This article first appeared in the April edition of the Law Society's Legal Compliance Bulletin
In 1960, the then Secretary-General of the Law Society, Sir Thomas Lund, wrote in the Guide to the Professional Conduct and Etiquette of Solicitors:
"You may well ask for a short summary of a solicitors' duties. I suppose, really, it is the old principle: "Do unto others as you would they should do unto you.". If I had to advise, very briefly, a young solicitor on the guiding principles of conduct when he comes into the profession, I think I should say to him that it is clear that only the very highest conduct is consistent with membership of this profession of ours. Your clients' interests are paramount – that seems to be clear –except that you should never do, or agree to do, anything dishonest or dishonourable, even in a client's interests or even under pressure from your best and most valuable client; you had better lose them…. You should refuse to take any personal part in anything which you yourself think is dishonourable; you should withdraw and cease to act for that client, even if he presses you to go on. So far as you possibly can, consistently with not actually letting your client down, you should be completely frank in all of our dealings with the court, with your brother solicitors and with members of the public generally.
Finally, I think I would say that where your word has been pledged, either by yourself or by a member of your staff, you should honour that word, even at financial cost to yourself, because his reputation is the greatest asset a solicitor can have, and when you damage your reputation you damage the reputation of the whole body of this very ancient and honourable profession of ours."
Forty years later this ethical approach to conduct has almost entirely been replaced by the language of compliance. Compliance is a concept borrowed from other regulatory frameworks. It is based around a set of rules and involves putting systems and processes in place to ensure that the regulated comply with those rules. In a compliance based system it is not necessary to understand why the rule exists as long as you follow it. As a regulatory model it is a good one. It works very well in sectors where regulation is a relatively modern concept and there is no pre-existing ethos. It also works well at the entity level. Over the last few years it has been the word of choice to describe how law firms regulate themselves. We have the Compliance Officer for Legal Practice and the Compliance Officer for Finance and Administration and indeed the title of this very publication.
However, the practice of law is no stranger to regulation. Lawyers have been regulated since, at least, Roman times. They emerged as a profession in this country in the 13th century and have evolved and developed ever since. Their regulatory framework was always based around Legal Ethics. Ethics as a concept includes the features I have described above but it adds another layer. To be ethical you need to look beyond rules and understand why those rules exist. A solicitor acting ethically will of course be able to identify the relevant SRA principles and rules of professional conduct and be able to follow them. However, they will also be able to recognise ethical issues and exercise effective judgment in addressing them. They will also understand and apply the ethical concepts which govern their role and behaviour as a solicitor.
This culture of ethics is an integral part of a common law legal system. Legal Ethics is taught extensively in the United States. In American law schools it is a necessary component of the curriculum, sitting alongside traditional legal subjects and every law school has a Professor of Ethics.
So why have we devalued ethics and moved to a culture of compliance? There were a number of reasons. First, Legal Ethics seemed associated with the club type regulation of the profession and therefore it seems to have been thought that it ought to be swept away in a more modern world where legal services sat alongside financial services along with other regulated services. This issue was compounded by the facts that Legal Ethics was used (or abused) as part of the debate around allowing external participation in law firms. It was said that qualified lawyers had a unique ethical outlook that was not shared by those who were not legally qualified. They, the argument went, would not conduct themselves to the same high standard bringing disrepute to the practice of law and risks to clients. This is of course nonsense. What sets Legal Ethics apart is the ethics themselves which carefully balance duties to the client, the court and society at large. Whilst the legal ethical framework is distinct, lawyers are not inherently more ethical than other members of society. However, the use of Legal Ethics as a shield against change undermined its credibility.
A second issue was that the regulatory framework needed to adjust in order to allow the regulation of legal entities as well as individual solicitors. A compliance based framework seems on a superficial level to fit better with entity regulation. Ethics is a concept that fits better when dealing with the individual. Failure to act ethically has traditionally been described as misconduct. Such misconduct could involve dishonesty or a lack of integrity. These are all concepts that are more apt to describe individual behaviour. They fit less well in describing the circumstances where an entity falls short of its regulatory obligations.
A third factor is that we did not value Legal Ethics as a subject in itself. At undergraduate level, the more abstract jurisprudence was preferred to Legal Ethics. Whilst there is a professional regulation aspect to the LPC this does not begin to address complex ethical issues.
However, by moving away from Legal Ethics we have lost more than we have gained in the search for modernity. Any regulatory system is dependent on motivating the vast majority of the regulated to follow the rules laid down by the regulator. This is done in two ways. The first is by fostering a culture of ethical behaviour within organisations and the second is by punishing those that do not comply.
