PRESS: Justice Committee on In-house Legal Practice
Here is the long form version of an article published in the Law Society Gazette about a significant recommendation by the Justice Committee to the Lord Chancellor in relation to in-house lawyers. The Gazette version contains changes to the text of my article that were not approved, change the tone and are not my language.
Historic move puts in-house lawyers on the Lord Chancellor’s priority list
In a historic move, the Justice Committee has acknowledged the importance of addressing the needs of in-house lawyers, and made a recommendation to the Lord Chancellor & Secretary of State for Justice that the Solicitors Regulation Authority and the Law Society proactively do that.
This is not a subject that has reached this profile and priority before. In-house lawyers in the UK have been largely ignored by policy makers and regulators to date. In fact, a letter of complaint written to the Solicitors Regulation Authority by a group of 33 General Counsel in March 2023 was never acknowledged - not, that is, until now, when it was produced again by the Justice Committee to the SRA chief executive for his comment. That letter was a call for honesty about the reality of the pressures that in-house lawyers and their duty of independence come under in their work, and a call for professional and regulatory support in dealing with those pressures, in the interests of society. In his evidence to the Justice Committee, the SRA chief executive said he and the SRA were not trying to ’sweep things under the carpet’ at the time and have ‘put more resource into dealing with this incredibly important and growing part of the profession’.
So what are the needs of in-house lawyers that the Justice Committee are calling to be addressed, and why is there such focus on addressing them now?
The Mayson Independent Review of Legal Services Regulation addressed these matters in June 2020. Mayson articulated that “in-house lawyers have to be able to sound alarm bells without the chilling effect of potential reprisal”. He highlighted the link between the needs of in-house lawyers and the needs of society: when in-house lawyers can do their jobs without fear and censorship, it is more likely that societal detriment in the form of corporate and institutional misconduct will be avoided. Mayson emphasised that in-house lawyers “should not be at risk of dismissal or disadvantage simply for observing their professional obligations”. He referenced the importance of in-house lawyers having further regulatory support and corporate governance ensuring they can function effectively. The Justice Committee has now said “it would be wrong for the Government to ignore” Professor Mayson’s conclusions as to the flaws in the current landscape.
The Post Office Horizon Scandal has gripped the nation and drawn attention in global news coverage. Collective focus is turning to the role of lawyering in enabling the harm that came to hundreds of subpostmasters, their families and communities. There is anger, sorrow and disgust. Some of the Post Office in-house lawyers will soon give evidence to the public inquiry and the heat will further rise. Enforcement action seems inevitable, in terms of regulatory and perhaps also criminal prosecutions. In-house lawyers are at the very heart of this story, and the world is coming to know it. What and when did they know? Did they try to stop the harm? Did they speak out? If not, why not? If yes, why were they not heard?
These are not new issues and they are not beyond the collective will to address. There have been corporate and institutional scandals for decades, from Standard Chartered Bank’s wirestripping, to HSBC and Rolls Royce deferred prosecutions, to media company phone hacking, to misappropriation of funds at RICS, and the covering up of sexual harassment and abuse. Commentators and private GC groups have been covering this for years, including in my early career back at Yahoo! in the 2000s. Professors Moorhead, Vaughan and Godinho published the book In-house Lawyers’ Ethics in 2018, with extensive research into the subject - research that shows behaviour is linked to incentives and cultural influences, not that we can neatly ascribe bad behaviour to ‘bad people’. The Mayson IRLSR was reported to the then Lord Chancellor in 2020. Why none of this prompted determined action from public and professional bodies, versus a decision that it could all wait, surely must be the subject of a formal evaluation in time. Yet now the world is watching, gone is the window for the role of in-house lawyers and the issues affecting them to be ignored - by regulators, policy makers, or the profession at large.
More widely on the ‘why now?’ is the palpable anti-corruption sentiment in society and the call being made worldwide for greater responsibility in business and government. Alongside this are a number of factors precipitating change in the legal profession. The UK market is reeling from the death of law firm partner Vanessa Ford and the excessive demands, lack of care, and toxic culture we all know well and which appear to have contributed to that tragedy. Many want to know how Vanessa’s can be the very last such tragedy. Added to which there is now no hiding from the growth of technology in business and society, and therefore law. It is clear that generative AI will change the face of the legal profession and require the attention, contribution and integrity of lawyers on a previously unparalleled scale. One of the lessons of the Post Office Horizon Scandal is that lawyers having insufficient interest or grasp of relevant technology is demonstrably unviable.
