In-House Ethics

Volume 5 • Issue 4 • May/June 2019
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The Tournament of Influence

Professionalism, ethics, and the in-house lawyer

By Richard Moorhead and Steven Vaughan

This article is based on In-House Lawyers’ Ethics: Institutional Logics, Legal Risk and the Tournament of Influence, published by Hart Publishing and cowritten with Cristina Godinho.

Being risk savvy and commercially aware is “leaning in” (to borrow Sheryl Sandberg’s now-famous phrase) for today’s in-house lawyer. In-housers are increasingly well-paid, high-status, powerful individuals within their organizations and the wider legal profession. The growth of in-house lawyer roles has been dramatic and pivotal to the evolution of commercial legal services. In-housers are equally crucial to government legal functions. Even law firms have a cadre of their own general counsel (see “The Lawyers’ Lawyers”). What is more, general counsel (GCs) increasingly take leadership positions in their host organizations; each board-level GC appointment is a badge of honor for the in-house community. GC roles increasingly encompass law, business, and strategy, often exerting powerful economic and cultural influence over their colleagues in private practice.

Although in-house lawyers are rightly scrutinized for their independence and their position as ethically risky insiders, there are also ethical opportunities in being an insider.

In a major research project described below, we interviewed dozens of GCs. Throughout these interviews, we heard about how GCs have gained “respect … that probably you didn’t [get] 20 or 30 years ago” as the in-house role has expanded and changed, but also because private-practice lawyers have come to realize that their own economic survival depends on respecting the hand that feeds them. As another interviewee said, “[Law firms] have to relate to in-house lawyers and work with them, whereas in the past they thought they could probably usurp them and deal direct with the leaders or the directors of the businesses.”

In-house lawyers have, or aspire to have, influence—influence built partly on notions of the in-house legal team as a value adder and partly as a response to the need to cope with increasingly complex regulation. As partners of their organizations, in-house lawyers are a success. Inside help is seen as more effective and more aligned than private practice. It enables organizational integration and the interpenetration of legal and organizational ways of seeing problems. As two interviewees noted, in-house lawyers are “positioned in the business” and “more central and even more core to the business.”

But the story may be a bit more complicated. Another view of the in-house role is as an ethically compromised endeavor. Some in-house lawyers having managed illegality through secrecy, offloaded risk onto unwitting third parties, covered dubious conduct in the cloak of legality, or otherwise aided and abetted harmful conduct. Enron, Tyco, Apple, Siemens, General Motors, Barclays, Standard Chartered, News UK, and the London Times—the “Rolls Royces,” literally and figuratively, of the corporate and legal world—have all implicated lawyers (in-housers especially but not uniquely) in serious corporate scandals. Government lawyers are not immune: John Yoo’s “torture memos” in the United States and Lord Goldsmith’s advice in the United Kingdom about the legality of the invasion of Iraq are two famous examples. This list grows monthly. Expect law firm GCs to be in the firing line when stories break about law firms using nondisclosure agreements to silence allegations of sexual assault, for instance.

Away from the media’s gaze, however, in-house lawyers can—and do—prevent wrongdoing, investigate and respond to human rights abuses, ensure products and services are advertised and sold in legal and reputable ways, and, for listed companies and heavily regulated companies, play a key role in ensuring companies deal fairly with markets and regulators. Although in-house lawyers are rightly scrutinized for their independence and their position as ethically risky insiders, there are also ethical opportunities in being an insider. These opportunities exist where in-house lawyers have more information; where they have greater and earlier influence on management decisions (to nip problems in the bud or shape decisions for the better); and where they are inclined and able to lead and proactively manage an organization’s legal functions in ways that strengthen the ethicality and legality of the organization. We found that some, but only some, in-house lawyers have this proactive and preventive approach to managing the legal function.

GC roles increasingly encompass law, business, and strategy, often exerting powerful economic and cultural influence over their colleagues in private practice.

