Precarious Professionalis

mpresentation to the Law Society and invited

guests 17/09/13

Richard Moorheadhttp://lawyerwatch.wordpress.com

@richardmoorheadr.moorhead@ucl.ac.uk

• What is professionalism?• How is it precarious?• In particular, is there a (growing?) problem with

ethics?• What it might mean for firms, TLS, regulators?

Defining professionalism

Professions, “are devoted to the service of the public, above and beyond material incentives.” Larson

“the use of discipline knowledge and skill for the public good.” Freidson

that raising up implies, “a duty to appraise what they do in the light of the large good, duty which licenses them to be more than passive servants of the state, of capital, of the firm, the client, or even of the immediate general public.”

QualityEthicality

State of the Art-ness

Regulators

You may feel…

Designing ethical indicators for legal

services

(Moorhead et al, 2012)

Precariousness 1. We are (more) competent

Meritocracy in Diversity

Non-solicitors vs Solicitors

Solicitors Non-Solicitors

-20

0

20

40

60

80

100

Very good or better Poor or worse

Getting a Result

0% 2% 4% 6% 8% 10%

12%

Solicitors Non-Solicitors

Good ir better Poor or worse

-30-20-10

01020304050

Solicitors Non-Solicitors

3 more studies…

Specialist LA SW Contracts

Solicitors -30%

NFPs -14%

Generalists awareness of legal issues when they decided to advise

Solicitors -68%

NFPs -74%

Wills

Solicitors -22%

Will writers -21%

Prosecutors

HM Crown Prosecution Service Inspectorate (2009), Thematic review of quality of prosecution advocacy and case presentation

33%

Gulati and Scott

"Most of what we mark up and send round, we don't understand at all."

Precariousness 2. We are state of the art

Where it the cutting edge knowledge in dispute resolution?

The legal model of expertise

21

6 variables and an algorithm

22

Design – Decide –Operate – Evaluate -

Educate

Precariousness 3. We are (more) ethical

35% trust lawyers, 30% do not

Nurse

s

Docto

rs

Teach

ers

Engin

eers

Lawye

rs

Accou

ntan

ts

Civil s

erva

nts

Build

ers

Estat

e Age

nts

Banke

rs

Jour

nalis

ts

Politi

cian

s

-80%

-60%

-40%

-20%

0%

20%

40%

60%

80%

100%

TrustDon’t trust

Guilt by association…?

21% think lawyers act in the best interests of their client

Docto

rs

Nurse

s

Teach

ers

Engin

eers

Lawye

rs

Accou

ntan

ts

Civil s

erva

nts

Build

ers

Banke

rs

Estat

e Age

nts

Jour

nalis

ts

Politi

cian

s0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Act in the best interest of consumers

Act in the best interest of consumers

20% think lawyers act ethically

Docto

rs

Nurse

s

Teach

ers

Engin

eers

Lawye

rs

Accou

ntan

ts

Civil s

erva

nts

Build

ers

Banke

rs

Estat

e Age

nts

Jour

nalis

ts

Politi

cian

s0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Act ethically

Act ethically

A capacity for sophistry…

32

A general self regard?• there is a fundamental quality

inherent in this profession of integrity, ethics, and ideals and we are all very client service-oriented. We put at the forefront the needs of our clients.

• James Schiro, then CEO PWC

• “We are professionals that follow our code of ethics and practice by the highest moral standards. We would never be influenced by our own personal financial well-being.”

• Gary Shamis, American Institute of Certified Public Accountants

34

But I’m a professionalMaryam Kouchaki

• M professional = 3,767vs.

M control = 2,22541% professionals overestimated

• 6% employees

• Professionalism and Moral Behavior: Does a Professional Self-Conception Make One More Unethical?

Professional PrinciplesYou must:• uphold the rule of law and the

proper administration of justice;• act with integrity;• not allow your independence to be

compromised;• act in the best interests of each

client

Where two or more Principles come

into conflict • the one which takes precedence is

the one which best serves the public interest in the particular circumstances, especially the public interest in the proper administration of justice.

Culture• Reaching the top• PEP and other

indicators• Hourly rates• Business focus• 'client first was

bred into me'.

