Ethics and litigation are in the regulatory spotlight. What's next for in-house lawyers?

The in-house section of the solicitors’ profession is in the regulatory and reputational spotlight. Now more than ever, the Solicitors Regulation Authority (SRA) must be seen to be an effective regulator of this community.

Equally, in-house solicitors must be satisfied that they understand regulatory expectations and have the means to show that their professionalism is not compromised by their employment.

The starting point for such considerations is different to that of a private practitioner; in-house practice has its own unique regulatory challenges.

For instance, what happens to independent judgement when your client is also your employer? What stops an in-house solicitor being able to put professional ethics first? And how does an in-house solicitor demonstrate to the SRA that they exercise professionalism in this type of workplace?

Furthermore, what happens if an in-house solicitor provides legal services to an employer with an exciting risk appetite or they are pressured to act contrary to their own professional codes? These and many other questions need to be tackled.

The SRA's priorities

The SRA prioritises its work and enforcement response by considering the impact of any regulatory breaches or otherwise unprofessional behaviours on clients and others and in respect of the reputation of the profession as a trustworthy one.

For these reasons, litigation is a regulatory priority. Any in-house solicitor providing litigation services to their employer or others must be satisfied that nothing they do undermines their regulated status or professional standing.

Of course, professionalism is not left to chance. It is regulated and assessed with reference to the SRA Standards and Regulations – the collection of rules, regulations and similar which all solicitors must observe.

The SRA expects all solicitors to understand which parts of these materials is relevant to them, know the content of those sections, and be able to demonstrate compliance in practice.

For these reasons, knowledge of this rulebook is essential, including, where relevant, those sections which reflect on litigation services.

The SRA Principles are a core part of the rulebook addressing everything which a solicitor does both professionally and, in respect of some matters, personally.

These are the core values, or basic behaviours, which underpin regulated status. In SRA terminology, these are described as “the fundamental tenets of ethical behaviour”.

The tension for employed solicitors is ensuring that these are used properly to support the making of decisions both professionally and personally. In the in-house context, the duty to act with independence (Principle 3) is a particular concern to the regulator.

A solicitor’s independence must not be compromised by duties to act in accordance with the employer’s wishes where those wishes might, for example, trigger illegality or unethical behaviour.

The regulator does not tolerate any employment-related explanations for why a Principle has not been met. It would also expect an employer’s misunderstandings or improper requests to be challenged by the regulated person.

In respect of litigation services, and in addition to independence, duties to uphold the rule of law (Principle 1), to act in a trustworthy way (Principle 2), with honesty (Principle 4) and integrity (Principle 5) must not be compromised by employment relationships.

These are core values which support the profession’s brand image and reputation. The SRA would expect the in-house solicitor to ensure that the employer’s instructions do not undermine their adherence to these Principles.

A focus on the law and ethics

The SRA Code of Conduct for Solicitors, Registered European Lawyers and Registered Foreign Lawyers contains standards which are designed to show that solicitors and others prioritise the law and ethics.

The fact that this Code is applied to all types of practice shows that the SRA expects the same standards of conduct from all practitioners regardless of circumstances. This application point also demonstrates that private and in-house practitioners often have more in common than either party might imagine.

Chapters one and two of this Code contain mandatory professional duties that are relevant to litigation services.

These duties include the requirement not to abuse your position by taking unfair advantage of others, not to mislead or attempt to mislead the court or others either by your own acts or being complicit in the acts or omissions of others including your clients, not to waste the court’s time, to draw the court’s attention to relevant cases and statutory provisions and procedural irregularities and similar.

In other words, the duties bestowed on solicitors by virtue of their position as officers of the court must be prioritised over duties to clients where there is a conflict between the two.

It is clear that these tensions may trigger the need to have conversations with an employer about what cannot be done on their behalf.

For example, does the employer understand the professional restraints on the services a solicitor can provide? Is the solicitor able to say ‘no’ to their employer? Are senior solicitors able to support professionalism through their relationships with business partners and the supervision of junior colleagues?

Additionally, it would be unprofessional to provide services in any circumstances where a lack of capacity means the solicitor is unable to deliver a proper standard of service.

Duties of this nature are described in chapter three of the SRA Code, and it is particularly pertinent to remember that these include the requirement that the services provide to a client is competent and delivered in a timely manner.

Solicitors are required to manage their personal competency to carry out their role. Those who are supervisors also have responsibilities for the work which they supervise in this regard.

They must consider: does the employer understand a solicitor’s duty to consider whether service provision meets professional duties? Does the solicitor have the ability to outsource services where necessary and the competence to instruct others competently? Are training needs being considered?

In recent times, the SRA has published guidance materials that identify risks and red flags that might indicate professionalism issues relating to litigation.

These include warnings about strategic lawsuits against public participation (SLAPP) instructions and the improper use of non-disclosure agreements (NDAs).

Again, any in-house solicitor instructed in connection with such matters must be prepared to challenge their employer’s improper instructions.

Equally, the SRA would expect them not to participate in unprofessional behaviour such as overly aggressive litigation, improper behaviour towards unrepresented third parties, improper and misleading labelling of litigation correspondence, and non-reporting of regulatory breaches. These have all been identified by the regulator as causes of concern.

What's next from the SRA?

It is likely that the SRA’s interest in the in-house community will only continue to grow in the coming months. This is significant; in-house solicitors should follow developments, and in the meantime start to reflect on risks inherent in their particular practice that might bring them to the regulator’s attention.