In-house lawyers – a paradox

There is one issue which divides the European legal profession more starkly than anything else, with a roughly equal number on either side. You might think it is the treatment of legal professional privilege or rights of audience. No, it is how to deal with in-house lawyers (although the answer has an impact on the two points I have just raised).

Are in-house counsel independent or not? Although we are sure of the answer in this country – yes, they are independent – you would obtain an equally firm answer in the opposite direction from many other member states.

The issue arises again now because two member states are travelling in opposite directions. In England and Wales, the Legal Services Board has issued a consultation paper called ‘Are regulatory restrictions in practising rules for in-house lawyers justified?’. Responses are sought by 24 April 2015.

This paper discusses whether the regulatory burden on in-house counsel should be reduced, on the grounds that the sector might be currently over-regulated. The direction of travel is towards less regulation.

In France, things appear to be going differently. At the moment, a lawyer cannot be an in-house counsel without losing his or her lawyer’s title and all related rights and obligations. Legal advice given by an in-house lawyer to his or her employer is not protected by professional secrecy. A draft law in December 2014 proposed, in its original version, a new status of ‘in-house lawyer registered with the bar’ – and so the debate is about whether to bring in-house counsel within regulation.

A recent study has shown how divided Europe is on the matter. Of 25 countries surveyed, 10 recognised in-house counsel, and 15 did not. Even among those which recognised the status, not all granted confidentiality to the advice given to the employer (for example, Germany did not). And the countries were again divided on whether to permit in-house counsel to retain clients beyond their employer (it is permitted in, for instance, Germany, Spain, the Netherlands and Poland).

Why is there this difference of approach? The argument is usually presented as one of independence, but really it comes down to a matter of trust. In the UK and like-minded jurisdictions, a lawyer is trusted both to be employed and yet to be able to withstand the pressures of employment, so as to give impartial advice and act in accordance with the requirements of the code of conduct.

So, the lawyer is trusted to juggle two duties at the same time, to the employer (involving private interests, with salary, promotion, bullying and so on) and also to the code of conduct (which represents the public interest). In other jurisdictions, the lawyer is not trusted to do that – it is believed impossible for a lawyer to reconcile two such powerful duties at the same time.

But now I will tell you something strange. In England and Wales, a lawyer is trusted to reconcile private and public interests, but only in some circumstances. For instance, our lawyers are no longer trusted to regulate the profession through their professional organisation (public interest), on the grounds that they might benefit from it at the same time (private interest).

The LSB is not alone in sustaining this Alice in Wonderland logic. As you may know, the regulatory position which now governs in England and Wales is not looked on with great favour in the rest of Europe, where lawyers by and large remain in control of their own regulation (subject to some overarching supervision by the courts or a government department, as used to happen when our rules were approved by the master of the rolls).

So, curiously, jurisdictions which do not trust in-house counsel to be independent on the grounds that they are unable to juggle their self-interest with the public interest should themselves be in favour of the LSB model. But they are usually the very ones which argue most insistently that lawyers are obviously able to be trusted to be able to regulate themselves (and their private interests) in the public good.

I know that logic does not govern human affairs. But it seems to me that either lawyers are trusted to juggle conflicting duties, or they are not. Every day lawyers are asked to juggle such conflicts – to the court and to their client, or to their client and to the code of conduct.

If in-house counsel can be considered independent because they are trusted to juggle duties to their employer and to their code of conduct, then more independent regulation of lawyers by lawyers should also be allowed.

Jonathan Goldsmith is a consultant and former secretary-general at the Council of Bars and Law Societies of Europe, which represents around a million European lawyers through its member bars and law societies. He blogs weekly for the Gazette on European affairs