Human rights and environmental due diligence for law firms? Bold ideas from the next generation of lawyers.

Human rights and environmental due diligence for law firms? Bold ideas from the next generation of lawyers.

(The views expressed here are my own and do not necessarily reflect the views of any of the organizations or institutions I am affiliated with). ??

What is a “responsible” law firm? Should law firms be held responsible for adverse human rights and environmental impacts associated with their client work? If yes, what should be the scope/extent of law firm responsibilities and how might they be implemented in practice??

These are complex and fraught questions with no easy answers. However, as law firms make difficult ethical and financial decisions in relation to their work in Russia/for Russian clients as a consequence of the war in Ukraine, the importance of these questions is apparent now more than ever. ?

Moreover, with the long-awaited publishing of the EU draft directive on corporate sustainability due diligence, these questions are also no longer merely hypothetical. ?The draft directive, which requires certain large companies operating in the EU to carry out human rights and environmental due diligence, will certainly apply to law firms indirectly via their multi-national clients, if it does not apply to them directly (which remains unclear under the current draft). ?

Some law firms are trying to get ahead of the pack, announcing new policies – unthinkable just a few years ago – which would see them scanning new client matters for climate change or human rights risks and moving away from such matters. ?Some would say these developments are not soon enough.

Scandals revealing how leading London law firms benefited in the past from slavery reveal only too well that practices which are accepted or merely questionable today may well be illegal and morally repugnant tomorrow. There are risks in being slow to get on the “right side of history”.

However, there are important reasons to be weary of calls for law firms to start behaving like human rights activists and de-risking clients engaged in questionable (according to some standard) moral conduct. Chief among such reasons are legal professional ethics rules, which paint a more nuanced picture in relation to this issue.

The duty of independence requires that lawyers must be independent from any influence (personal or external) and should be partial only towards their client interests. According to this principle, lawyers must not compromise on professional/ethical standards to please clients or seek to serve their own personal interests through their clients. From this principle, we can conclude that lawyers should not be identified with the deeds of their clients, no matter how morally questionable those deeds are. The lawyer defending the axe murderer should not herself be accused of being an axe murderer. ?The lawyer defending a terrorist cannot be accused of sympathizing with terrorism. ???

Also important are the principles of access to justice and the rule of law. In a system of laws, everyone is entitled to protection under the law and access to legal advice and representation – yes, even human rights abusers and environmental polluters. Indeed, even the Nazis had competent legal counsel at the Nuremberg trials and rightly so.

The duty of client confidentiality or secrecy implies that lawyers may not be compelled to reveal client information shared in confidence and have a duty of secrecy which is intrinsic to the lawyer-client relationship. From this, we may conclude that broad obligations on lawyers to act as whistle blowers on their clients in relation to loosely defined human rights norms would be entirely incompatible with the role and function of the lawyer vis-à-vis their clients. Not to mention they would be entirely unenforceable in practice. Let’s not forget that human rights norms not only include core civil liberties such as the rights to life and freedom from torture. They are far more extensive and include e.g. the rights to work, to take part in cultural life, to equal participation in political and public affairs, to form trade unions, to an adequate standard of living, to freedom from hunger, to the enjoyment of the highest attainable standard of physical and mental health and many, many more. How could a lawyer even be aware of all possible human rights risks associated with their client’s business activities?

However, there are other professional duties, exemplified by the ABA Rule 2.1 and the CCBE Charter and Code of Conduct Preamble, which point to a duty of lawyers to take into consideration moral, ethical and social factors beyond law when advising clients and encourage lawyers to be trusted advisors to their clients in the broadest sense. These norms bring to mind a quote from the Honorable Thelton Henderson: “A partner in a major law firm who works to ensure that his or her corporate clients treat their employees in a non-discriminatory manner, or that his or her clients take the high road even as they pursue the bottom line, furthers the public interest just as much as the lawyer who sues the corporation for discrimination or the lawyer who charges the corporation with fraud…”

In between these various professional ethical duties on the one hand, and the emerging soft law and hard law demands on law firms to engage in human rights and environmental due diligence on the other hand, lies a vast black box. What would such due diligence even look like in the context of a commercial law firm? How would it be implemented in practice?

In a recent class with law students at NYU Paris, I decided to run an experiment. ?The students were given 15 minutes to come up with a law firm human rights and environmental due diligence policy. The results were fascinating. Big, bold ideas from the next generation of commercial lawyers.

From the draft directive, the United Nations Guiding Principles on Business and Human Rights (from which the draft EU directive takes inspiration) and other instructive norms such as the OECD Due Diligence Guidelines for Responsible Business Conduct, it is clear that corporate human rights and environmental due diligence must certainly include (in some form):

·??????Integration of due diligence into policy in order to identify risks to adverse human rights and environmental impacts arising through corporate operations and the corporate value chain (in a law firm this might practically consist in elevated client KYC, client ethical Codes of Conduct or ESG related contractual assurances in legal service agreements); and

·??????Preventing adverse impacts on human rights and the environment or bringing them to an end - either by applying leverage or by ceasing the offending activity/contribution to that activity (in a law firm context this might consist in dropping certain matters or refusing to take them on, or advising clients to pursue legal strategies that minimize or eliminate adverse impacts). ?

But what did the students come up with? Here are just a few of their ideas:

1. Develop a tiered fee-structure and apply higher fees for clients working in high-risk sectors and use the proceeds to fund philanthropic activities seeking to ameliorate human rights and environmental harms in those sectors. ??
2. Provide six-months of free human rights and environmental compliance advice when onboarding new clients in high-risk sectors.
3. Require annual minimum disclosure requirements for clients in high-risk sectors (e.g. by way of standard ESG related representations). ?
4. Systematically present various options (including more human rights and environment respecting options) to clients in matters where there are human rights and environmental risks.
5. Develop in-house due diligence teams (presumably within the risk or general counsel function) to identify and scan high-risk matters for human rights and environmental risks. ?
6. Develop a flexible model of scrutiny for due diligence in relation to clients/ matters where:

• ????A higher level scrutiny is applied where there are clear risks to vulnerable groups (e.g. low income communities);
• ????A higher level of scrutiny is applied to transactional matters as compared to disputes matters (because in the context of disputes, professional duties of independence and access to justice are more pertinent than in relation to transactional advice);
• ???A higher level of scrutiny is applied to new clients as compared to long-standing clients, where preference will be given to using law firm leverage to provide existing clients with human rights and environment respecting legal options.

Of course, many questions and doubts will naturally arise/occur to the experienced commercial lawyer about how practical or feasible these ideas are. Nevertheless, they certainly provide food for thought.

In an age of global inequality and climate change, it might be time to reflect on the role of and the ethical norms applicable to the corporate bar. Famed US Supreme Court Justice and public interest lawyer, Louis Brandeis (speaking in the early 1900s) complained that, ”instead of holding a position of independence, between the wealthy and the people, prepared to curb the excesses of either, able lawyers have, to a large extent, allowed themselves to become adjuncts of great corporations and have neglected the obligation to use their powers for the protection of the people.” There are some who might say that this comment still rings true today.

Whatever the eventual outcome, these emerging norms and laws related to responsible business conduct will probe important and reflective discussions within the legal profession. I would hope that, at a minimum, the next generation of lawyers has a seat at the table when the discussions are taking place. ?