These tensions between influence and compromise, professionalism and misconduct, and reactivity and proactivity are at the heart of our book, In-House Lawyers’ Ethics: Institutional Logics, Legal Risk and the Tournament of Influence (published by Hart Publishing and cowritten with Cristina Godinho). We pose the question: Can one be an insider and retain the mantle of professionalism? Our response comes from understanding—and promoting the balancing of—the organizational and professional logics at play. In particular, it comes from reinforcing values of ethicality and independence in ways much subtler than the traditional focus on whether in-housers have the gumption to say “no” to their employer if faced with plain and serious illegality, although our evidence suggests that even to that basic question, sometimes saying “no” is a no-no.

What we did: Methodology

Our work is based on interviews with 67 in-house lawyers and senior compliance personnel (who were often lawyers by training) and a survey of 400 lawyers working in-house in business, government, and the third sector. Our sample was drawn from in-house lawyers working in England and Wales. Broadly representative of those working in business, government, and the third sector, there was a good range of experience: a quarter having in excess of 24 years of postqualification experience, general counsel (27 percent of the sample), and other senior in-house legal positions (42 percent). We had a broad spread of commercial and other organizations, often global in presence and reach.

Through our interviews and survey, we looked at general concepts, understandings of professional ethics, thinking on roles, and so on and examined those concepts within specific contexts. In particular, we explored the emergent discipline of legal risk management, looking at how in-housers define legal risk, how they manage it, and how they perceive and deal with the resulting ethical issues. We deepened this contextualization by asking lawyers to respond to realistic risk problems, using these scenarios as windows into how they see risk and ethics rather than discussions about abstract concepts and processes. We were especially interested in whether risk represents a new way of thinking, seeing it as potentially blending strategic, legal, and commercial ways of thinking and as a changing institutional logic shaping the way in-house lawyers think about and conduct their role.

The survey was designed to look quantitatively at how lawyers balance the competing logics at play in the workplace. We developed metrics for organizational culture, in-house role orientation, team identities, and approaches to professional principles. We then examined relationships between these metrics and other well-known measures of ethical inclination, such as moral attentiveness and moral disengagement. Unable to measure ethical misconduct directly, these measures provide the next best alternative: validated proxies for ethical misconduct. We use them as a valuable indicator of ethical risk, enabling us to map how the moral compass of in-house lawyers relates to different team, role, and professional orientations. To give one example: Do in-house lawyers who believe strongly that a commercial orientation is part of the in-house role have a weaker or stronger moral compass? Put crudely, but meaningfully, are they more likely to lie and cheat in the workplace? It enables us to look at other seminal questions: Are lawyers right to think of themselves as “mere advisers”? What is it about entrepreneurialism that may be ethically problematic? Our data also allows us to begin to answer practical questions, such as whether ethical infrastructure is important and whether lawyers should sit on the boards of their organizations.

This infographic highlights what we looked at in our research; namely, how organization, role structure, relations with the business, team orientation, individual background, in-house identity, professional orientation, and ethical infrastructure impacted moral attentiveness and moral disengagement.

In-house Lawyers and professionalism

Organizational misconduct can be perpetrated and enabled, but also inhibited or prevented, by in-house lawyers. The success of in-house lawyers depends on their embeddedness within organizations. Embeddedness on its own makes egregious conduct both more and less likely. The impact of this embeddedness is contingent on how in-house lawyers themselves, and the organizations they work for, see their role. A central question is whether and how their role as professionals impacts that contingency. In other words, what does being professional mean in such embedded in-house contexts? And how does being professional influence in-house lawyers, and their organizations, toward or away from misconduct?

Many of our interviewees were aware of the economic and relational influences on their roles.

At the general level, our data suggests that in-house lawyers have a particular constellation of institutional logics. Many see themselves as a distinct professional group within, but different from, the broader legal profession. As the identity curve in Figure 1 shows, although half of in-house lawyers primarily identified as a subject specialist or a lawyer first (a solicitor, barrister, or attorney), similar proportions saw themselves as an in-house legal adviser or manager (usually of other lawyers), a business adviser, or a businessperson.

