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‘The conversation we never had’ – SRA to give handbook in-house makeover as UCL unveils ethics research

It’s been the debate the profession has avoided over the last decade, but one that finally appears to be stirring. Scrutiny of the regulation, guidance and professional support for in-house counsel will be addressed by the UK’s primary legal watchdog, it has been confirmed.

Speaking at the launch of a research project on legal ethics and risk management within companies last night (31 March), Solicitors Regulation Authority (SRA) chair Enid Rowlands (pictured) acknowledged the agency’s historical lack of engagement with the swelling ranks of in-house counsel in England and Wales.

Rowlands said that the SRA will review its core handbook to produce standards and guidance geared specifically to in-house counsel over the next 18 months as part of a wider effort to focus more closely on this section of the profession.

She commented: ‘We are revisiting the handbook and looking at the specific rules for in-house lawyers. My intention is that we use the research to reconfigure that handbook, to make it simpler and to address some of these [ethical] questions. You cannot sit up there as a regulator and make rules. All regulators depend really on taking their audience with them. I don’t think we have the right answer as the regulator. I think the regulator has an obligation to listen to views and try and reform the handbook by taking the profession with it.’

Rowlands acknowledged the lack of attention the SRA has historically given in-house counsel despite dramatic growth in the employed profession over the last 15 years and the transfer of increasing amounts of legal work to corporate legal teams.

Rowlands became the first non-lawyer chair of the SRA in January, succeeding Charles Plant.

She added: ‘This is a fascinating area that as a regulator we need to focus in on much more. We need to make our regulation more targeted. It needs to remain proportionate. Some of the questions that occur to me are: could we make it clear what a statement of independence is? That is absolutely key. What does independence mean? Can we in some way enshrine that notion and protect in-house lawyers better as regulator? Can we state more clearly the purpose of a general counsel, because I don’t think we do that very well? How do you actually manage the raising of concerns in the legal sector when you know about risk, you know about wrong-doing?’

Rowlands’ comments came after a presentation on the report, ‘Legal Risk: Definition, Management and Ethics’, which was authored by UCL professor Richard Moorhead and Dr Steven Vaughan of the University of Birmingham. The report conducted interviews with 34 senior general counsel and compliance professionals to gauge attitudes to handling and defining legal risk and addressing ethical questions.

The project is billed as the first part of a wider debate on the ethical role and expected standards of general counsel, including addressing the specific pressures, conflicts and operational challenges facing in-house counsel.

Moorhead and Vaughan cited a lack of definition of the role and responsibilities of in-house counsel, with many in-house teams applying loosely intuitive approaches to managing risk and ethical issues. The academics noted the extent that matters of conduct were often defined by the culture of the employing company, not the professional standards of in-house counsel.

Moorhead – highlighting the string of corporate scandals that have involved in-house counsel in recent years – cited in-house counsel interviewed for the report admitting to pressure to make questionable decisions, citing how hard it was to tell the business ‘no’. One counsel interviewed said: ‘I don’t have any absolute nos – that’s me taking a risk.’

The venture, which is backed by UCL’s Centre for Ethics and Law, is expected to produce a follow-up report later in the year, producing suggested definitions for the role of general counsel and best practice in ethics and legal risk management.

LBC Wise Counsel chief executive Paul Gilbert, who was involved with the project, concluded: ‘We need a conversation of a generation because we have not had this conversation ever.’

Whether the in-house profession – which has been increasingly focused in recent years in proving its commerciality – is ready to engage with this conversation is far from certain.