The role of ethics committees in legal firms, and the need for nuanced insight

The Code of Conduct from the Solicitors Regulation Authority (SRA) specifies that ethical decisions when onboarding clients must uphold public trust in the legal profession, and be made with independence, integrity, honesty, and respect for equality and inclusion. But there are situations where it’s unclear how to fulfil these ethical obligations.

To address ‘unique ethical questions’ raised by new technologies, world events, and shifts in public attitudes, The Law Society launched a three-year professional ethics programme to support lawyers and law firms. It also ran a series of roundtables on legal ethics.

The President of The Law Society, Lubna Shuja, highlighted ethics as a focus in her presidential plan this year. This spilt over into one of The Law Society’s Gazette roundtables, hosted by Xapien, where our CEO assumed the role of advocate for technology. The discussion delved deep into the perspective on ethics, with legal professionals sharing their insights and the shifts they’re witnessing within their own firms.

Ethical decisions: regulation, risk and reputation

The standard compliance approach at law firms involves working through a checklist of regulatory obligations. But overly focusing on the process can lead to contrasting problems.

On the one hand, compliance teams can quickly become overwhelmed, and decisions may be made without appropriate context. To tackle this, firms must use a risk-based approach to ensure that compliance decisions are proportionate and reasonable.

On the other hand, a narrow focus on the process may not capture ethical issues outside the scope of current regulation. As Lubna Shuja notes in a Law Society blog, ethical decisions need to also reflect organisational values and balance pressures from clients, courts and employers.

Reputation management—which is part of a firm’s compliance obligations—can add further complications. Particularly since there may be a conflict between the strict letter of regulation, a firm’s values, and how its ethical decisions are interpreted by the public. 

For example, at the roundtable, participants noted that some law firms will not act for clients connected with Russia due to the reputational risk.

While the SRA’s Code of Conduct does specify ethical values to guide decisions, and emphasises that ‘public interest’ should be prioritised, there are nonetheless situations where it’s unclear how to fulfil these ethical obligations.

In such circumstances, a law firm’s ethics committee can pick up where regulation and the code of conduct stops, to provide guidance.

The role of ethics committees in law firms

Even in an ideal world, regulation and the SRA’s Code of Conduct should not be the ultimate and complete authority on legal ethics. 

Participants in the Law Society’s roundtable agreed that this would amount to ‘mission creep’ if regulators wholly dictated law firms’ ethical standards, leaving no room for firms to make decisions according to their own values and assessments.

Ethical values are not static, and so lawyers and compliance teams continually test the boundaries of their decisions as context changes and new information or risks come to light. 

For law firms without a formal process to make and test ethical decisions, this often relies on a so-called ‘sniff test’—where a lawyer uses professional instinct to determine if something ‘feels right’ or ‘makes sense’ ethically.

However, law firms are increasingly under pressure— from clients, the public and regulators—to demonstrate that they have a consistent and robust methodology for making ethical decisions. An ethics committee is generally the first step to creating this consistent practice, as highlighted by participants in the Law Society’s roundtable. 

It also instils confidence among employees that the firm is applying its principles and values in practice, as pointed out by a lawyer from a B Corp values-driven firm.

Reshma Raja, General Counsel and Partner at RPC, added: “If you get the values and the culture right you’ve got a good brand, but it’s not just a set of words on a piece of paper and a website. I think the new generation coming into the legal profession absolutely want this, in terms of they want to work for someone that have got the values right, and it starts at the top and filters all the way down through.”

A lawyer at a firm without an ethics committee acknowledged that “every firm does need an ethics committee now”, particularly to tackle complex issues. These include how to take a nuanced approach to Russian clients amid sanctions, and whether acting for high-polluting clients offers firms opportunities to positively influence these clients, or whether the firm should take a hard line on ‘advised emissions’—the environmental impact of clients’ work. 

Nuanced decisions call for nuanced information

As ethical decisions become increasingly complex and nuanced, the demand for more detailed and nuanced information to support those decisions also grows.

AI can play a crucial role in providing the level of nuanced insight that was previously impossible. Xapien’s powerful AI technology enables compliance professionals to move beyond the traditional “tick box” approach of verifying data from existing datasets, including Politically Exposed Persons (PEPs) and sanctions lists, as well as corporate records.

Instead, Xapien conducts comprehensive searches across the entire indexed web to surface, analyse, and summarise valuable information into a concise report. This report can be instantly shared by compliance professionals with their ethics committee. 

Curious to learn more? Read our previous blog from The Law Society Gazette’s roundtable on the dangers of tick box compliance. Or get in touch if you’d like to learn more about how Xapien automates the highly complex process of human research to enhance ethical decision-making.