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Original Articles

Keeping it In-House: Ethics in the Relationship between Large Law Firm Lawyers and their Corporate Clients through the Eyes of In-House Counsel

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Pages 201-229 | Published online: 01 May 2015

  • For example, an external law firm that was heavily dependent on Enron for a large part of its profits helped Enron to cover up massive funding shortfalls through misleading financial reporting: M.C. Regan, Jr, “Teaching Enron” (2005) 74 Fordham Law Review 1139; Deborah L. Rhode, “Lawyers, Ethics and Enron” (2002) 8 Stanford Journal of Law, Business & Finance 9.
  • D.F. Jackson, Report of the Special Commission of Inquiry into the Medical Research and Compensation Foundation, vol. 1 (2004), 213.
  • Ibid, 223.
  • Ibid, 237.
  • Suzanne Le Mire, “The Case Study: James Hardie and Its Implications for the Teaching of Ethics” in B. Naylor and R. Hyams (eds), Innovation in Clinical Legal Education: Educating Lawyers for the Future (Legal Service Bulletin Cooperative Ltd, Melbourne, 2007); Christine Parker and Adrian Evans, Inside Lawyers' Ethics (Melbourne, Cambridge University Press, 2007), 237–41.
  • Tim Dick, “Lawyers Under Fire for Failing to Co-Operate” The Age (Melbourne), 28 November 2006.
  • Terence Cole QC, Report of the Inquiry into Certain Australian Companies in Relation to the UN Oil-For-Food Programme, (2006), vol. 1, lxviii.
  • Cole QC, ibid, lx.
  • Cole, ibid, lxi.
  • Cole, ibid, 235.
  • Cole, ibid, 242; Kath Hall and Vivien Holmes, “ The Power of Rationalisation to Influence Lawyers' Decisions to Act Unethically”, in this issue of Legal Ethics; Parker and Evans, ibid, 221–2.
  • Robert W. Gordon, “A New Role for Lawyers?: The Corporate Counsellor After Enron” (2002) 35 Connecticut Law Review 1185, 1190.
  • David B. Wilkins, “Who Should Regulate Lawyers?” (1992) 105(4) Harvard Law Review 801, 829.
  • Ibid, 802.
  • Ted Schneyer, “Professional Discipline for Law Firms?” (1992) 77 Cornell Law Review 1, 6–7.
  • Elizabeth Chambliss, “The Nirvana Fallacy in Law Firm Regulation Debates” (2005) 33 Fordham Urban Law Journal 119, 121.
  • “The client is king” is a frequent catch-cry by external law firms marketing themselves to corporate clients: eg Corrs Chambers Westgarth chief executive officer John Denton, quoted in James Eyers, “Tax Break on Legal Costs at Risk” The Australian Financial Review, 18 June 2008, 4.
  • Appropriate ethical permission was sought and received from the Human Research Ethics Committee (HREC) of the University of Melbourne and potential interviewees were approached and advised of the nature of the study in line with the ethical protocols agreed with the HREC.
  • “The BRW Top 1000”, Business Review Weekly, 9 November–13 December 2006. We cannot give further details as to the nature of the companies selected, in order to preserve the anonymity of our interviewees.
  • The researchers plan a larger study that will examine the ethics of large law firms by interviewing practitioners within large law firms about their systems and practices. The interviews reported in this paper are intended to give a preliminary taste of how some of the large law firms' “stakeholders” view the ethical responsibilities and performance of large law firms.
  • Karl J. Mackie, Lawyers in Business: And the Law Business (Basingstoke, Macmillan, 1989), 19–22; Eve Spangler, Lawyers for Hire: Salaried Professionals at Work (New Haven, CT, Yale University Press, 1986), 70; David Weisbrot, “The Australian Legal Profession” in R.L. Abel and P.S.C. Lewis, Lawyers in Society: The Common Law World (Berkeley, University of California Press 1988), 244, 301.
  • Robert L. Nelson and Laura Beth Nielson, “Cops, Counsel, and Entrepreneurs: Constructing the Role of Inside Counsel in Large Corporations” (2000) 34(2) Law and Society Review 457, 458; Stan Ross, “Prospects for Structural and Economic Integration of the Australian Legal Profession” (1997) 4(3) International Journal of the Legal Profession 267, 277 (outsourcing of government legal work in Australia).
  • Deborah L. Rhode, “Moral Counselling” (2006) 75 Fordham Law Review 1317, 1332–3; see also John Flood, “Megalawyering in the Global Order: The Cultural, Social and Economic Transformation of Global Legal Practice” (1996) 3(1/2) International Journal of the Legal Profession 169, 182 (discussing this procedure in the UK context).
  • Robert Eli Rosen, “‘We're All Consultants Now’: How Change in Client Organizational Strategies Influences Change in the Organization of Corporate Legal Services” (2002) 44 Arizona Law Review 637 (arguing that management rhetoric reveals a change in the way company clients use lawyers).