This identity curve shows how respondents primarily identified. Given the choices of specialist, lawyer, in-houser, manager, business adviser, and businessperson, most selected lawyer or in-houser (in that order).

Figure 1: In-house lawyer identity curve

While in-house identities are still, generally, strongly legal, the data shows that there is a different kind of legal as compared to “regular” solicitors or barristers. Our interviews back up this finding. Many of our interviewees were aware of the economic and relational influences on their roles. As one said:

I think that can happen sometimes, particularly if you’re working on a major project with one department and it’s over a long period of time, it’s inevitable that you will go native to an extent, and sometimes, in those circumstances, it is difficult to maintain objectivity when you’re dealing with the same people day in and day out.

We went further than this basic identification, measuring distinct elements of the institutional logics of in-house lawyers. We isolated five role orientations:

  • Commercial orientation (in-housers are commercially aware, add value, advise on business as well as legal considerations, and regard the commercial success of their organizations as important)
  • Ethical orientation (in-housers advise on what is right as well as what is legal, including lawful but unethical actions, and take the lead on what is right when the law is uncertain)
  • Independence orientation (an in-houser’s judgment is, and is seen to be, independent)
  • Exploiting uncertainty orientation (in-housers identify loopholes in the law that benefit the business and help the business benefit from legal uncertainty, even, perhaps, exploiting the law for commercial ends)
  • Neutral adviser orientation (in-house lawyers advise, but the organization decides)

Almost all in-house lawyers recognize and agree that these orientations are part of their role, but they do so with differing emphases, as you can see in Figure 2. The closer the center of gravity to the top of the chart, the stronger the orientation in our sample of in-house lawyers. The thin vertical lines represent the top and bottom 25 percent of each distribution of the orientations; the boxes, the middle 50 percent. Where there is no vertical line, the box represents 75 percent of respondents. We can thus see very high levels of agreement that a commercial orientation (or, outside of commerce, a results orientation) is a strong part of the in-house role. Ethical and independence orientations came next, with the neutral adviser somewhat weaker, but in-house lawyers generally see that as part of their role. It was the exploiting uncertainty orientation that split the field, with a wide spread of agreement/disagreement. The center of gravity of the in-housers as a whole tended toward disagreeing with the idea that this was part of their role, but in reality they were split.

This chart shows how respondents emphasized their different role orientations (which include commercial, ethical, independence, exploiting uncertainty, and neutral adviser). The exploiting-uncertainty orientation was notably deemphasized.

Figure 2: In-house role orientations

These five orientations are distinctive ways of seeing the role. However, they also plainly overlap, and most are strongly supported by in-house lawyers. In other words, most of our in-house lawyers saw their roles as drawing upon elements of the “cop,” “counselor,” and “entrepreneurial” roles Robert L. Nelson and Laura Beth Nielsen describe in their ground-breaking work on in-housers. One question Nelson and Nielsen posed was whether such roles represented ideal types or repertoires of action. Our data points clearly toward the latter. In-housers have the commercial orientation of entrepreneurial lawyers (but not always the appetite for exploiting uncertainty) and the advisory orientation of counselors, and are independently oriented and ethically oriented (as arguably cops, and also perhaps counselors, are). They have the potential to be cops, counselors, or entrepreneurs as they, the situation, or their organization demands. And in general, though they are willing to be cops, they are reluctant to do so. Most are (reluctantly) willing to say “no” to their employers when there is no legal alternative to a proposed action, but nearly one in 10 of our survey respondents were not. Saying “no” is both a minor problem for many and an acute problem for some. As one interviewer told us, “I don’t have any absolute no-no’s—that’s me taking a risk, isn’t it? I don’t have any noes.”

High-level survey results at a glance

  • 65 percent said achieving what their organization wants has to be their main priority.
  • 36 percent agreed that loopholes in the law that benefit the business should be identified.
  • 12 percent said where commercial desirability and legal professional judgment are in tension, commercial desirability is more important.
  • 30 percent said an emphasis on commercial awareness sometimes inhibits the in-house lawyer in performing his or her role.
  • 9 percent indicated saying “no” to the organization was to be avoided, even when there is no legally acceptable alternative to suggest.
  • 7 percent never discussed professional ethics issues with colleagues internally or externally, formally or informally. For most in-house teams, formal and informal ethical infrastructure was limited.