 Does money affect the way we think?

The money prime

Framing… why might this be important?

• ‘‘This research project is being conducted to advance the ideals and aspirations pursued by applied social science.''

• ‘‘This research project is being conducted with strict adherence to the standards and obligations required of applied social science.'‘

How commercial lawyers see their role

• “always make sure that the client …understand[s] the law. I think they also need to understand what the law is trying to achieve, so that if there is a grey area they know the correct way to interpret it.”

Grey Discomfort

“Ill-advised activity by some senior managers…” and

“the demands of management to do certain things, which …hover on the edge of illegality.”

Managed dissonance…“[O]k, you’re not really being asked to make it happen but you’re being asked to kind of... brainstorm these ideas which you feel deeply uncomfortable about, but which you kind of have to go along with because the top management has kind of given this undertaking to do everything it can to help….”

What kind of unlawfulness is okay?

“non-criminal” activity “sort of on the edge of commercial practice”

…. When you’re advising a best course of action which isn’t criminal, it’s just commercial, they can choose to ignore you, and you’re an employee.”

Public, client or firm interest?

“I would say that the firm that I work for is primarily focused on its own commercial interests and I think it would argue that it’s by placing importance on the other two that that is going to be best achieved.”

Overbilling a client

“... well I know what they will do [laughs] …is keep their mouth shut, and not look like an idiot... because …they don’t want to lose the firm money and look like people who want to give it away. … you do that at some risk to yourself…”

Ethical infrastructure?

I don’t think I’ve ever come across any support or encouragement on [the ethics] front. …it’s assumed that you’ve …gone through your ethics training …and you are meant to know it all. Nothing has ever, really ever, been said to me …from the partners or in terms of training that in any way encourages it or supports it.

Where were the lawyers?

• Lehman needed that Opinion to argue for an accounting approach which reduced their leverage

• Linklaters advised that Repo Transactions were ‘true sales’ (they were at English Law)

• There were other tests Lehman needed to apply

• Lawyer’s advice used by Lehman’s to give impression the tests had been passed. When only one had been

• Did/should Linklaters’ understand the consequences and do anything about it?

• Kershaw and Moorhead (2013) Consequential Responsibility for Client Wrongs: Lehman Brothers and the Regulation of the Legal Profession

Nightjack• J hacks email,

establishes who Nightjack is

• Meets AB (in-house lawyer)

• J establishes ID via legitimate means

• DC Horton seeks Injunction

• Affidavit implies, or states, J began search process legitimately

• Leveson, SDT and HC

Rupert Murdoch @ Leveson

• I think the senior executives were all informed, and I -- were all misinformed and shielded from anything that was going on there, and I do blame one or two people for that, who perhaps I shouldn't name, because for all I know they may be arrested yet, but there's no question in my mind that maybe even the editor, but certainly beyond that someone took charge of a cover-up, which we were victim to....

52

Some other cases with questions

It’s okay, it’s not about our ethics…

Precariousness 4. Best regulators

Ideology or evidence?• lay membership of the approved

regulators;• separating the representative and

regulatory functions of the approved regulators;

• opening up the market to new business structures and/or greater flexibility

• the handling of consumer complaints. • consumer panels

Regulatory TechniquesEntry Education and training Fit and proper person testsCOLP/COFAsSystems and internal processes Consumer information CPD

Regulatory TechniquesInsurance Specialisation Panels Quality marksCodes/outcomes/rules Risk profiling, monitoring and supervision In-house complaints procedures

Regulatory Approaches

Legal Ombudsman Compensation/costs reductionInvestigation Informal resolution Censure / Fine / Suspension / Strike Off

Regulatory competition

And its perils

So what should be done…?

• Invest in innovation, research and development

• More rules/guidance?• A fitness to own test for in-house departments?• A fitness to run test for partners??• Principle-based regulation + enforcement

• A proper debate about the rule of law and administration of justice principles

• Ethical infrastructures and cultures• Education and training?

Precarious Professionalis

mRichard Moorhead

http://lawyerwatch.wordpress.com@richardmoorhead

r.moorhead@ucl.ac.uk