In March 2023, the Solicitors Regulation Authority conducted a thematic review covering more than 34,500 in-house solicitors working in England and Wales, receiving responses from more than 1,200. The review highlighted the role that in-house solicitors play, not only in the leadership of the varied organisations which employ them, but also in guiding and advising such organisations to ensure that they behave ‘legally, fairly and ethically’.
The SRA acknowledged that, while the in-house solicitor role provides opportunities to influence positively the strategic direction of an organisation, inevitably it also creates challenges. As a regulated individual, a GC, for example, must still balance their ‘client’s’ best interests with the public interest.
These tensions have been brought into sharp focus by recent high-profile public inquiries which must surely cast doubt on the review’s findings. When considering the safeguarding of in-house solicitors’ ‘independence’, it stated that the lawyers surveyed had indicated that their independence was ‘highly valued’ by their organisations. This led the SRA to conclude that, overall, in-house teams were resilient to the commercial and business pressures that could impact on their freedom and ability to provide objective advice.
Following the publication of the review’s results, 30 GCs signed a letter in which they stated that, contrary to the SRA’s findings, the reality is that it is common for in-house lawyers to encounter pressure from their organisations to compromise their regulatory obligations. The GCs addressed the isolation felt by many who, having given what the business considers unpalatable advice which has been rejected, feel that there are only two options available to them – namely, to conform and compromise their regulatory obligations, or to resign.
The SRA has recognised that organisations which employ in-house lawyers need to fully understand their lawyers’ regulatory obligations, and to recognise that, just as solicitors in private practice must balance their clients’ needs with the public interest, so must in-house lawyers, since they are bound by the same ethical code. The regulator has issued draft guidance for organisations employing solicitors, at the heart of which is the concept that in-house teams should treat the organisation as the client rather than their employer.
The draft guidance aims to raise awareness among organisations of the rules and principles to which all lawyers must adhere wherever they work. The regulator has focused on certain core duties which all solicitors owe to their clients and the public: namely, to act with independence, honesty and integrity and in the best interests of the client.
Unfortunately, there is obvious scope for conflict between these principles and the strategy of some organisations. The message from the SRA to employers of in-house teams is that solicitors must deliver the ‘right advice’, no matter whether that is uncomfortable or runs contrary to the organisation’s strategy. The guidance goes further and suggests that in-house lawyers must have the freedom to raise concerns where appropriate, referring to concepts such as empowerment, and stating that solicitors who find themselves in this position should not be disciplined or ‘punished’.
By way of illustration, the guidance has appended to it six case studies, dealing with scenarios ranging from bribery to workplace culture and the terms of NDAs for exiting employees.
These are all issues that private practice solicitors may also encounter in their work for clients. But surely it is idealistic to imagine that the challenges faced by an in-house solicitor are comparable, when they are, in effect, tendering advice to their employers.
The difficulty for the SRA in implementing the guidance will also be that it has no power to sanction the organisation as an unregulated entity. The result is that the in-house lawyer could be sanctioned for bowing to internal pressure from an organisation. But, from a regulatory perspective, that organisation can effectively act with impunity.
While it is obviously a step in the right direction for there to be focus on such a large body of lawyers, they inevitably face different challenges compared with lawyers in private practice.
This is not the last we have heard on the issue. With employers of in-house teams being outside the SRA’s jurisdiction for regulatory purposes as unregulated entities, the pressure will inevitably remain on solicitors to maintain the right balance and ensure that they meet their regulatory obligations, managing attendant tensions along the way.
Clare Hughes-Williams and Philip Murrin are partners at international law firm DAC Beachcroft
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