find the latest legal job
Corporate/Commercial Lawyers (2-5 years PAE)
Category: Corporate and Commercial Law | Location: Adelaide SA 5000
· Specialist commercial law firm · Long-term career progression
View details
Graduate Lawyer / Up to 1.5 yr PAE Lawyer
Category: Personal Injury Law | Location: Brisbane CBD & Inner Suburbs Brisbane QLD
· Mentoring Opportunity in Regional QLD · Personal Injury Law
View details
Corporate and Commercial Partner
Category: Corporate and Commercial Law | Location: Adelaide SA 5000
· Full time · Join a leading Adelaide commercial law firm
View details
In-house Legal Counsel & Commercial Lawyers
Category: Corporate and Commercial Law | Location: All Sydney NSW
· Providing lawyers with flexibility and control over when they work, how they work and who they work for.
View details
In-house Legal Counsel & Commercial Lawyers
Category: Corporate and Commercial Law | Location: All Melbourne VIC
· Providing lawyers with flexibility and control over when they work, how they work and who they work for.
View details
In-house counsel failing ethical risk management

In-house counsel failing ethical risk management

Trish Hyde ACLA

A new report suggests many corporate counsel struggle to navigate conflicts between their ethical obligations and company expectations.


The Legal Risk: Definition, Management and Ethics study, undertaken by University College London’s Centre for Ethics and Law, suggests many in-house counsel do not have the structural support or processes in place to deal effectively with ethical conflicts.

Professor Richard Moorhead and Dr Steven Vaughan, the report’s co-authors, conducted interviews with 34 senior in-house lawyers and senior compliance staff at large corporates to discuss legal risks and efforts to manage them.

Concerning findings

The report found the nature of an in-house role often leads to tension between identifying legal risks and the corporation’s interests.

“Risk assessment requires professional objectivity for such assessment to be useful and accurate, yet the culture of ‘being commercial’ and the framing influences of a professional culture that emphasises putting the client first strains that objectivity,” the report states.

“The professional obligation of independence is also sometimes called into question.”

The authors suggested risk management processes were often "ad hoc", based on intuition rather than a systematic process and varying from case-to-case.

Structural issues were also identified as a potential issue, with lawyers reporting being punished for challenging the corporate hierarchy or rewarded for toeing the line.

“More generally a corporate discipline was at work that protected the discretion of senior decision-makers and disciplined lawyers towards corporate norms. That discipline reminded lawyers that they were there to support the business; that they advise and do not decide.”

“In general, in-house lawyers and the businesses they work within have an allergy to the word ‘no’ being exercised by anyone other than the ultimate decision-maker."

Ultimately, the authors warned legal risk management may be compromised if lawyers could not act independently.

“Discomfort and concerns about independence effectively meant that, on occasion, our in-house lawyers felt their companies were taking unreasonable positions on legal risk or, perhaps, untenable positions on the legality of their action.”

Australian context

Responding to the report’s finding, Australian Corporate Lawyers Association president Trish Hyde (pictured) acknowledged ethical tensions existed and said the report raised “interesting and appropriate areas for discussion”.

However, her experience has been that independence is robust among corporate counsel in Australia.

“I do know that within Australia in-house counsel very much hold their responsibility to the court as the first and foremost of their ethical obligations,” Ms Hyde said.

“That is probably the one area where I see some differences in views [from the report].”

She argued lawyers needed to take a nuanced approach to risk management and ethical questions.

“We're not talking about black and white – it's about how we manage this risk [and saying] ‘this is the way we think we can do it’. The legal advice is taken on board then an assessment is made about how to proceed.

 According to ACLA's research, around half of in-house counsel in Australia also hold compliance powers, a model Ms Hyde suggested could give lawyers greater sway in organisations.

“To be an effective in-house counsel, the ability to influence the organisation and be there at the point at which risks are discussed and identified is critical to their success,” Ms Hyde said.

She urged lawyers facing ethical dilemmas to talk the problem over with trusted peers or to take advantage of the ACLA helpline.

“It's about reaching out to somebody else that you can talk to. The key message is have the conversation.”


Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

In-house counsel failing ethical risk management
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Scales of Justice
Dec 15 2017
Timing ‘critical’ in unusual contempt of court ruling
A recent case could have interesting implications for contempt of court rulings, according to a Ferr...
Dec 14 2017
International arbitration and business culture
Promoted by Maxwell Chambers. This article discusses the impact of international arbitration on t...
Papua New Guinea flag
Dec 14 2017
World-first mining case launched in PNG
Citizens of Papua New Guinea have launched landmark legal proceedings against the country’s govern...
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...