In-house lawyers are in a very different situation to private practice lawyers. Some of the challenges they face are similar (short timeframes, clients shopping externally for advice, bad coffee), but others are more specific to the in-house role. In particular in-house lawyers face heightened ethical and professional challenges that arise from being employed by their client and embedded in their business.
So, what are some of the pitfalls that an in-house lawyer should avoid? The Practical Law Australia team recently met with retired Court of Appeal judge the Hon Reg Barrett to answer this question.
Reg Barrett worked in-house at Westpac as general counsel and company secretary during some of its most tumultuous times in the early 1990s when not many companies had general counsel. He also observed the in-house legal role develop, advising in-house legal teams as a private practice partner before being appointed as a judge.
The team of legal experts at Practical Law Australia have drawn on our years of in-house experience and some of Reg Barrett’s war stories to help you navigate the innate conflicts of an in-house position.
1. Know your role
When starting a role in-house have a clear idea of its parameters. Obviously roles and expectations change, but there are some details you should try to settle early on to help you operate effectively and comfortably.
- Who’s your client? If your company is part of a group, confirm at the start which entities are your client and which aren’t. Also identify the individuals from whom you will be receiving your instructions.
- What are your responsibilities? Having a good idea of where your responsibilities end, and where the responsibilities of others begin is useful in determining how to approach situations that might be awkward or have the potential for conflict. If unclear, ask for guidance about what you can and cannot do so you know when to escalate a matter.
- What are your reporting lines? If you need to escalate a matter, you need to know who you can escalate it to.
2. Push back on pressure to give hasty advice
Technology is speeding up business processes and legal are expected to keep pace. It can be tempting to shoot off a quick email in reply with an off the cuff answer but these snap decisions can come back to bite you.
Consider your advice and ensure you have the information you need before giving it, even if people are chasing you into the meeting room/carpark/loo for sign off. Insist on reading the relevant material. Even as an in-house solicitor you’re required to:
- Act in the best interests of your client (which means not giving in to pressure to sign off).
- Provide a competent and diligent legal service (as well as prompt).
3. Avoid “reply all”
It’s a millennial habit to reply all to everything and cc all affected parties to ensure visibility. Replying all can be efficient; everyone is kept on the same page in real time with a history of the entire conversation there for ease of reference, right?
In some circumstances, this is helpful, but it’s easy to be trigger happy and inadvertently breach your duties to your client or your professional responsibilities.
This follows on from the advice to know who your clients are. If you don’t know, you might copy in recipients that aren’t entitled to a seat at the table.
Copying emails to parties other than your client (even in the same corporate group) can inadvertently breach your professional responsibility to maintain confidentiality for your client. It also has the potential to create or protract issues where you don’t have a clear understanding of the context or a recipient’s motives and no avenue to clarify or address them, not being their legal advisor.
Particularly in the context of a dispute or negotiation it’s always better for lawyers to communicate only with their clients and each other. Copying your client in to an email you have sent to the lawyer for the other side may give the opposing lawyer implicit consent for that lawyer to include your client in a reply. You should generally remain the contact point through which your client and the lawyer on the other side communicate.
It’s, of course, against the Australian Solicitors’ Conduct Rules (ASCR) in most circumstances to communicate with the client of another lawyer directly unless:
- Their lawyer has consented.
- Their lawyer has notice from you of an intention to communicate, hasn’t responded after a reasonable time and there’s a reasonable basis for the communication.
- You reasonably believe that it’s warranted due to urgent circumstances.
If you want to copy in anyone except your client’s employees, a barrister or other external legal advisers, it’s good practice to get the consent of someone senior in the business and to make it clear that it doesn’t constitute consent for a reply all. You may not need to do this in every situation, for instance if it’s a low-level interaction within the responsibilities of your role, but this comes back to Know your role.
4. Disguising business advice as legal advice affects your credibility
Lawyers are often seeking to cross-skill in order to broaden their career options. If you act in more than one capacity, be clear about the hat you’re wearing when you give business advice. There can be a temptation to package business advice as legal advice if you feel strongly about it, knowing that the business leaders will sit up and take more notice. Doing this can erode your credibility as an adviser and, if you have something to gain from it, could breach your professional responsibilities too.
5. Try not to rely on legal professional privilege
Everything an in-house lawyer does is potentially discoverable.