We examined the normativity of different logics by looking for relationships between each orientation and ethical inclination (moral attentiveness and disengagement; see “Methodology” above). In general terms, our evidence supports a view that an orientation to exploit uncertainty is normatively problematic and casts some doubt on the commercial orientation. In-house lawyers more inclined to think that their role is to take advantage of uncertainty in the law for the business are on average less ethically inclined. This means they are probably more inclined to lie and cheat and suggests they would be thus more likely to breach their professional obligations. The commercial orientation was associated with mixed effects, perhaps making the more commercially oriented lawyers more prone to ethical blind spots and more likely to fail to spot ethical problems when they arise. This suggests that if organizational imperatives really disrupt professionalism, this disruption would seem to be primarily achieved through an in-house lawyer’s facility with uncertainty than commercialism per se. Legal ingenuity may be riskier than the desire to be commercial per se. And it can be countered: Those with a strong commitment to independence and ethicality had a stronger ethical inclination.

The tournament of influence and saying “no”

We believe that critical to understanding the overall impact of these orientations is how they are balanced by individuals in the moment when faced with a tricky call, as well as day to day, as they establish ways of working in organizations and leading legal teams. Central here is what we call the “tournament of influence” inside organizations. As part of this tournament, lawyers manage their independence through a series of networked interactions with colleagues. In each engagement, in each piece of work, in-housers position themselves within their organization. Like everyone else, in-house lawyers want to be wanted. Our interviewees made plain that they need to be seen to be overtly helpful and to be influential; they need to project helpfulness to overcome their reputation as deal blockers. This helpfulness cements their place in the network.

Interviewees coming from sectors with a history of scandals tended to think that their organization recognized—and valued—the independence of their in-house lawyers.

Our book and research show that this tournament of influence can have an important effect on how in-house lawyers view their role, how they see their professional obligations, and how they negotiate their position vis-à-vis others within their organization. An in-house lawyer may need to be both well placed in the tournament of influence as well as resourceful and willing to organize alliances with others before they can stand up to their employer when they need to. Furthermore, embedding professional expertise involves the everyday grounding of legal work in the organization’s values. The reason the job is being done and the outcome that the job delivers are influential on how the job is done. For many of the in-housers we interviewed, this meant being asked to be “value adding” and integrated into business development and planning functions, away from pure legal advice and toward risk management and commercial input.

Value adding was a concept that sometimes unsettled, rather than worked with, the grain of the in-housers’ legal thinking. For many, it destabilized traditional professional norms. They seemed to feel themselves rubbing up against a genuine incommensurability between legal and commercial ways of thinking. Value adding very likely encourages cognitive dissonance that, by design or accident, encourages professional neuroticism. To illustrate what we mean, imagine being faced with a legal question to which you are not sure of the legal answer but to which the desirable commercial answer is clear, at least in the short term. The incentive, consciously or unconsciously, is to adjust your view of the legal uncertainties to accommodate the organizational imperatives. On top of that, team loyalty bias is a real, often subconscious, risk. In these ways, working to overcome a negative stereotype, being keen to portray themselves as the opposite of deal blockers or costly nitpickers, and being service-oriented, loyal, and desirous of a reputation for helpfulness can impact forensic judgment.

Such vulnerability was emphasized in our data where there was not a clear understanding at an organizational level of the need for independence in an in-house legal team’s thinking. We found business recognition of independence was sometimes strong, but more often tentative or absent. It could also be hierarchical; interviewees often suggested understanding the need for independent in-house legal functions was stronger at the apex of organizations. Many thought that “the business doesn’t see the professional qualification” such that an in-house lawyer is just another employee. This despite 80 percent of survey respondents agreeing that their organization needed to understand their view was independent. An interviewee remarked, “[I]f you asked a CEO, ‘Name me the top three criteria of why you want a general counsel,’ I don’t think ‘because they will hold a higher ethical standard than anybody else in the business’ would be featuring, but I stand to be corrected.”

