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Updated Insolvency Code of Ethics: what do insolvency practitioners need to know?
Jenny Higgins
Today being UN World Environment Day, no doubt many law firms and their employees will be reflecting on how they can do more in this important area.
Others are also reflecting on how to do more. Climate change is moving up the agenda of legal regulators worldwide and into the world of legal ethics. That will have an impact for all law firms.
The recent publication by the Law Society entitled “Guidance on the Impact of Climate Change on Solicitors” caused a stir not because it said anything new or different but because it marked a first step to address the issue at all. Although the Law Society is not the regulator of solicitors and law firms here in the England and Wales, the Solicitors Regulation Authority said in its recent business plan that it intends to publish a regulatory position paper on ESG issues later this year. They are not alone. Law Societies and Bars in Australia, New Zealand, Japan, Brazil and Europe are considering taking the same step.
The climate debate engages what has become familiar legal ethical territory around client selection and the limits of what lawyers can do for their clients. The standard conception of legal ethics, that lawyers do not identify with their clients and should zealously serve their interests as long as they stay within the bounds of legality, is disintegrating. This is apparent from the debate around acting for Russian clients, money laundering, the use of SLAPPs and other abusive litigation and in the use of non-disclosure agreements to cover up sexual misconduct. The wider and more general backdrop is the charge that the legal profession is an enabler of harm; a claim that has been made by non-governmental organisations such as the UN, OECD and FATF.
In relation to climate change, we have seen pressure groups single out law firms for the work that they do. See for example The Carbon Circle: The UK Legal Industry’s Ties to Fossil Fuel Companies by Law Students for Client Accountability. This publication not only highlights the work of individual law firms but also demonstrates the generational divide on this subject.
So what will be the impact of the Law Society’s recent Guidance and the other guidance that is likely to be seen worldwide?
First and foremost, it is expected that they will make clear it is up to each law firm to choose its clients, as the Law Society Guidance does. With the exception of those professions that have a cab rank rule, that is perhaps a statement of the obvious. However, a clear statement to this effect in relation to climate change does put the emphasis back on law firms to justify their client choices. That will not be a regulatory issue but a reputational issue for law firms. They will need to be able to explain to the public and indeed their own employees who they will act for and why. Those firms that do not have them, will need to develop policies. These are not easy issues. How legal work affects the climate can be both nuanced and wide ranging. Different considerations may apply to criminal work or where legal rights are in issue than in the area of transactional work.
It may be that some regulators will go further and require firms to specifically consider the climate when taking on work from clients. In regulatory terms this may be no more than a requirement to have a policy as described above but it is easy to see how these obligations may become more onerous over time.
Finally, the climate debate has made the issue of what is described as greenwashing more serious. This is specifically addressed in the Law Society Guidance and is likely to be followed up by the SRA. Firms should be particularly careful in the way in which they describe their own environmental credentials and ensure that any published targets around carbon reduction are realistic and achievable.
Although the UN’s World Environment Day has been celebrated annually since 1973, this year – some fifty since its inception – it’s call for urgent action will have an extra resonance for many in the legal industry for more reasons than one.
This blog was first published by Law.com on the 5th June 2023.
Further information
If you have any questions regarding the blog, please contact Iain Miller in our Regulatory team.
About the author
Iain specialises in legal ethics, investigations, and public law matters. He is General Editor of the leading textbook on legal services regulation, Cordery on Legal Services.
We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.
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