Contracts: a professional conduct frontier

A smoking gun appeared in recent evidence at the Post Office Horizon Inquiry.  That gun is contract drafting. It sits in the hands of all lawyers. 

The contracts required to run a post office effectively imprisoned sub-postmasters into accepting liability for accounting shortfalls shown by the Horizon software, whether or not they were responsible for them.  The only reason the prosecutions were able to go ahead as they did was because of the contracts.  We knew this was the case, but seeing the subject eviscerated by Sam Stein KC on 24 May 2024 was an experience in outrage and embarrassment in observation as a lawyer.

The culture of lawyering evidenced through the sub-postmasters contract becomes a subject to attend to, where we see:   

  • A contractual term requiring sub-postmasters to accept liability for all shortfalls in accounting data caused through his/her negligence, carelessness or error.

  • An interpretation of that term by those prosecuting sub-postmasters that sub-postmasters would be contractually liable for all shortfalls - an approach that was called out by Justice Fraser as unacceptable in the 2019 Bates case.  

  • The sub-postmaster contract was really equivalent to a consumer contract, given the imbalance of legal sophistication and bargaining power between the Post Office and the sub-postmasters - an imbalance every lawyer learns at the beginning of their career is regulated via protections in dedicated legislation. And yet sub-postmasters were required under that contract to pay without recourse or appeal, sums running into in the thousands and tens of thousands.  

  • An update to the contract terms in 2013, well after Post Office knew about bugs in the Horizon system and the consequent unsafe prosecutions that relied on data from that system, ‘tightened the contractual screw’ (Stein KC) further, by removing the ‘negligence, carelessness or error’ caveats, such that sub-postmasters would be automatically liable for all and any shortfalls howsoever caused.

Not only were the contracts with sub-postmasters wielded in their legal construction to justify prosecutions where there was no evidence of theft, but the lawyer response to the defences in such prosecutions was not to reconsider the entire approach in light of all that was coming to light, but further to weaponise the contractual terms against those without legal representation to understand and negotiate them - essentially to lawyer the problem away.  It is not hard to imagine the lawyers who drafted the contract update congratulating themselves or relieved at the perceived risk reduction of the amendment.  

Lawyers are trained and paid to find the clever legal workaround, but this must not be at the expense of our sense and integrity, else does this not amount to abuse?  When the professional and regulatory duty of lawyer independence is alive in our practice, it makes it less likely that we become distanced from that sense and integrity even in the cut and thrust of commercial reality.  It acts as a fire break for us to consider what we are doing in its full context, not blinkered by a focus only on cleverness and client demand that avoids responsibility.  

At a LSB Professional Ethics, Rule of Law and Regulation event last year, corporate and commercial lawyers acknowledged how distant the concept of rule of law is in their day to day work - even the law can feel distant when they are doing deals as a business person and negotiator first and a ‘lawyer second’.  Yet the reality of the impact of contract drafting in the Post Office Horizon Scandal is precisely why that view could not be further from the necessary and the truth.  

How we structure language in legal documents is the difference between fairness and manipulation, between transparency and deliberate obfuscation, between a level playing field and one where the odds can be stacked based on who has the lawyer not just with the cleverest capability, but with the least connection to the societal terms upon which their authority to practice relies.  

The contract Post Office Ltd had with Fujitsu was similarly problematic in contract construction.  From a workshop some years ago with Professor Richard Moorhead, hosted by Paul Gilbert, it was demonstrated the services agreement for the provision of the Horizon software was replete with incentives and disincentives, as is the standard way with such arrangements.  I was stilled in the realisation of that impact and how deeply all lawyers - myself included - have been entangled by it, to the point that it is ‘normal’.  If there are defects in the software, the service provider has to pay - which makes sense, but is structured as a disincentive to transparency as to the true state of technical performance and highlighting issues as they arise or are suspected.  If the client wants access to data, they have to pay - which is a disincentive to enquiry and the open flow of information.  Incentives sit at the heart of corporate behaviour and contract terms drive incentives.  We all know this, which is why contract drafting has become akin to martial art.  

The same goes for the legal drafting in the Post Office whistleblowing policy.  There came a point when the Post Office needed to demonstrate a formal process for sub-postmasters to raise concerns.  The response to this was to include reference to sub-postmasters in the corporate whistleblowing policy alongside employees.  However, instead of a definitive statement effecting the intended extension, Post Office lawyers included the commonly lawyered term ‘if appropriate’.  This so brilliantly exposed by Stein KC, evidenced the intention to have a justifiable out to excluding a sub-postmaster from whistleblowing protections should the Post Office consider that advantageous at any point, for any reason, in their discretion.  The presentation made it possible to say the Post Office had done the right thing, but the practicality demonstrated otherwise.   

I don’t have the answer for the extent to which and how we unwind decades of legal practice in contract drafting, undertaken in large conformity by thousands of legal professionals worldwide, unintended or otherwise as to outcome. Nor how to ensure it is not baked in to digital contract tools, scaling and embedding disingenuity or bias into our technology. However, the answer must start with the responsibilities we hold to act with integrity and independence in every aspect of legal work.  That means all the time, in all our drafting, not only when there is obvious illegality. 

We must do the very best by our clients, but real business needs great and independent lawyering, not legal trickery and obfuscation.

The more plainly we can speak, the more rounded and universal we can consider, the more transparent we can be in our lawyering, the more likely not only the relationship for which we have been given stewardship to paper will be set on a sustainable and collaborative footing, but that distorted incentives will no longer be able later to manifest in misconduct and manipulation. 

What we see in the Post Office Horizon Scandal is a clear need to go back to basics as lawyers and revisit the core principles on which we act.  These are infused in all areas of practice, even and perhaps most those we take for granted as normal, but which should not be.  That includes every time we pick up our red (drafting) pen or its technological equivalent.

LinkedIn discussion with comments here.

The Inquiry playback video on the above is here, at 1:47 onwards.

jenifer swallow