Investigations into partner wrongdoing – common concerns and best practice
It’s never been more vital for law firms to have robust structures in place to deal with a complaint made against a partner, write Clare Murray, Beth Hale and Pooja Dasgupta
This article is part of a series by CM Murray, Navigating Partnership Law, that explores issues being raised with the London-based employment specialists by law firms and their partners.
The #MeToo and Black Lives Matter movements have brought into sharp focus the prevalence of misconduct allegations against partners in the professional services sectors. The way in which such allegations are addressed by firms has also come under particular scrutiny. Here, we explore below some of the most common problem areas and some best practice recommendations for firms responding to complaints about alleged partner wrongdoing.
Common concerns in handling partner investigations
The situation can develop very quickly after a firm receives a complaint involving potentially serious allegations of misconduct against a partner; those receiving the complaint may feel pressure to act fast, which leads to errors being made at an early stage from which it can be hard to row back. The complaint may raise a number of complex and sensitive issues and name several individuals. It is a very common – and in some ways human – reaction for affected individuals to try, directly or indirectly, to shape the firm’s response to those allegations. It is absolutely essential that, right from the outset, that this is prevented; that all control of the investigation is placed in the hands of other suitably empowered members of the firm who are independent of the allegations and that any lobbying efforts by well-intentioned colleagues are firmly resisted.
Whilst firms are usually well equipped with a full suite of policies and procedures to guide them through investigations relating to employee misconduct, they often lack the equivalent framework of policies specifically tailored to and appropriate for partners. Firms can refer to the ACAS Code of Practice on disciplinary and grievance procedures as a starting point in relation to partner investigations, but with partner-focused policies it is vital to ensure:
- consistency of handling between partners to minimise the risk of unlawful discrimination and unlawful whistleblowing detriment as far as possible (a common problem area for firms):
- a fair process and rational decision-making by the firm in relation to its response to the allegations being investigated:
- the process dovetails both with the powers and obligations of the firm, and the rights and obligations of the individual partner contained in the firm’s LLP or Partnership Agreement (which will differ from those relevant to the firm’s employees); and
- to reflect the structure and corporate governance requirements of the particular firm, including any internal and regulatory global reporting obligations in relation to allegations of partner wrongdoing.
Other common problem areas that we see in partner misconduct investigations include, but are not limited to:
- ensuring investigator independence – firms may resist the potential appointment of an external investigator who may be able to lift a lot of internal pressure and political embarrassment by assuming this role for the firm; or fail to ensure full impartiality of subsequent decision-makers;
- considering on an ongoing basis the wellbeing of all parties involved, including not only the complainant, but also the alleged perpetrator and potential witnesses. The process can be an incredibly stressful, distressing and isolating experience for all concerned and it is crucial that firms proactively consider the health and wellbeing of and support required by individuals;
- taking adequate steps to prevent victimisation of or retaliation against the complainant and potentially witnesses too, both during and after the investigation has been undertaken. This is a common area where firms can often adopt too light a touch and where consistently more focus is required; and
- carefully considering regulatory duties to notify the allegations to the SRA and keep them updated on the investigation in a proactive and timely manner.
There are, of course, many firms who are alive to the above issues, seek early advice and follow best practice when handling partner investigations. Taking such steps to ensure a thorough and independent investigation will also likely assist the firm, the accused partner and the complainant in complying with their respective legal and regulatory obligations and to reduce risk as far as possible. In contrast, firms that don’t follow fair and thorough processes may leave themselves exposed, not only to legal and regulatory risk, but also to potentially significant and lasting reputational damage, particularly in view of the media’s continuing interest in high profile misconduct allegations.
Policies and training
As mentioned above, firms should implement, and continually review, partner-specific policies that are aimed at preventing and responding to complaints of harassment, bullying and other types of wrongdoing. Policies should outline the key steps to be taken in any investigation, including how to make a complaint and setting out a range of informal and formal steps to deal with the complaint within specific timeframes. Whilst firms should endeavour to follow their policies to the letter, this is sometimes practically challenging as, for example, new information may come to light during the investigation. Firms should therefore incorporate into the terms of reference for any investigation a certain level of flexibility for investigators to deal with any such new information or issues that are raised once the investigation has begun.
In addition to having well drafted policies, firms should ensure appropriate and robust training on a regular (rather than one-off) basis to (a) communicate the firm’s ‘zero-tolerance’ approach to such behaviour; and (b) offer guidance to first responders regarding the practicalities of dealing with a complaint, particularly in respect of how and to whom the complaint should be escalated. Firms should also ensure that they monitor partner behaviour and take appropriate and consistent steps, including potential disciplinary action, in circumstances where allegations are upheld.
Following ACAS Code principles
As mentioned, the ACAS Code does not apply to partners or LLP members; however, it offers helpful guidance on due process in the context of internal investigations, grievances and disciplinary proceedings. Incorporation of certain ACAS Code principles into any partner-specific behavioural policy will assist firms in ensuring consistent and fair handling of complaints and is likely to reduce the firm’s exposure to discrimination and whistleblowing claims in the longer term.
Reviewing and updating the LLP/partnership agreement
It is important for firms to review their LLP or partnership agreement to ensure that their powers under the agreement are adequate for the purposes of dealing with an internal investigation. For example, firms should consider whether they have express powers to (a) ensure that partners comply with firm policies, with express grounds for expulsion for breach; (b) suspend the alleged perpetrator during an investigation into alleged wrongdoing (or any subsequent disciplinary process); (c) impose sanctions, where necessary (LLP agreements very often being silent on sanctions short of expulsion i.e. demotion or financial sanctions); and (d) allow the firm to take privileged legal advice without being required to disclose that advice to the partner under investigation.
Firms should also be mindful of the detrimental impact that investigations of this nature might have on the wellbeing of the complainant, the alleged perpetrator, any witnesses and other colleagues who work closely with any of those involved. This is particularly relevant where the outcome of the investigation could potentially have career-changing (and in some cases family and life-changing) impacts for some of those involved. It is therefore advisable to arrange appropriate support and counselling for all parties involved throughout the investigation process and beyond; merely directing an individual to the firm’s Employee Assistance Programme benefit may not be sufficient in certain circumstances to ensure that the individual is properly supported.
Law firms have done a lot of work over the last couple of years to respond more effectively to allegations of partner wrongdoing, and sought to proactively eradicate unlawful discrimination, harassment and bullying in their workplace. It is important, though, that as the workforce returns to the office in some form or another firms have primed their systems, training and processes for partners to ensure that any issues that might emerge are dealt with swiftly, effectively and fairly for all concerned.
Managing partner Clare Murray, partner Beth Hale and associate Pooja Dasgupta specialise in partnership and employment law at CM Murray