Stewarts hosted the launch of this week’s Institute of Business Ethics report on client acceptance at its swish City HQ just off London’s Fleet Street. The litigation specialist did its own due diligence in advance, becoming the first law firm to embrace the six-step client ‘gating process’ which an IBE taskforce argues is needed to cleanse the profession of its reputation as a conduit for dirty money.

‘For several years we have been working to enhance the principles on which we base our business acceptance decisions, beyond the minimum regulatory criteria,’ said Julian Chamberlayne, risk and funding partner. ‘We urge other law firms to similarly endorse the principles.’

The taskforce was established in the wake of Russia’s invasion of Ukraine to probe the role of solicitors in advising oligarchs and kleptocrats. Led by Guy Beringer CBE KC (Hon), a former senior partner of Allen & Overy, it reviewed how UK law firms decide whom to represent in the context of ‘kleptocracy, state capture and grand corruption’.

The taskforce calls on firms considering whether to take on a client to apply an ethical framework that goes beyond observing the letter of the law. Complying with anti-money laundering regulations is not enough on its own. Further steps are required to ‘return the legal profession’s responsibility to the public interest to the heart of the client acceptance process’.

The six-step model incorporates questions such as assessing whether there is a risk that the proposed mandate will facilitate kleptocracy, state capture and grand corruption; and whether that risk outweighs the public interest in access to representation. Law firms should also consider whether representing the client could ‘harm public confidence in the profession’.

Research estimates that $660bn to $1.26tn of illicit wealth flows into global financial systems annually, ‘often facilitated by professionals working within legal frameworks but at the edge of ethical boundaries’.

The taskforce also calls for a ‘legitimate provenance of wealth test’ that would require credible explanations for clients’ wealth and ‘address gaps in AML frameworks’. This is ‘not conceived as a legal test but as an exercise of judgement that will need to be defended with internal and external stakeholders’.

The profession itself should lead the client vetting overhaul, says the taskforce, but if ‘no significant improvement’ is forthcoming within two years ‘alternative approaches’ will need to be considered. Regulators including the Solicitors Regulation Authority, meanwhile, must ‘articulate the principles by which law firms can reconcile their professional duties with the public interest – for example, clarifying in guidance how the principle of access to representation still affords a law firm discretion over whether to act’.

Beringer said: ‘The recommendations do not aim to dismantle traditions; they mean to strengthen them. As lawyers, we must adapt to a rapidly changing world while upholding our longstanding responsibilities to society. Trust, accountability and responsible leadership are no longer optional. They must be placed at the heart of the profession if we wish to restore public trust and ensure a continuation of service. This report lays out a roadmap for change.’

At the launch, which was standing-room only, Beringer highlighted the threat of legislation if the profession does not put its house in order. A fellow taskforce member noted that Labour peer Baroness Hodge (Margaret Hodge), the government’s anti-corruption champion, last month called for the introduction of a new criminal offence that would see lawyers prosecuted for failing to prevent money laundering and economic crime.

Beringer also stressed the hard economic benefit to City lawyers of rigorous client selection processes and transparency, when a ‘flight of capital’ can be anticipated from other developed jurisdictions. The former A&O chief did not name names, but these presumably include the US.

Commenting on the report, Law Society president Richard Atkinson said: ‘Law firms often have sophisticated client onboarding approaches which factor in a whole range of issues. These approaches are underpinned by the firm’s own institutional values which should be rooted in strong professional and business ethics and adhere to the SRA framework of professional obligations, rules and guidance.

‘Each decision should have regard to the particular circumstances of that case and not [be] based on general preconceptions that some clients are more worthy of legal representation than others.’

The IBE’s 11-strong taskforce includes Sara Carnegie, legal director of the International Bar Association; Michael Bennett, former partner and general counsel at Linklaters; and Susan Hawley, executive director of Spotlight on Corruption. The institute is hoping to establish a legal ethics forum to take forward its work.

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