Interestingly, it was interviewees coming from sectors with a history of scandals that tended to think that their organization recognized—and valued—the independence of their in-house lawyers. This suggests professional independence can be reinforced by the host organization. Our sense is that the employers of our interviewees saw their in-house lawyers as (expert) technicians and business advisers, not as professionals (with some isolated exceptions if the employer is more interested in a culture of integrity).

As part of this tournament, lawyers manage their independence through a series of networked interactions with colleagues.

An uneven relationship between in-housers and their organizations was common, as was criticism of in-house lawyers for being obstructive. The two graphs below in Figure 3 show those in-housers who reported ethical or legal pressure and those who did not. About 10 percent of our respondents reported being asked to advise on ethically or legally debatable actions frequently or very frequently, and 40 percent overall were asked to advise on such actions at least sometimes. Approximately 10 to 15 percent agreed or strongly agreed that they were asked to advise on things that made them uncomfortable or in ways that suggested the business took a different view on whether and/or how to uphold the rule of law. About a quarter to a third agreed at least somewhat with these concerns. In this context, we recall that a number of our interviewees suffered from exposure to what the following participant termed the “shouty man syndrome” or the desire to be seen to be adding value as a helpful part of the team, not to being a deal blocker:

The problem we face is what I call the “shouty man syndrome,” which is it doesn’t matter how much we agree this is the right way to go if you’ve got a client, an internal stakeholder, shouting at you to get something done because it’s urgent and you just don’t understand why is legal being so difficult? You end up defaulting to all too often being helpful even though long term, that’s the wrong answer.

In addition, almost half of our survey respondents reported that their organizations acted against legal advice on important matters.

These two charts correspond to those in-housers who reported ethical or legal pressure and those who did not, respectively. More reported disagreeing to some extent than agreeing to some extent with the statement that they had been asked to assist on something that made them feel ethically uncomfortable and with the statement that there were tensions between their obligations and the law.

Figure 3: Constituent data for ethical pressure (positive and negative)

One might be depressed by these findings, but many in-housers did not feel under pressure. That some may recognize the problem may also be a healthy sign. Our research stands in contrast to other work that has suggested that occupational conflict between the organization and the professional is muted, absent, or well managed in law. We see clearly here that conflict does arise. The key thing is whether conflict is recognized and how it is dealt with.

Looking more closely at “no” and independence

When it comes to ethical and legal pressure, independence is the critical professional logic, but it goes beyond the issue of saying “no” when presented with clear examples of wrongdoing, the classic test used in much research. Most of our interviewees accepted a willingness to say “no” and the need to pay a price for independence (negative performance appraisals, getting fired, having to resign). Indeed, they said that it came with the territory. Yet, only a minority of our interviewees placed independence at the heart of how they conceived their roles. Others accepted that, as one in-houser put it, “you start to get a bit blind after a time.” An in-house lawyer’s value in properly serving the client’s interests sometimes depends on the lawyer considering, independently of self-serving or client-serving rationalizations, what the law really demands. But our interviews suggested that standing back may be easier said than done. Being cognitively open to the needs of the organization, with social and often economic incentives on in-housers aligning with their organizations, made standing back difficult. The tournament of influence risked undermining professionalism.

A number of our interviewees suffered from exposure to what one participant termed the “shouty man syndrome,” or the desire to be seen to be adding value as a helpful part of the team and not to being a deal blocker.

Equally, our interviewees often made subtle and not naive claims to professional independence. Independence, its importance, and how it manifests are part of a complex series of interactions between the in-house lawyer and the organization. Many recognized that how they provided advice and how the advice was used was contingent on a number of factors, for example, how the legal team was perceived, the relationship between the in-houser and the person seeking advice, and the point at which legal had been involved in the decision-making process. Issues of objectivity and independence are most clearly raised in the context of in-housers being sensitive to their place in the corporate tournament of influence. That sensitivity sometimes involves a negotiation between the in-house lawyer’s view of what is lawful and right and their view of what is tolerable. Independence is as much a process as it is a test for individual decisions. In this way, independence is not a binary, but a judgment call—and even more often a series of judgment calls. Independence therefore operates along a continuum. It may be found to be weaker or stronger in the same person at different times and in different contexts. At its core, it relates to the positioning of the in-house lawyer in the organization and the need to work for influence.

