In a new post at Legal Week, Richard Moorhead draws attention to an interesting new research paper on legal ethics by Christopher J. Whelan & Neta Ziv. The paper, titled “Privatizing Professionalism: Client Control of Lawyers’ Ethics” (to be published in a forthcoming issue of the Fordham Law Review, now available on SSRN) explores the ethical burden corporate clients place on their outside counsel. Whelan and Ziv examined the formal guidelines given to outside counsel by their clients, as well as informal industry ethical norms, to determine what impact corporations can have on the ethical standards and behavior of their lawyers.
The authors found that clients can, in fact, exert considerable influence over the ethical behavior of their outside counsel. More significantly, Whelan and Zin make the argument that such influence is an important form of “private regulation” that may fill in the gaps between government regulation of legal ethics and self-regulation by the industry:
Thus, the privatizing of professionalism may offer a new method with additional tools for the effective monitoring of lawyer ethical conduct. External regulators cannot effectively monitor individual lawyer or law firm behavior, but corporate clients can, via their [outside counsel] guidelines and other procedures. Not only can clients, especially in-house counsel, monitor lawyer conduct directly and indirectly, they have the leverage to direct and to manage particular behavior. Our research suggests that this is in fact what many corporate clients, to a greater or lesser extent, actually do.
It is an interesting development in the evolution of legal ethics standards. The authors are right that clients are better positioned to monitor the behavior of their own lawyers, and may also be better able to incentivize ethical behavior. But it is precisely that closeness that makes private regulation questionable. It may work well when the ethical concerns are typical and the motivations of both client and outside counsel are aligned. But that will not always be the case. As Moorhead rightly points out, the trend raises a key question: “What happens when business interests and ethical interests are in opposition?”
Posted by Emily Fisher