Why in-house lawyers face an ethical minefield

Jessica Morris
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In-house lawyers at General Motors are among those blamed for not sharing information within the company on dangerous faulty ignition problems (Source: Getty)

Rising regulation, higher standards of compliance, and the increased threat of litigation are making the role of in-house lawyers more important, but many are being confronted by a ethical minefield, a new report has found.

They have to balance the demands of their primary role, such as upholding the rule of law, with being a commercial team player for the business - which is creating significant ethical challenges, the report, by University College London (UCL) and Birmingham University, said.

Appetite for legal risk involves accepting, even welcoming, tolerance for conduct which may be, even may be likely to be, unlawful.

This is sometimes in tension with the professional obligation to promote the rule of law and the guidance to solicitors that they must treat the public interest in the administration of justice as definitive of conflicts between professional obligations.

Such tensions also impact on corporate interests: there are relatively recent, serious conduct risk examples of allegations involving lawyers in and/or instructed by Standard Chartered Bank, the News of the World, Barclays, The Times newspaper, BNP Paribas and General Motors.

Teams of in-house staff lawyers are typically headed by a general counsel and work in a particular company. This is different from private law firms, where lawyers work in departments focused on a specific area of law, generally outside of and for a range of companies.

"Growing evidence [including] our research and some anecdotal commentary suggests that the role of general counsel is under increasing pressure," Professor Richard Moorhead, director of UCL's centre for ethics and law and one of the report's authors, said.

"Their professional and ethical boundaries are not as well drawn as may be necessary for the increasingly sophisticated world of in-house work."

"What is also clear is that the more-for-less challenge, and the need to be commercial and influential within a business context can pose significant ethical challenges for in-house lawyers. They and their businesses are not always well prepared for such challenges," Birmingham University's Dr Steven Vaughan, Moorhead's co-author, added.

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