In this relational context, saying “no” as an in-house lawyer requires significant effort as well as internal human capital. Where stakes are high, an in-house lawyer may need to be both well placed in the tournament of influence but also resourceful and willing to organize alliances within the organization before they can say “no.” “No” is both decided and negotiated. It is also avoidable—for example, the relevant facts can be framed in helpful ways that make the legal tests easier to satisfy, the questions asked can be posed in ways that make it easier not to say “no,” and reservations can be expressed but not pressed. That avoidance by in-house lawyers may be pragmatic (because certain legal risks are tolerable) or tactical (because bigger priorities requiring the use of “no” lurk elsewhere that require a saving of political capital for later) or self-protecting (because the in-houser wants to be seen as useful, helpful, and so on).

An interesting question is the extent to which ambiguity can be rationalized after the event or used to stretch the envelope of what is permissible under law. In his book The Inside Counsel Revolution, Ben W. Heineman Jr., former GE senior vice president for law and public affairs, is of the firm view that where the law is clear, it cannot be broken and legal obligations cannot be ignored as part of a kind of cost–benefit calculation. Many of our interviewees did not seem to agree and were rather vague about the red lines they would not cross. Several of them talked to us about the concept of comfort. In other words, getting comfortable was contextualized within the broader role of in-house lawyer as business adviser. Each piece of advice, each “yes,” “no,” and “maybe,” was part of a broader series of interactions where the in-housers worked to persuade their colleagues of their utility, relevance, and commitment to their employer. Thus, the tournament of influence involved negatives (not saying “no” too often) and positives (demonstrating “value”). One of the terrors of in-house lawyers was being perceived as difficult, and colleagues then not coming to them for advice when they should. As one interviewee framed it, “It’s important to know when to say ‘no.’ You want to avoid the legal department being the ‘Department of No.’”

The balancing act: A story

What we want to convey is how the balancing of commercial and professional logics and of the different orientations relate to the organization, its history and approach, its institutions and cultures, and the response of the lawyers within those histories and structures. Through established patterns of behavior and responses to critical incidents, ways of being professional are built personally and institutionally. Orientations are balanced: the ethical and commercial; the independent and advisory; and whether, when, and how to take advantage of uncertainty.

Saying “no” as an in-house lawyer requires significant effort as well as internal human capital.

Perhaps this balancing is best made concrete by a story. Imagine you are an in-house lawyer working for a ride-hailing app (let’s call it Hike) and you are asked to advise on whether the organization can “greyball” regulators. The plan is for Hike to alter its software application to avoid law enforcement or other government officials booking rides using their service. The aim is to inhibit the regulator’s ability to test Hike’s compliance with the law. The CEO wants to do this. What do you do?

In this hypothetical scenario, your initial research suggests that an imaginative prosecutor could say you were perverting the course of justice. There is no analogous case, but you can see how the proposal fits the definition of the offense. If you had to advise on probabilities, you would say it was a 51–49 call that a criminal prosecution would succeed. It’s a serious offense, but not very likely to get prosecuted. The regulators might also try to make life difficult in other ways. Yet recent history has shown regulators do not generally do so; however, because similar organizations are popular with the public, they will fight tooth and nail if challenged. What is more, the culture of Hike is to challenge regulation as “anticonsumer.”

