Law firms are under scrutiny for the clients they choose to act for and this pressure is only going to intensify. More scrutiny inevitably leads to greater risk that firms – by acting for clients perceived to be disreputable – will damage their own reputations. This is all set against a backdrop of more and more firms making their ambitious ESG commitments public.
We see risks growing most keenly at the intersection between business and politics – not always a comfortable place for law firms. Concerns about ethical, social or environmental issues related to clients – or accusations of enabling corruption – can lead to tough questions for law firms from the media, activists and even by politicians. Climate change is already providing some notable examples of the reputational risks of acting for high emitters.
Firms have historically relied on the most basic principle of criminal justice – the right to legal advice – as a shield. However, when acting for corporates it is just not as straightforward. Large law firms make commercial choices about which clients to act for and are perfectly able to turn down particular clients if they want to.
So what do firms need to do to prepare for difficult questions?
Firstly, unless litigation or regulatory actions are involved, forget about the right to legal advice. It won’t wash. It is far more effective to be absolutely clear than you are helping your clients to comply with applicable laws and rules – not avoid them.
Secondly, take a look at your client onboarding processes and related due diligence. Are they in line with best practice, up-to-date and well-understood by your partners? Ensure your protocols are robust and defensible, in the event that things go badly wrong. It is important to note that a breach of policy is often more defensible than a poor policy or process.
Thirdly, prepare now. Proactively think about – and identify – a few of your clients, for whom you act on commercial matters, and whom have been criticised in the press, or are in sectors that are under a lot of scrutiny; high carbon emitters for example. Think about why you act for them and how you would defend doing so if asked. Note that you must not forget about your own people as a key stakeholder and you have to be able to justify the firm’s position to them.
In the case of polluters, you have the potential to help them begin their journey towards reducing emissions. You actually have more power to shape positive change than if you only advised carbon neutral companies. However, over time you will need to demonstrate progress both internally and externally.
Finally, get some advice before you have a problem. Every firm is different, but most are going to face questions about their client choices over the coming months and years. You do not want to be in a position of thinking about how to explain your decisions only after you have been put on the spot.
If you would like to discuss any of the issues raised in this blog or arrange a workshop to develop or stress test your current communications approach, please get in touch with your usual Byfield contact or firstname.lastname@example.org