There is a zeitgeist landing. The standards we once accepted will no longer hold. The spotlight on the legal profession is getting even brighter. Regulators, professional bodies and policy makers know it.
This is not about well-paid professionals complaining about how hard their life is or about bashing lawyers or those who employ them. Nor is it about turning in-house lawyers into the police when their sense and commerciality is so critical to economic and sustainable growth. This is about the importance of GCs and in-house counsel having what they need to do their jobs well and meet their legal and professional obligations, and the societal harm that can arise if they do not or cannot do so. Not all in-house lawyers experience this in their work, but many do and many will.
So what comes next?
In their in-house lawyers thematic review, the SRA ascribed the cohort of those with the needs described above at 10% of the 34,500 in-house lawyers in England and Wales, where one in ten in-house lawyers experience pressure to compromise their regulatory duties. Whether or not a materially under-reported figure, given the questionable methodology identified by Dr Karen Nokes and Professor Richard Moorhead, this alone should be cause for collective alarm: 3,450 lawyers pressured to capitulate to their employer-clients’ demands. This surely necessitates an independent assessment to understand the nature and impact of that pressure, its true extent, and its correct treatment. Yet it is not even that alone. The SRA also assessed, amongst other findings, that 50% of GCs feel isolated and that many in-house lawyers are overwhelmed and have inadequate board support. 64% are not raising their regulatory duties including their duty of independence with their employer-clients.
The Justice Committee in its recommendation has put this issue squarely on the Lord Chancellor’s table, as the highest ranking minister in the UK - historically, technically higher in rank than the Prime Minister. Current SRA activity is around website guidance, framed as useful as opposed to required. It is hard to see this satisfying the Justice Committee and the Lord Chancellor the Rt Hon Alex Chalk KC MP, presumably used to working with empirical demonstrations of efficacy. The issues are also not only for solicitors, when approximately 10% of the in-house sector are barristers or from other backgrounds.
As well as guidance and standards upheld by enforcement, in-house lawyers need actual support, of the practical kind. Training, easy access to advice, and their regulator to back them in a crisis. Governance around their reporting, hiring and firing, to put decision-making in the hands of the client entity, not a single executive, as for Data Protection Officers and Company Secretaries. An employment contract that sets the stage and provides a backstop. These are measures that are not complicated, but that need focused evaluation, prioritised implementation and ongoing review.
At a recent launch of a book by Ciarán Fenton that speaks to many of these issues, a call was made in the room for a movement: a movement to bring about the change many want to see for the profession, and an end to abuse and the being apologetic it experiences, breeds and contains. That call matches the risks to society, of which corporate and institutional misconduct is one of the biggest. If we are in any way reliant on in-house lawyers to help us build responsible, sustainable businesses and institutions, we need to build the environments that enable them to fulfil that duty every time, without being in harm’s way and without relying on them to do that solo.
Alongside the inevitable increase in focus on in-house lawyers, including from legal businesses who are looking to maintain relevance, what’s coming next may well be a growing revolt. From 33 GCs who felt able to speak out when many did not, to hundreds if not a number of thousands of people in the legal community and beyond calling for systemic change, and even a different regulator. A movement of 3,450 in-house lawyers would be the 10% referenced in the SRA thematic review under pressure to compromise their regulatory duties. 10% is also the acknowledged threshold for the emergence of tipping points, where the adoption of a position by such proportion assures adoption of that position by the whole.
If policy-makers, regulators, and professional bodies do not act on the recommendations of the Justice Committee in a way that makes a real difference, we should not be surprised if collective revolt is exactly what happens.
Jenifer Swallow is a lawyer and advisor to technology and legal businesses, advisory group member of the Post Office Project and the IRLSR, former GC of fintech Wise Plc and CEO of LawtechUK, and co-author of the ‘GC 33’ letter to the SRA.