How does an in-house lawyer advise in that situation? Do you say: “This is an extremely risky strategy with a whole of host of unpredictable and potentially serious regulatory risks that include the future of our operating license and a risk of criminal prosecution”? Can you say that while the situation is not clear, there are no obvious or clear legal impediments to the greyballing strategy? Such responses may well be shaped, in part, by how the organization framed the task. Imagine you give a measured response and the CEO says, “I don’t want to hear detail. I pay you to make decisions. I just want a ‘yes’ or ‘no’ report that goes to the board saying whether we are acting within the law.” What then? Imagine the CEO had limited the scope of the advice sought (“We want advice only on clear legal barriers to doing this”) in a context where legal’s voice is usually ancillary to business decisions already taken in principle. “The extent to which such an approach will be acceptable within the organization will depend in part on the routines established around legal risk decisions in the past. Do nonexecutive directors feel that this is the kind of decision they should probe, for instance? And when you are asked to report to the board, can you simply say, “There are no insuperable legal barriers to this action, and in legal terms it is reasonable to go ahead”? Should you?

The actions of in-house lawyers here may be shaped by particular attitudes to risk in the organization, by their attitude to exploiting uncertainty, or by the extent to which they see themselves as a “mere adviser” or as someone used to leading ethically through uncertainty. Is the in-house lawyer who says there are no insuperable barriers giving the appearance of leading through uncertainty here, while, in fact, following the lead of the CEO rather than giving an independent view? Who is the client and whose best interests are being advanced?

One of the terrors of in-house lawyers was being perceived as difficult, and colleagues then not coming to them for advice when they should.

An in-house lawyer comfortable with the idea that uncertainty is exploited, and who is especially motivated by their own success, might be more inclined to take the view that economy with the truth was simply part of the normal role of an in-house lawyer advocating a position for their client and getting the job done. This might be especially true if the in-houser takes a narrow, shareholder value-led view of corporate governance. The extent to which in-house lawyers see obligations to behave with integrity or to protect the rule of law as meaningful and important influences on their decision-making here is also important. In-housers accustomed to equating professional ethics with client-first lawyering may have a harder time seeing the risks in a zealous-advocate approach that allows themselves to argue that the CEO might be right, rather than thinking about whether the CEO is really right and how it might be really bad for the company, the lawyer’s ultimate client, if the CEO gets it wrong.

Environment and infrastructure

In addition to the importance of the balancing of role orientations, our work suggests that environment is influential on ethicality. In-house teams had distinctive orientations—we labeled these financial, delivery, society, and integrity oriented. We considered organizational context by looking at the relationships between the in-house legal team and their organization, as well as what ethical infrastructure was in place to protect against ethical pressure. Stronger team cultures of integrity and of thinking about the organization’s role in society were associated with a stronger ethical inclination in the lawyer members of the in-house team and stronger ethical infrastructure (things like formal ethics training and guidance and more informal conversations about conduct).

In general, our research revealed ethical infrastructure was weak in-house, suggesting that in-house teams could strengthen this immediately: there is currently limited training on, and formal or informal discussions of, professional ethics issues among in-house lawyer teams. Even where ethical pressure was elevated, ethical infrastructure remained generally weak. It is a far-from-common response to ethical pressure to institute training, guidance, and support to deal with that pressure. In Figure 4 below, notice the high proportion of in-house lawyers who report total absences of discussion, training, or guidance on professional ethics matters in their teams.

This chart notes the formal and informal ethical infrastructures in-house. The formal are internal training, external training, and guidance. The informal are external informal discussion and internal informal discussion.

Figure 4: Ethical infrastructure in-house

One of our interviewees said, for instance, “We have a code of conduct, and we have a framework of training that people have to do every year, but that’s not specific to the lawyers—that’s everybody.” There was some sense, from a number of the interviews, that training on ethics is something that in-house lawyers do (for example, give to people inside the organization who are outside the legal team) rather than something those lawyers receive. When we talk to lawyers about these matters, it is striking how many say, “You know what? We’ve not thought about any of this since law school.”

Some final thoughts

In-house lawyers both serve and are part of their clients. They are representative and constituent, servant and agent. They lead in some situations and advise on others. The more senior those in-house lawyers are in the organization, the more they become an important part of the client’s directing mind. This mixed servant–agent role does not fit well with the idea of either total independence or lawyer as mere adviser counseling the business at arm’s length. Does this collapsing of the client–professional divide negate claims to professionalism? Our answer is that it depends. It depends on how well in-house lawyers, legal teams, and their host organizations balance the competing orientations at play when they work. If the professional simply emulates what the client wants without regard to the public interests the profession protects, or if they weigh the legal implications of a problem too heavily through the lens of client loyalty, then there are significant risks.

