Solicitors’ code of conduct and ethical issues in law firms

Are some lawyers risking everything by prioritising their clients needs above the rule of law?

Working with solicitors and other members of staff from law firms every day, I know that most solicitors are doing all they can to maintain compliance of their obligations. Most strive to ensure that trust remains intact, even in difficult circumstances. Many realise that to avoid serious consequences with the Solicitors Disciplinary Tribunal, having a workplace culture that encourages integrity and being open when mistakes are made is paramount. However, this is not the case with all. Some individuals and firms out there, regularly open themselves up to serious risk by breaching the solicitors’ code of conduct.

Having attended the Law Society’s 2022 Risk and Compliance Annual Conference at the end of last month, one of the key areas covered was the ethics and conduct of lawyers in England and Wales, with regard to whether they should decline to act for clients subject to sanctions, in light of what is happening in Ukraine. Of course law firm ethics goes way beyond the current sanctions. This brought to mind some of high-profile cases where solicitors’ ethics have been brought into question during the last 12 months. Although investigations are still ongoing for some, the public must be wondering if the ethical and moral compasses of the lawyers involved are pointing the right way.

The rules of professional conduct for lawyers

It is a question of principle. Whilst solicitors must focus on doing their best for the clients that appoint them, the rule of law must always come first.

The Solicitors Regulation Authority (SRA) has two codes of conduct for solicitors which set out a framework for the profession to work to in terms of  competent and ethical practice. One for individual solicitors and one for firms of solicitors.

When it comes to the SRA’s seven principles – principle one and principle seven can cause conflict.

• Principle one stipulates that solicitors should:
  “… act in a way that upholds the constitutional principle of the rule of law
  and the proper administration of justice”.
  
  
• Principle 7 says solicitors must: “…act in the best interests of the client”.

Clearly principle 7 must always come second whenever there is a conflict between the two. A solicitor should, where relevant, inform their client of the circumstances in which their duty to the Court outweighs their duty to them as their solicitor”.  

P&O Ferries’ lawyers under the spotlight

The most recent case that brought lawyers under the spotlight is in relation to P&O Ferries, when the Chief Executive Officer admitted to a Parliamentary inquiry looking into the sacking of 800 seafarers, that he had chosen to ignore the law because he didn’t think obeying it would serve any real purpose. He admitted that no union would agree to the proposed changes and therefore any consultation would just be a sham.

Although no formal allegations have yet been made about the role P&O’s lawyers played in the sackings, there have been many social media comments saying that they should be held accountable along with others. It is not yet clear whether the lawyers advised P&O to break the law, or whether they advised against doing so, but P&O believed that because if it offered a substantial amount of money in settlements, it would achieve its aims and objectives of returning the company to a sound financial footing and so how they went about achieving this would be forgotten.

P&O and its main shareholder admitted to the inquiry that it had been losing substantial amounts of money over the last few years and the sacking of permanent staff, replacing them with agency staff was the only way it could turn its fortunes around. In trying to justify its actions the company line was based around the fact that either the proposed reorganization had to be pushed through, or all 3,000 employees would have to lose their jobs when the company collapsed into administration, which it suggested would have been imminent had matters stayed as they were.

Whatever the reasoning behind choosing to ignore the law, it is clearly not an acceptable route for businesses to take, as can be seen by the commentary that has followed in the press and on social media since the admission was made to the inquiry. What will be interesting to hear is what advice the lawyers gave, and if it was the right ethical advice, and whether this was purposely ignored in order to achieve the wider business objectives.

The great Post Office scandal

Another high-profile case that has been in the news over the last few years is that of the sub-postmasters who had been accused and found guilty of theft when in fact the issues leading to these allegations had been caused by the Post Office’s computer system, Horizon. Horizon had not been working properly and had shown accounting shortfalls which incorrectly pointed the finger at sub-postmasters when in fact there hadn’t been any. Over 700 sub-postmasters were found to have been wrongly accused of theft, fraud and false accounting.

As with P&O, the Post Office’s lawyers have come in for significant criticism over their actions, and in particular the way in which they have tried to draw out court proceedings so that the sub-postmasters ran out of money and could no longer proceed with their appeals and other court proceedings. They even went so far as to try and get the trial judge to recuse himself on the basis he would not be impartial in hearing the matter, on the grounds that he appeared to show bias in the common issues judgement. Suffice to say this was not successful!

A public inquiry is currently under way, led by Sir Wyn Williams, a retired high court judge, and is looking at all aspects of what has become known as “The Great Post Office Scandal”. Because of this, legal regulators appear reticent to carry out their own investigations into the conduct of the lawyers involved until this has been completed and a report published. However, based on what is known so far it seems clear that the regulators will have some very searching questions for the lawyers involved as they look over the 20+ years since the scandal began.

Royal Institute of Chartered Surveyors unfair dismissal

The final case worthy of note is that relating to the Royal Institute of Chartered Surveyors (RICS), where four members of the Institute’s governing body were unfairly dismissed after they raised governance concerns relating to an external audit report.

An external inquiry led by Alison Levitt QC found that an earlier internal inquiry was carried out by the General Counsel of the Institute, but this was in effect outsourced to its legal advisers, the firm the GC used to work for. The partner undertaking this work had been the supervisor of the GC and so there was a very close working relationship. The GC in effect told the firm that in its report there should be no threat to, or criticism of a number of senior executives within the Institute.  Levitt said that the conclusions of the legal advisers’ report had “already been decided before it had been commissioned!”.

The four non-executives objected to the appointment of the inhouse GC to lead the internal review, as they believed she was not independent enough, but she led the review anyway and found no issues of concern in relation to governance. The four non-executives were found, by Levitt, to have been wrongly dismissed in an orchestrated manner, which included the involvement and advice of a partner at the Institute’s legal advisers.

Levitt made a number of recommendations relating to the use of lawyers:

• The General Counsel should not have a pre-existing relationship with external legal advisers
  
  
• External legal advisers should be put out to tender every three years
  
  
• The existing legal advisers of RICS should be replaced
  
  
• The process for seeking external advice should be overhauled

For a detailed insight into the role played by lawyers in the RICS case, the blog written by Professor Richard Moorhead is worth reading.

Upholding public trust in the legal profession

Principle 2 of the Solicitors Regulation authority states that a solicitors must act in a way that upholds public trust and confidence in the profession.

It is clear that when cases like those outlined here come to the attention of the general public they raise real concerns both in the minds of the people and the regulators of those involved.

Acting with independence, honesty, integrity and encouraging equality, diversity and inclusion covers the remaining four principles of the SRA. All seven intertwined, raise many questions about what has happened in terms of the legal advice given in the cases above.