People respond better to positive reasons to change their behaviour rather than negative ones. It is incredibly powerful to tell a solicitor that as a member of a profession they need to behave ethically because their work has a wider significance in society. Put simply, framing the required behaviours around ethics rather than compliance will achieve better outcomes.
Second, if a compliance approach was prompted largely through the move to entity regulation we did not really think this through. In this jurisdiction entity regulation of law firms was introduced as the inevitable consequence of Alternative Business Structures and without much separate debate. It is notable that in other jurisdictions there is an on-going debate about whether entity regulation is the right regulatory model. For example, several Law Societies in Canada are currently consulting on the issue of entity regulation as a freestanding issue. The essence of this debate is where the balance lies between entity regulation and individual regulation. We never had this debate but nonetheless we moved the emphasis of regulation towards entities. As is set out below the SRA seems to be moving the balance of regulation back towards the individual which makes an ethics based model more appropriate.
Third, a compliance culture dangerously glosses the obligations of solicitors in society. It is simply not possible to reduce legal ethical requirements to a series of outcomes without leaving out a body of knowledge that is relevant to help make the right decision. A solicitor in practice owes a fiduciary duty to their client. This duty is a complex one. It plays a significant role in the law relating to conflicts of interest where a conflict often cannot be overridden by contractual agreement. Yet in other circumstances a fiduciary obligation can be varied by agreement it can be entirely overridden by contractual agreement. These complex and nuanced obligations to a client are subject to an overriding duty to the court. The duty to client does not extend to misleading the court even if that would be in the client's best interest. Such conduct would compromise the administration of justice. A further layer of complexity arises from the role of solicitors as officers of the court and the court's jurisdiction over them. This is most clearly manifested in relation to the law relating to undertakings. Another important obligation is a solicitor's need to maintain independence from their client. The trend in recent years has been to try and distil these obligations into simple codes and outcomes. However, such an approach risks poor ethical decision making as a lack of understanding of the underlying principles is more likely to lead to the wrong interpretation of obligations particularly when balancing the stresses of daily practice.
However, the good news is that this trend towards compliance is coming to an end and the pendulum is shifting back towards Legal Ethics. Starting in November we will all need to reflect on the SRA Statement of Solicitor Competence and decide what training we need to undertake to ensure we are competent. At the beginning of the statement is the following requirement:
A1 Act honestly and with integrity, in accordance with legal and regulatory requirements and the SRA Handbook and Code of Conduct, including
a.Recognising ethical issues and exercising effective judgement in addressing them
b.Understanding and applying the ethical concepts which govern their role and behaviour as a lawyer
c.Identifying the relevant SRA principles and rules of professional conduct and following them
d.Resisting pressure to condone, ignore or commit unethical behaviour
e.Respecting diversity and acting fairly and inclusively
Whilst we have all been focussing on c above. The SRA will now require us to be competent in a and b. These are ethical and not compliance issues and indeed are the same words I used above to describe what characterises Legal Ethics. These requirements will also be reflected in the new Single Qualifying Exam (SQE) to be introduced by the SRA in the next few years. To take matters one step further the SRA has indicated that the SRA Statement of Competence could be used as a benchmark for enforcement action.
At the same time there has been a flowering of the academic study of Legal Ethics in England and Wales. University College London has a Centre for Ethics and Law led by Professor Richard Moorhead. There is a growing cohort of UK academics writing on this subject such as Professor Joan Loughrey at Leeds University, Dr Steven Vaughan at Birmingham University and Professor John Flood who is at Griffith University School of Law, Queensland. It is hugely important that we are beginning to recognise that Legal Ethics should sit alongside contract, tort and other legal subjects. This is not a radical approach. Indeed it brings us back in line with other common law jurisdictions.
Clearly for all of us involved in legal practice and particularly in legal regulation we need to recognise that the direction of travel is now from compliance towards Legal Ethics, reversing the trend for the last forty years. The practical issue for the solicitors profession is that there is now a need to learn (or re-learn) the ethical principles that used to sit at the heart of the profession. This will not only include training for those already in the profession but more extensive learning at undergraduate level and during the LPC or in due course the SQE. Like all other aspect of a common law system, Legal Ethics changes and evolves over time and needs to remain relevant to the modern circumstances of practice. By embracing Legal Ethics in its modern form the legal professions will have access to an invaluable way of improving ethical decision making. We are about to embark on the age of Legal Ethics 2.0.