.

The paper said the main legal principle here – the iniquity exception – encompassed not only crime but also “broader situations of fraud, dishonesty, bad faith or sharp practice”.

It continued: “The solicitor need not ‘form an opinion’ that a crime or other iniquity ‘will occur’. A prima facie case is all that is legally required.”

Other problems were that the guidance understated the right or duty of disclosure, lacked clarity, and “often nudges the reader towards non-disclosure rather than stating the position more neutrally”.

The guidance also failed to address lawyers’ obligation to report up within organisational clients when faced with evidence of potential ‘iniquity’.

“This is something that should be done and which many lawyers will or should already be doing. But our experience in talking with lawyers who have faced, raised, or ignored such harms is that they sometimes have a less strong grasp of reporting up obligations than they should.”

The authors said: “For all those reasons, we think that the guidance inappropriately discourages
effective reporting of serious misconduct and risks of harm.”

They called on the SRA to host workshops to develop better guidance and support for the profession. “The ways in which the SRA supports lawyers more broadly, and in-house lawyers in particular, merits separate attention going beyond our thoughts here.”

Professor Moorhead has taken a close interest in the Post Office scandal; he is one of the leaders of Exeter University’s Evidence-based Justice Lab project looking at corporate governance, criminal justice and professional regulation, as well as government oversight, in the context of the scandal.

He has also been a leading voice on non-disclosure agreements, acting as specialist adviser to the Parliament’s women and equalities select committee on the issue.

Earlier this year, Ms Swallow said that in-house lawyers’ regulatory responsibilities, such as the SRA principles, should be written into their employment contracts to ensure their independence.

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