Commercial law firms must rethink their roles to avoid accusations of facilitating corruption, placing professional ethics at the centre of their decision-making when considering whether to accept new clients, according to a new report.
The Institute of Business Ethics (IBE) Taskforce on Business Ethics and the Legal Profession calls on lawyers to “apply [an] ethical decision-making framework going beyond rule-based behaviour” prioritising ethical considerations and the public interest over compliance with anti-money laundering (AML) regulations.
Chaired by Guy Beringer KC (Hon), the former senior partner at legacy Allen & Overy, the taskforce was formed by the London-based institute in response to heightened scrutiny of the legal profession following the Russian invasion of Ukraine in 2022, which highlighted the ethical challenges faced by law firms representing clients with questionable sources of wealth.
In its overview of its findings and recommendations, the taskforce notes: “The dual identity of law firms – as commercial enterprises and as part of a public profession – creates inherent tension. While lawyers provide essential expertise that drives commerce, they also bear a responsibility to uphold justice and fairness in the public interest.
“This balance has been tested in recent years with high-profile cases [involving] law firms representing the beneficiaries of kleptocracy, state capture and grand corruption.”
The summary adds that the report “challenges the profession to rethink its role – as not just a service provider but as a steward of public trust”.
The report estimates that up to $1.26trn of questionably obtained wealth was “often facilitated by professionals working within legal frameworks but at the edge of ethical boundaries”.
The report highlights a significant gap in current AML legislation, which it argues often fails to address the ethical implications of representing clients involved in grand corruption. To bridge this gap, the taskforce recommends the adoption of a ‘Legitimate Provenance of Wealth Test’.
The test, although not a legal requirement, demands credible explanations for clients’ wealth, aiming to enhance transparency and accountability within the profession.
The report recommends firms adopt a six-step gating process for client acceptance which involves evaluating the source of a client’s wealth, assessing the risk of facilitating corruption and considering the public interest.
The taskforce also recommends that law firms disclose information about their client acceptance processes to foster public trust and confidence.
In the absence of such transparency, the report says regulators should “articulate the principles by which law firms can reconcile their professional duties with the public interest – for example, clarifying in guidance how the principle of access to representation still affords a law firm discretion over whether to act”.
Beringer emphasised that the recommendations aim to strengthen, not dismantle, the profession’s traditions.
“As lawyers, we must adapt to a rapidly changing world while upholding our long-standing responsibilities to society,” he said. “Trust, accountability and responsible leadership are no longer optional.”
UK disputes firm Stewarts, which hosted the report’s launch on 2 April, has pledged to adopt the findings. Risk and funding partner Julian Chamberlayne said: “For several years, we have been working to enhance the principles on which we base our business acceptance decisions, going beyond the minimum regulatory criteria.
“Responsible business practice is at the core of Stewarts’ strategy and vision, and today, we are proud to be [one of] the first adopters of the taskforce’s recommendations.”
The taskforce’s members include Sara Carnegie, the International Bar Association’s legal director; Michael Bennett, former general counsel of Linklaters; Jeff Twentyman, formerly of City firm Slaughter & May; Professor Stephen Mayson; and Patricia Robertson KC of Fountain Court Chambers, among others.
A report published by the IBA’s own Anti-Corruption Committee last month revealed that, despite a significant increase in lawyers’ understanding of international anti-corruption laws in recent years, the need for global collaboration to address the issue remained more pressing than ever.
Last November, an IBA report argued that soft law guidance, particularly when devised by lawyers themselves, could help ensure more ethical legal practice.
The report – The role of lawyers as ethical gatekeepers and related issues – was produced following a roundtable convened by think tank Chatham House, co-hosted by senior IBA officers and members with support from the IBA’s Legal Policy & Research Unit.
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