If a higher risk matter is likely to need the protection of legal professional privilege consider briefing it to external lawyers. There’s always a risk that a senior legal adviser, particularly where they are also an officer of the company, will be considered a decision maker of the business, rather than its adviser.
Remember also that privilege doesn’t apply to a communication just because you label it as privileged or private and confidential. Besides, even genuinely privileged communications may be discoverable in some circumstances.
For further information about when legal professional privilege will apply at common law and under the Evidence Act 1995 (Cth), see the Practical Law In-house Toolkit, Managing disputes and litigation: Protecting privilege over documents.
6. Keep it cool when getting heavied
In-house lawyers, as employees, can face a personal conflict when they need to give advice that they know the business isn’t going to like and that might put them out of favour with their employer. This is particularly the case if the business leaders have a habit of shopping externally to get the advice they want or when situations (or the personalities involved) are highly charged.
You simply cannot compromise your integrity or professional independence. Stick to the legal questions at hand and, if there’s a genuine legal concern, stick to your guns.
7. Maintain your ethics
This doesn’t mean remember to earn your mandatory CLE points. It means make yourself a source of sound and fearless legal counsel that people will respect and heed. However much certain individuals’ attitudes may sometimes suggest otherwise, the business as a whole relies on you to deliver dispassionate and objective guidance.
Circumstances can arise in a business where the individuals acting against your advice are either stubbornly blind to the gravity of an indiscretion (such as backdating an important document) or simply don’t care.
So, if you stick to your guns and give good advice and the decision-makers of the business just ignore it, what can you do?
Get on the front foot. While not commonplace, in-house lawyers should ideally have their ethical and professional responsibilities acknowledged either in their employment contracts or separately in writing by senior executives. Many employers may not understand that, despite the rules of privilege and fiduciary duties to their clients, your overriding obligation is to the court and the administration of justice. Having an acknowledgement of these priorities placed in front of key instructing individuals in the business might be the first step in generating awareness of them. Training for business leaders could also help.
Don’t look the other way. If you haven’t already, counsel them against the breach. This seems obvious, but the temptation can be to avoid touching the issue to prevent tarring yourself with that brush. Be clear and forthright about the legal consequences, and we don’t have to tell you that you should put it in writing. Most businesses with in-house legal teams will have comprehensive internal policies that you can leverage to make your point, in addition to the law.
Take if further. If someone is ignoring clear advice, the business needs to be put on notice so it can review its attitude. There’s always an internal manager, director or chairperson that you can go to if your good advice falls on deaf ears. This is hardest when the perpetrator is your direct superior, someone you have a close relationship with or a very senior officer.
Last resort: leave or report. This isn’t always in your short term interest. Unfortunately though, sometimes it’s your legal responsibility to report a matter to an authority. In rare circumstances you can even be guilty of an offence yourself if you fail to report the breach to the proper authority (for example, failure to report a serious indictable offence under section 316 of the Crimes Act 1900 (NSW)).
Leaving and finding work elsewhere won’t negate the need to report reportable offences, but it must be in your long-term interest to find a workplace where your ethics aren’t compromised.
Remember where your loyalties lie
Ultimately, most of the advice given here comes back to knowing and living your professional responsibilities. Few lawyers are willing to consciously breach these sacred principles, but it’s easier in an in-house position to lose sight of them as our loyalties and dependence grow towards the hand that feeds us.
Professional responsibility legislation
The ASCR are developed by the Law Council of Australia and are legislated under the Legal Profession Uniform Law Acts (Uniform Law) in each participating state or territory jurisdiction. These Acts have extra-territorial application. The ASCR apply to all legal practitioners, including Australian-registered foreign lawyers acting as a solicitor.
Initially, the Uniform Law was only between New South Wales and Victoria. This came about under a bilateral agreement between the states dated 5 December 2013. They entered into force in New South Wales and Victoria on 1 July 2015. Since then, they’ve been largely adopted in Queensland, South Australia and the Australian Capital Territory.
Generally, breach of the ASCR won’t result in a penalty or disciplinary action unless it constitutes an act of unsatisfactory or unprofessional conduct. Adherence to the spirit of the ASCR (not the letter) is intended as a guide for legal professionals.
The Hon Reg Barrett is a member of the Practical Law Australia Advisory Board. He was general counsel and company secretary at Westpac in 1991-1995. Before his appointment as a judge in 2001, he also worked as a partner at Allen Allen & Hemsley and later Mallesons Stephen Jaques (as they then were) advising in-house legal teams.