Thursday, October 29, 2015

On Sometimes Onerous Client Terms and Very Real Law Firm Concerns



Fascinating summary and analysis from Richard Moorhead, Director of the Centre for Ethics and Law and Professor of Law and Professional Ethics at the Faculty of Laws, University College London, on the SRA's recent publication: Independence, Representation and Risk: An Empirical Exploration of the Management of Client Relationships by Large Law Firms: "Out of the Shadows: Are Institutional Clients Influencing Lawyers to the Detriment of Others?"--
  • "The study concentrated on ‘high impact’ [i.e. high risk in SRA terms] commercial firms working.  The essential concern addressed by the research was whether institutional clients were exercising too much influence over the firms they instructed, to the detriment of the public interest and/or the interests of other clients."
  • "The central finding was that all respondents, 'discussed a shift in the balance of power from law firms to clients… [with] major corporates and financial institutions seek[ing] to impose their own terms of engagement on law firms.'  Most interviewees it seemed felt forced to accept terms of engagement dictated inflexibly by the client although some reported routinely and successfully pushing back on unacceptable terms."
  • "Whilst generally the resurgent client is seen as a positive, this report suggests some negatives.  Similarly, one might be tempted, unwisely if taken too far, to discount general grumbles that client procurement practices discourage lawyers from viewing themselves as professionals.  Allied with the concern that lawyers are increasingly thinking of themselves as mere ‘service providers’, the report raises more specific concerns which it seems to me do require careful thought and a considered response."
  • "The first of these is the familiar concern that institutional clients deliberately seek to conflict certain large firms out of litigating against them, whether that conflicting out is merited or not.  Partly this seems to be institutional clients, not entirely unreasonably, taking a broader view of conflicts of interest than law firms would like to take.  There may also be a degree of seeking to transport tougher US rules to UK firms."
  • "A more worrying problem is that (some) clients appear to be seeking terms which (some) firms accept that may affect duties it owes to other or future clients."
  • "The report considers a second set of potential problems including the attempts of clients and firms to ‘add value’ to their mutual relationships through secondments and the like.  As the report puts it there are: '...potential for breaches of confidentiality to arise from client terms –  via inbound secondments, IT and data protection audits, most favoured nation clauses etc – struck us as being high, but our interviewees seemed confident that this risk was being managed appropriately.'"

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