How do lawyers behave when the commercial drives of a business push the boundaries of ethical conduct? This is the core question that was discussed in an insightful talk given by Professor Richard Moorhead to clients and consultants in The Attic last week.
Discussion around this topic has gained considerable momentum, and it is the focus of recent research following the Tomlinson Report in the wake of the banking crisis and research commissioned by the SRA. I initially came across it in 2016 at the UCL’s Centre for Ethics and Law talk about whether institutional clients threaten lawyer independence, the write up of which you can read here.
Professor Moorhead ‘s research, ‘Legal Risk: Definition, Management and Ethics’ and ‘Mapping the Moral Compass’ explores the growing evidence that the role of the general counsel is increasingly under pressure, and that the professional ethical boundaries are not as well drawn as may be necessary for the increasingly sophisticated world of in-house work.
How lawyers think about their role and how this plays out in their management of situations is necessarily more complicated than an abstract analysis of professional regulation. Professor Moorhead explained that lawyers are not the ‘moral compasses’ of a commercial situation and that professional integrity will often dictate how they will need to conduct themselves. The purpose of the research is not to put lawyers under the microscope, rather an awareness of the challenges facing those working in the in house environment: having to do more with less, the requirement to be more commercially-minded set against increased stress and greater risk. For example, the recent Rolls Royce case is only one of a number of situations where in house lawyers’ conduct has been implicated.
Culture, seniority and bias
Questions were posed about how lawyers frame their role and how it is framed for them. Our audience agreed there are likely be different answers depending on the seniority of the lawyers, whether a GC is on the board and the culture of the organisation. This last point is key. Moorhead’s research suggests that problems are structural in nature (rather than individual ‘bad apples’) and that the culture of an organisation often leads to bad decision making. In particular, there are two observed biases: Team loyalty – where decisions differ depending on who you are acting for (e.g. claimant or defendant) and subjectivity – claiming you are objective in fact leads to a more subjective approach.
If you find those biases surprising, the following findings are food for thought: thinking yourself to be a professional makes one more likely to cheat, according to research by Maryam Kouchaki. Professor Moorhead described the concept of psychology informing ethics taking place, that there is an element of dis-inhibition and moral licencing, for example in the way a question is framed: if something was described as ‘advancing the ideals and aspirations’ rather than being conducted with ‘strict adherence to standards and obligations’ the participants were more likely to cheat.
Personality traits and responses
So what happens when a breach of sanctions is found? Turning to ‘Legal Risk: Definition, Management and Ethics’, Professor Moorhead described the three responses: Defensive – (how to defend), Activist (what happened) and Pro-activist (what needs to happen). Using the Schwartz values survey personality test, the traits of in house lawyers were found to be similar to those who are in private practice. This creates a schematic overview looking at traits such as universalism, benevolence, conformity and tradition. Unsurprisingly, higher benevolence and conformity traits lend themselves to a greater ‘pro-social justice’ outlook than traits of power, achievement, hedonism, and stimulation which are defined as ‘self-enhancing.’ Having undergone personality testing, lawyers were then given a problem centred on advising a company about transactions which may fall foul of a licensing process. Those who advised the client how to handle transactions so that a regulator is less likely to scrutinise them had a higher dominance of achievement and power traits.
Looking at his findings from ‘Mapping the Moral Compass’, this research essentially looked at the ‘ethical inclination’ in in-house lawyers in two ways: their moral attentiveness (the extent to which people deal with problems as moral problems) and moral disengagement (the extent to which people are inclined to morally disengage, to behave unethically without feeling distress). Out of 400 respondents, the results showed:
- 10-15% experienced elevated ethical pressure. 30-40% sometimes experienced ethical pressure
- Ethical pressure was highest in public sector organisations
- 36% agreed that loopholes in the law should be identified that benefit the business
- 9% indicated saying “no” to the organisation was to be avoided, even when there is no legally acceptable alternative to suggest
- 65% achieving what their organisation wants has to be their main priority
- 7% never discussed professional ethics issues with colleagues internally or externally, formally or informally.
In the research, four ethical identities were identified:
- Capitulators – reasonably morally attentive but are under ethical pressure and are less morally engaged
- Coasters – do not perceive themselves as under ethical pressure and have moderate-low levels of moral attentiveness but not lower moral disengagement
- Comfortably Numb – do not perceive high levels of ethical pressure and have low levels of moral attentiveness and higher moral disengagement, the most concerning of the four groups
- Champions – are under the highest levels of ethical pressure but retain the highest levels of moral attentiveness and the lowest levels of moral disengagement.
In the context of the current regulatory framework, the SRA Handbook places ‘independence and legality’ first and this stands in contrast to the greater emphasis that in-house lawyers place on acting in client’s interest. Unsurprisingly, the Champions reported worst relations with business elements of the employer.
In terms of looking to how the legal sector can benefit from such findings, our audience shared their experience that ethics is not usually discussed at recruitment, let alone taught at law schools and there is little training or advice for in house lawyers. Interestingly. the US has a stronger tradition of teaching ethics at law school.
So what to do? Professor Moorhead recommends American author, Ben W. Heineman Jr, ‘The Inside Counsel Revolution: Resolving the Partner- Guardian Tension’. He also suggests that legal teams (in private practice and in house) discuss case studies to share views about ethical problems. From these discussions, an airing of potential problems and risks is a good foundation to build the supportive organisational infrastructure describe above. Furthermore, discussing what professionalism means to one’s day-to-day conduct helps to internalise ethical behaviour. In short, discussing what it means to be a professional with others rather than merely regarding yourself as a professional can help keep the moral compass from being lost in the complexities of commercial endeavour.
Professor Richard Moorhead is the Professor of Law and Professional Ethics at UCL Faculty of Laws and Director of Centre for Ethics and Law. He writes a regular blog commenting on the legal profession, Lawyer Watch.