Our analysis repeatedly shows the tension between organizational and professional logics and the tendency of in-housers to prioritize the former over the latter. That is similar to most work in this area. Importantly, though, we identify what drives variation in ethical inclination. The collective effect of our survey and interviews suggests quite strongly the weaknesses of an approach to in-house lawyering that deemphasizes the independence of the lawyer and promotes the exploitation of uncertainty for an organization’s ends. Creative compliance, or entrepreneurialism with rules, is ethically dangerous and often associated with markers of ethical disinclination and misconduct.

Our research revealed ethical infrastructure was weak in-house, suggesting that in-house teams could strengthen this immediately.

Our work shows that promoting independence and ethical orientations increases ethical inclination. Conceptualizations of the professional role that strengthen the ideas of independence and legality as well as integrity and effectiveness (key principles in the solicitors’ regulatory code of conduct) are also effective toward promoting ethical inclination. We should be clear that we are not saying that in-house lawyers are not advisers and that others in the organization, often legitimately, end up making decisions. But in-house lawyers are not mere advisers; they have leadership roles and, if senior, constitute an important part of the organization—the client. There is a balance to be struck between the organization’s desires and an independent interpretation and application of the law. In-house lawyers often think that their professional obligations require them to put the organization’s interests first. But, in England and Wales at least, this is not what the rules say. Protecting the rule of law and the administration of justice is preeminent. It is also worth it for in-housers to remember that psychologically lawyers are already likely to be interpreting the law through a lens of organizational loyalty. Even if we put ethical issues aside, in-house lawyers inputting high-quality assessments of legal risk need to work to protect the independence of their view from conscious and subconscious influence if they are to assess risk correctly. We do not identify a perfect end state, but our evidence points quite forcefully toward the benefits of a better balancing of these professional and role orientations that supports a stronger role for independence, legality, and integrity. This balance needs conscious reinforcement through in-house teams by building up their ethical infrastructure.

In spite of our criticisms, our study also uncovers some in-house lawyers willing to identify and challenge ethical pressure. There is a kind of contingent professionalism at work here, as part of the tournament of influence. Independence is weaker or stronger. Resistance is context specific. There is a general disinclination to take a too robustly independent line. However, our research also shows that specific problems or alignments of ecological factors can strengthen independence. As such, professionalism, in the public-spirited sense, remains an occupational value. At the same time, professionalism is, even among our most independent respondents, a hybrid that balances organizational and professional logics. The ecology of in-house lawyers is permeated by nonlegal ideas: value, influence, service, cost benefit. Ideas about the public interest and legality are less strong, but they are present. The organizations themselves can recognize, affirm, and develop their importance. In-house legal teams can be encouraged to interpret laws by the letter and in their spirit. The narrow framing of legal tasks can be discouraged. Proactivity can be encouraged and resourced. There may be institutional protections to be stimulated through relationships with nonexecutive directors and careful management of incentives as well as through appraisal processes and via encouragement to discuss and sometimes escalate ethical issues. Similarly, in-house legal teams can seek to strengthen professional logics themselves—by taking tasks on the basis that they will look at them with a professional rather than an instrumental mindset, by defining and supporting a professional approach to work that attends to independence, through ethical leadership, and by their attitude toward uncertainty. In-housers can strengthen debates about independence, what their role really entails, and how to be professional. We hope that some of the discussion in this article—and our book—helps in these endeavors. We have been critical, but we remain optimistic.

 


Richard Moorhead is a professor of law and professional ethics at University College London Faculty of Laws. In September he will be head of Exeter University Law School.

Steven Vaughan is an associate professor at University College London Faculty of Laws.

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In-House Ethics Volume 5 • Issue 4 • May/June 2019

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