Law firms should deploy a six-step ‘gating process’ for accepting clients to restore public trust and shed the profession’s reputation as a conduit for dirty money. Complying with anti-money-laundering regulations is not enough on its own.
This is the main recommendation of a distinguished taskforce established by the Institute of Business Ethics in the wake of Russia’s invasion of Ukraine to probe the role of solicitors in advising oligarchs and kleptocrats. Led by Guy Beringer, a former senior partner of Allen & Overy, the taskforce reviewed how UK law firms decide whom to represent in the context of ‘kleptocracy, state capture and grand corruption’.
In its report, published today, the taskforce calls on firms when taking on clients to apply an ethical framework that goes beyond complying with the letter of the law. Further steps are needed to ‘return the legal profession’s responsibility to the public interest to the heart of the client acceptance process’, it stresses.
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 $660 billion to $1.26 trillion 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 long-standing 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.’
The 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.
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