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The Role of Ethics in Client Acceptance – When Can and Should Firms Refuse Client Work?

In this article, first published by The Law Society Gazette, Partners Corinne Staves and Andrew Pavlovic set out what law firms need to think about before rejecting clients on ethical grounds.

Recently we have seen some members of the bar pledge that they will not act against peaceful climate activists or for new fossil fuel projects. They argue the climate crisis is too important. This amounts to an anticipatory breach of the cab rank rule, under which a barrister must accept instructions on matters in which they are competent to act, regardless of the individual advocate’s personal views on the profile of the client or the facts of the matter, in order to ensure everyone has access to justice.

This issue is more complex than can be summarised in a few introductory remarks. It usefully highlights though an increasing trend for law firms towards incorporating ethics into client acceptance decisions.

Law firms are not subject to the cab rank rule, and a trend emerged rapidly and strongly in 2022 as firms reacted to the war in Ukraine. Clearly there was no scope to act if the anti-money laundering and sanctions rules prevented it, but many firms went further and introduced policies addressing the extent to which they would advise on matters with connections to Russia.

Some firms already had policies about applying ethical considerations to other client acceptance decisions. Environmental, social and governance (ESG) is a good example.

This issue was the subject of discussion at the Law Society annual risk and compliance conference on 17 March. Participants were asked to opine on a number of hypothetical, thorny ethical scenarios. One scenario split the group 50:50. It is not easy.

The starting point needs to be consideration of the firm’s stakeholders. These include (current and future) clients, partners, staff, community, suppliers and the regulator. Some people include the press and critics too (such as MPs naming lawyers in parliament as well as the emergence of the ‘lefty lawyers’ jibe ). Others disregard these critics, both because other stakeholders are more relevant and also because the criticism derives from a conflation of the views of the adviser with those of their client. Lawyers do not agree with murder, but murderers still have a right to get legal advice.

Ultimately it boils down to the firm’s culture and reputation. Understanding what it is and how you want to protect it.

Will the firm’s decisions influence how its stakeholders perceive it? If a business or client acceptance decision is so controversial it will drive away the firm’s key clients and people, that is surely too big a risk to take. It also affects the firm’s culture. By all means be the firm that says yes to anyone (assuming it is lawful and the firm has the expertise) but make sure the partners and staff understand and support this broad approach and the principle of access to justice. Ditto if the firm is going to say no to potential clients on ethical grounds.

How should firms tackle this?

  1. Identifying key stakeholders will enable the firm to develop a policy or framework for decision-making.
  2. A policy needs to be flexible as by definition these are difficult decisions. It also needs to take into account specific concerns arising from regulatory rules, guidance and warning notices. A recent example of this is the SRA’s warning notice on Strategic Lawsuits Against Public Participation (SLAPPs) in November last year, which was followed by a thematic review addressing both SLAPPs and the conduct of litigation more generally in February 2023. When assessing whether to take on a litigious matter for a wealthy client, particular consideration will need to be given as to whether the proposed litigation could be seen to be oppressive, abusive or unfair. This is likely to require at least some assessment of the merits and identification of the potential features of the litigation before making a decision to act.
  3. Context is important. Each decision needs to be made on a case-by-case basis. Some firms take the view that assisting businesses to fix their ‘issues’ is different (that is to say, moving to more sustainable models) from advising them on continuing the status quo. Bear in mind that it may be hard to refuse a second or third project for an existing client, even if those new projects are not aligned with the firm’s values.
  4. A single decision-maker is unlikely to be appropriate – it is a lot of pressure for one person – but a large committee is also unlikely to work because decision-making needs to be nimble. If a committee is used, consider appointing people with a diverse range of views and practices, different levels of seniority and from different offices/regions. A panel might assist with scheduling logistics and swift decision-making.
  5. If a policy has been agreed, it should be followed and applied consistently. Exceptions can set unwelcome precedents, either upsetting external stakeholders or just creating internal imbalance (‘why did you say yes to X partner, but no to me?’). As ever, good record keeping is vital, but recording the reason for exceptions is particularly important.
  6. Decide how and when decisions will be communicated internally and to clients. Training may assist.
  7. For international firms, consider how you will take into account variations in culture and attitude in different regions.
  8. Finally, agree how the policy should adapt over time. This may be to reflect a changing external environment, or it may be to adapt to internal pressures. If the wind farm work drops off, and fossil fuel work picks up, is the firm financially secure enough to refuse work purely on ethical grounds? If the firm does not want to find itself facing yet more difficult decisions, advance strategic planning is needed.

This article was first published by The Law Society Gazette.

If you have any questions or would like to discuss specific points in relation to client acceptance in more detail, please contact Partners Corinne Staves or Andrew Pavlovic