Clients should require their law firms to have robust compliance programs

However, having looked into this question as a part of my continuing professional education, I have found that the legal profession worldwide is much less active on the topic of compliance than I expected. Law firms seem to be doing less due diligence and paying less attention to compliance within their firms than they do for the clients whom they advise.

It is my intention to encourage law firms to act as role models for compliance, and increase awareness of corruption, enforcement, and compliance in Latin America and beyond.

Lawyers are often potentially close to the epicenter of corruption processes — not only as key intermediaries but also as essential parts of the neutralization and legitimization of what would otherwise be “corrupt” activity, protected as they are by the shield of confidentiality.

Lawyers take an oath of integrity in order to obtain their licenses and titles and to be able to call themselves lawyers. The license and title signify that we have gained the necessary knowledge to defend and promote the rule of law. If our oath has a real meaning, then lawyers have the responsibility of living out the oath and doing what we can to protect the value of the rule of law.

The perception that lawyers are involved in corruption has become relatively widespread. According to a joint survey by the IBA, OECD, and UNODC, of 642 legal professionals from 95 jurisdictions, roughly half considered corruption to be an issue in the legal profession, both in their home and in neighboring jurisdictions.

Here’s my suggestion: That clients require from law firms evidence of anti-corruption compliance and that the firms have established robust compliance programs.

It seems a reasonable expectation that compliance programs within law firms should be the norm: Law firms surely be expected to have internal controls and systems adapted to their size, type of operation, primary country of operation, and the other countries they are associated with.

In March of 2019, I interviewed the former Business Ethics Coordinator of a major international law firm. She confirmed to me that during the years she had worked in the law firm, no client had ever asked to see or read the firm’s compliance program. That’s odd. For years, companies have been requiring their suppliers to sign their ethic codes and prove they have implemented adequate measures to prevent corruption in their businesses. And yet the same companies do not require anything similar from some of their highest-risk suppliers — their legal advisors.

More than two-thirds of respondents in the IBA, OECD, and UNODC survey said their law firms had not been subject to anti-corruption or anti-money laundering due diligence conducted by foreign clients. Instead, most external counsel were hired as a result of networks and referrals. And yet without proper vetting and due diligence mechanisms, clients have no way to assess the presence of possible conflicts of interest, undue influence, and anti-corruption awareness, which leaves them at risk.

In the UK, the Solicitors Regulation Authority requires all regulated legal service firms to appoint Compliance Officers for Legal Practice (COLPs). Despite the COLP requirement, little is actually known about how compliance roles operate within legal service firms. If that’s the situation in the UK, where anti-corruption legislation is advanced and compliance is robust, what can be expected from law firms and lawyers in countries where enforcement and compliance lag far behind?

In fact, less than 40 percent of the IBA, OECD, and UNODC survey respondents said anti-corruption was a priority at their law firm, and almost a third of respondents said their firms do not have a clear and specific anticorruption policy. Similarly, 65 percent of respondents admitted that they do not have a policy for monitoring the anti-corruption compliance of existing legal counsel.

I examined materials published by some of the biggest law firms in different countries, to find their anticorruption policies, programs, or compliance staff. My conclusion is that only some multinational law firms, members of the so called Magic Circle in the UK or Big Law in the United States, sometimes have information available on their web pages, while most others do not. Some firms did publish policies and codes of conduct for suppliers, but not for their own members and employees, at least nothing visible to the public. That means some of the best-known law firms in the world are giving advice about anti-corruption enforcement and compliance while apparently not implementing relevant policies and practices within their own organizations.

Companies that are committed to leveling the playing field and doing business in an ethical and responsible way should start by asking to their legal advisors for evidence of their anti-corruption policies and practices, and by carrying out due diligence to determine whether the law firm in question shares the same values they are trying to promote.