Ukraine crisis exposes law firms “going too far” in clients’ interests

Miller: Lawyers and their clients are not in separate spheres

Some law firms have gone too far in pursuing their clients’ interests, but the need for solicitors to act in the public interest as well is becoming more important, a debate on the impact of the Ukraine crisis on lawyers heard yesterday.

It was told that firms were also wrestling with demands to put values more at the heart of what they did.

Richard Moorhead, professor of law and professional ethics at Exeter University, told the seminar at the London School of Economics’ law school that some law firms “push things too far”; there were plenty of instances of firms using “inappropriate tactics” and being called out by the courts. The Post Office scandal was another high-profile example.

There was a question of whether it was a problem with the profession or the legal system – for example, the rules around costs – but “sometimes it’s about being complicit in wrongdoing knowingly or recklessly”, he said.

The Solicitors Regulation Authority (SRA) was “more interested” in this issue than the past, he said, but suggested it was “hesitant” to get involved because of the difficulty and heavy costs of taking on such matters.

Iain Miller, a legal regulation specialist and partner at City firm Kingsley Napley, defined the three “basic limbs” of legal ethics as the administration of justice, acting in the client’s best interests and serving the public interest.

The latter has not attracted much attention because it was “a bit woolly”, he said. But it has come to the fore in the debate about non-disclosure agreements – the SRA’s guidance warned against using some clauses that could be upheld in court on a contractual basis, he said, but the regulator’s approach was that “just because you can, doesn’t mean you should”.

It followed this in its recent guidance on the conduct of litigation and specifically so-called SLAPPs (strategic lawsuits against public participation), he said.

Trevor Clark, a former Linklaters partner who is now a lecturer in the legal profession at Leeds University, said the questions were relevant to transactional work too, “where lawyers are pushing the boundaries for their clients, exploiting inequality of resources”.

He asked: “Should lawyers have fidelity to the law or is the role of the transactional lawyer to structure around the law?”

Mr Clark said it was “easy to be cynical” and see law firms closing down their Russian businesses as “purely a business move” – with the Moscow offices of the large firms relatively small as a proportion of the whole, it would be far more damaging to alienate large clients.

However, he went on, “firms are cognisant of their wider reputation from a business perspective but also know their staff will be very interested the positions [they take]”. Firms were thinking about recruitment too.

However, big firms were also “moving towards placing values more at the heart of what they do”.

As to claims that some firms are not conducting enhanced due diligence on political figures, Mr Clark suggested this was more likely to be the case at private client firms than big City firms. “There does seem to be some smoke and some fire as well.”

Mr Miller said the idea that “lawyers and their clients are not in separate spheres” – and that the nature of a firm’s clients has an impact on it – was beginning to take hold, pushed in particular by younger lawyers and law students.

That included acting for oil and tobacco companies, for example: “I see Russia as an extension and more immediate and extreme example.”

However, he said this could cause problems by creating “silos of different types of firms that act for different types of clients”. Mr Miller went on: “That might not be good for all of us. It raises serious issues that I don’t think anybody’s begun to consider.”

While at the moment it was being argued that lawyers should not be identified with their clients – as stated in the UN basic principles on the role of lawyers – Professor Moorhead argued that this was a “fairly hypocritical attitude for law firms to take… when it suits them, firms identify very strongly with their clients”.

The Law Society and lawyers “like to talk about the rule of law as the right to representation”, he observed. But it was “much wider than that” – until there was evidence of Russian oligarchs who were unable to find any representation at all, and given the wider problems of access to justice, “I’m not worried about it”.

Professor Moorhead suggested that the market may “shake out”, with smaller firms more willing to act for Russian clients, but that was all. This discussion seemed to define the rule of law as “the right to representation for people who can afford to pay the enormous sums of money for representation in the High Court”.

The more general point was whether people as individuals, rather than lawyers, “have a moral obligation to think about the contribution we make to the world” and so should think more carefully about the types of clients and work they want to do.

He argued too that it was “perfectly valid” for a law firm to say it acted for certain clients in deference to the rule of law and equally valid to criticise them for doing so.

Professor Moorhead questioned the extent to which “box-ticky” ‘know your client’ systems made taking on a client a matter of “procedural judgment but not substantive judgment”.

Mr Miller argued that if being “perfectly legal” to act for a client was no longer the test, replaced by an “ill-defined” higher threshold, different law firms would find different levels.

The changes in the way large partnerships operated economically – moving from lockstep-based remuneration to ‘eat what you kill’ – was also identified as an issue.

“Firms are now much more financially focused and much more unstable because of it,” Professor Moorhead said. Partners knew they could be ‘de-equitised’ and moved out. “That drives a heavier appetite on risk,” he said.

On the flip side, said Mr Miller, “the need to attract talent and make your firm one people want to work for” was pushing in the other direction.

This was currently more about working culture than ethical culture, suggested Professor Moorhead, “but that may come”.

The panellists also debated the cab-rank rule. Professor Moorhead admitted he was “torn” over it but said he understood it was “honoured more in the breach”.

Mr Miller observed that there were “a lot of exceptions” to the rule “and I have certainly never instructed a barrister who didn’t want to do the case”.

“If a particular barrister doesn’t want to take something on, the cab-rank rule is not going to be the trump card,” he added.

At the same time, “it’s there to protect and justify the Bar for doing unattractive cases, and that’s probably a good thing”. He said it would be useful for criminal defence solicitors to have a similar rule.

Professor Moorhead considered that the rule “performs a symbolic purpose” and made barristers “comfortable”. He said: “Maybe a little bit of discomfort might be quite useful to make people think about what they do and why.”

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