In an article published by Corporate Counsel this week, Ethical Systems chief executive Azish Filabi and consultant Jim Lager argue that in-house counsel need to reclaim the mantel as the ethical guardians of the companies they serve.

Ethical leaders

Lawyers working within business environments have been steered away from a 'wise counsel' approach to legal practice due to the economic, structural and behavioural pressures that come to bear on the 'company lawyer'. As in-house counsel look to position themselves as value-adding 'enablers', they might be tempted to strip their function as lawyers back to its bones, putting out fires where the arise and helping companies 'find the yes' through legal loopholes. Growing competition between in-house departments and their law firm counterparts can also push GCs to prioritise cost effectiveness and efficiency over their ethical duties to their employers, their customers and the public. However, Filabi and Lager argue that providing an organisation with sound ethical leadership should be the ultimate role of any GC—and is the most crucial way in which in-house lawyers can help ensure the long-term viability of the business. 'We think that good ethics makes compliance easy,' the authors argue.

Good for business

Ethical practice doesn't always have to come at a cost to business—in fact, the very opposite is often true. 'Ethical fading by lawyers who see their role more as a legal technician than a wise counsel has had disastrous consequences for both clients and the public,' the Filabi and Lager argue, highlighting the ongoing turmoil engulfing General Motors as a case in point. An investigation by Anthony Valukas concluded that GM lawyers opted to settle cases relating to the automaker's ignition switch for nine years without raising the matter as a safety issue or ethical concern. The result of this narrow and short-term focused approach, Filabi and Lager suggest, was a delay in action which hit GM with massive costs associated with vehicle recalls, reputational damage, regulatory fines and a host of lawsuits—as well as, it has been alleged, the deaths of at least 90 GM customers.

The moral lawyer

Ultimately, Filabi and Lager argue that in-house counsel must remind themselves of their ethical duties and reintroduce moral concerns into their decision making, or risk leaving their companies exposed to calamitous unknown risks. Beyond steering legal decision making, sculpting ethical organizational culture is key. 'A culture of amorality in the general counsel's office could lead to one where ethical transgressions become banal, so commonplace to a culture that it becomes infused with irresponsibility, giving little consideration to reputation or stability,' the authors warn.

Filabi and Lager's full article can be found on Corporate Counsel