“Significant risks” to solicitors under Bribery Act, Law Society warns

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By Legal Futures

10 June 2011

Gift giving: firms need clear policies

There are “significant risks” for law firms offering gifts, entertainment and to pay for expenses as a result of the Bribery Act 2010, the Law Society has warned.

A practice note issued by the society also says that while referral fees should not fall foul of the Act, solicitors need to be aware of whether their introducers are behaving in a way that might.

The guidance says firms should seek to prevent the giving or receiving of gifts, hospitality or paying of expenses “if it might influence or be perceived to influence a business decision”.

Government guidance says hospitality is not prohibited under the Act, but the note suggests that firms consider a policy on what gifts or hospitality it is acceptable to give or receive.

“This is often done in terms of a financial limit,” it says. “Any limit should take account of the cumulative impact of several small gifts. Where firms operate internationally they may wish to provide guidance to on how gifts and hospitality might be handled in relation to local customs and culture.”

Using the example of a firm that gives Christmas gifts each year to local estate agents, the society says “it is unlikely a small token of appreciation” will engage the Act. “However, firms shoudl consider carefully the intent behind gifts. They should also ensure that they have a clear policy on gifts an record both the giving and receiving of gifts.”

Where firms offer to pay expenses, such as for a potential client to attend an event or visit the firm, “firms should be transparent about the expenses they pay and the business reason for their payment”.

Similarly, when solicitors are offered hospitality or gifts by other professionals to whom they are likely to refer work, “firms should consider how they handle such offers or whether they need to ensure that acceptance of such offers is approved at a more senior level and whether any threshold should be applied”.

The society says the Act largely consolidates, rather than changes, the previous law on bribery, under which there was “no implication” that referral fees were illegal. “Therefore it is unlikely that such fees are illegal under the new arrangements.”

However, it continues: “You may wish to consider how the introducer is obtaining work that is then referred to you. If the introducer is paying bribes to gain the work, this may, in certain circumstances, be seen as them paying a bribe on your behalf.”

Law firms should also be careful with donations to a charity that has a connection to a customer or organisation that might influence their business. “For example, it might be appropriate to wait for a deal with an organisation to be concluded before promosing to make a donation to a charity linked to that organisation.”

The practice note also provides guidance on dealing with bribery issues abroad.

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