PRESS: How the Post Office Inquiry Has Spotlighted the Difficult CEO-General Counsel Relationship

A piece here by Habiba Cullen-Jafar of Law.com referencing my work on in-house lawyer ethics, with extracts below.

“The role of lawyers has always been key to unraveling the machinations of a scandal.

The general counsel is privy to intimate corporate details, but is also tasked with balancing professional ethics with business pressures often applied by the CEO.

Its a dynamic that has been laid bare in the Post Office Horizon inquiry, that is investigating a scandal in which over 700 postmasters were wrongly accused and some prosecuted for theft and false accounting as a result of IT failures.

At the ongoing Horizon inquiry into the scandal last week, two former Post Office general counsel gave evidence, including Susan Crichton, who highlighted an alleged lack of access to the board, a contemptuous relationship with her CEO, Paula Vennells, and the ethical dilemmas that she described as a “recipe for disaster” that in-house lawyers have warned against for years.

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Vennells noted: “My reflection on what happened with [Second Sight] as I write this today [September 2013], is that Susan [Crichton] was possibly more loyal to her professional conduct requirements and put her integrity as a lawyer above the interests of the business.”

The statement goes to the heart of any GC’s dilemma, as former Clifford Chance partner turned legal campaigner Dan Neidle explained in an interview with Law.com.

“All lawyers, in-house or private practice, are subject to the tension between what clients want and the legal position.

“A bad lawyer goes to either extreme, becomes unable to understand the implications of the law or becomes blind to what is going on commercially. A successful lawyer finds a way to balance this tension, but nevertheless, is always conscious of it.”

One of the GCs interviewed for this piece pointed to the pervasive reluctance among corporates to take legal seriously, particularly among younger companies striving to gain a foothold in their industry.

“Take fintech, for example. They typically have incredibly hungry founders and need to have GCs as the sector is so highly regulated. But they don’t want to spend a dime on legal, so they end up hiring cheap inexperienced lawyers who are hugely exposed but do not have the experience to handle pressure.”

But it’s not an issue confined to young companies and inexperienced in-house lawyers.

One veteran GC recalled two times in his career when he was forced to resign after disagreeing with bosses.

“I got on really well with people, until suddenly I didn’t. I had raised concerns about something that wasn’t supposed to have been raised and all of a sudden I was being threatened with either turning a blind eye or being sacked.”

Crichton would eventually go on to resign, telling the inquiry: “I was put in a position where I couldn’t do my job. I couldn’t deliver on it.”

The idea of GCs not being able to do their job effectively is well-known.

Last year, former TransferWise GC Jenifer Swallow spearheaded a letter of complaint signed by 30 top GCs against the Solicitors Regulation Authority’s in-house review, which optimistically concluded that, although “a minority struggle”, most in-house lawyers felt able to take the ethical course of action without trouble.

The GCs’ response highlighted: “It is common for in-house lawyers to face ethical challenges and pressure to compromise their regulatory obligations. This is not a minority issue. To conclude otherwise indicates underreporting, undue optimism and/or other deficiencies in the review.”

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The scandal prompted Swallow to publish guidance for GCs, including having a relationship with the entire board, clearly signaling regulatory boundaries, and, ultimately, not forgetting your role as a lawyer.

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The SRA last month issued a survey on ethical practice frameworks for in-house legal departments, and also published related guidelines. But many argue that this is insufficient, and have called for better regulation.

“You don’t even technically need to be a lawyer to be a general counsel,” one GC highlighted.

GCs agree that, as the Post Office inquiry has spotlighted, more needs to be done to ensure that in-house lawyers are able to perform their function and, when coming up against issues, are able to raise these without fear of repercussions.

As one general counsel said: “It’s like how police officers have guns. Most never have to use them. But they need to be ready when push comes to shove.””