  • For a review of this development in the US context see Deborah A. DeMott, “The Discrete Roles of General Counsel” (2005) 74 Fordham Law Review 955, 958–65.
  • DeMott, ibid, 971.
  • Robert L. Nelson, “Ideology, Practice, and Professional Autonomy: Social Values and Client Relationships in the Large Law Firm” (1985) 37 Stanford Law Review 503, 507.
  • Wilkins, supra n. 8, 829 (arguing that actions taken by corporations to disqualify their former lawyers in conflict situations caused law firms to institute procedures to identify and avoid these conflicts).
  • David Wilkins, “A Systematic Response to Systemic Disadvantage: A Response to Sander” (2005) 57 Stanford Law Review 1915, 1938.
  • See Rosen, supra n. 24, 670 on the significance of “partnering”.
  • Statutory authorities can choose to use the panel or not.
  • See James Eyers, “First Step in McClelland's Cost-cutting Mission” Australian Financial Review, 23 May 2008, 27.
  • Interview, 2 pm, 17 March 2008.
  • The interviewee named their own company.
  • Interview, 12 noon, 18 March 2008.
  • Interview, 11.30 am, 6 June 2008.
  • Interview, 11 am, 7 April 2008.
  • See Rosen, supra n. 24. See also “Loyalty Schemes”, Lawyers Weekly Online <www.lawyersweekly.com.au/articles/Loyalty-schemes_z74613.htm> at 27 August 2008, describing theadvantages of using relationship partners to maintain relationships with key clients.
  • Interview, 3 pm, 8 April 2008.
  • Interview, 3 pm, 18 March 2008.
  • Interview, 12 noon, 18 March 2008.
  • Interview, 3 pm, 18 March 2008.
  • Interview, 11.30 am, 6 June 2008.
  • Interview, 3 pm, 6 June 2008.
  • Interview, 11 am, 7 April 2008.
  • Interview, 4 pm, 17 March 2008.
  • Interview, 3 pm, 18 March 2008.
  • Interview, 11.30 am, 6 June 2008.
  • Interview, 11.30 am, 6 June 2008.
  • See “Legal Eagles Put to Flight” Weekend Australian Financial Review, 5–6 April 2008, 9; James Eyers and Alex Boxsell, “Firms Weigh Loyalties after Warning” Australian Financial Review, 11 April 2008, 51.
  • Interview, 11 am, 7 April 2008.
  • Interview, 4 pm, 17 March 2008.
  • Interview, 12 noon, 18 March 2008.
  • Interview, 3 pm, 8 April 2008.
  • Interview, 3 pm, 18 March 2008.
  • Interview, 11.30 am, 6 June 2008.
  • Interview, 3 pm, 18 March 2008.
  • Interview, 4 pm, 17 March 2008.
  • Interview, 11 am, 7 April 2008.
  • Interview, 3 pm, 18 March 2008.
  • See for example Legal Fees Review Panel, Report: Legal Costs in New South Wales (2005) Lawlink New South Wales.
  • Interview, 12 noon, 18 March 2008.
  • Interview, 11.30 am, 6 June 2008.
  • Interview, 11 am, 8 April 2008.
  • Interview, 12 noon, 18 March 2008.
  • This is one of the main reasons why the Victorian government has one single panel for all government bodies: the Victorian state government can negotiate a deal with panel firms, meaning that governmentbodies pay a reduced rate for legal services but the firms have a more orless guaranteed volume of business from a range of government clients, rather than every state government entity buying legal services for itself from different firms at higher rates. It is reported that the Commonwealth is looking into setting up a single ‘whole of government’ panel to achieve a similar economy.
  • Interview, 11 am, 7 April 2008.
  • See James Eyers, “Legal Fees Out of Control? Call Feebusters” Australian Financial Review, 2 May 2008, 1, 59.
  • Interview, 12 noon, 18 March 2008.
  • Interview, 3 pm, 18 March 2008.
  • See reports of a benchmarking survey conducted by the Australian Corporate Lawyers' Association in Matthew Drummond and James Eyers, “Efforts to Control Costs Have Little Effect” Australian Financial Review, 14 March 2008, 59.
  • See Iain Campbell, Jenny Malone and Sara Charlesworth, “ ‘The Elephant in the Room’: Working-Time Patterns of Solicitors in Private Practice in Melbourne”, Centre for Employment and Labour Relations Law, University of Melbourne, Working Paper No. 43; Law Institute of Victoria, “Bendable or Expendable? Practices and Attitudes Towards Work Flexibility in Victoria's Biggest Legal Employers” (2006) Law Institute of Victoria and Victorian Women Lawyers; Marc Galanter and Bill Henderson, “The Elastic Tournament: The Second Transformation of the Big Law Firm” (2008) 60(6) Stanford Law Review 1867–929.
  • Interview, 3 pm, 18 March 2008.
  • The analysis in this section is based on Susan Fortney, “The Billable Hours Derby: Empirical Data on the Problems and Pressure Points” (2005) 33 Fordham Urban Law Journal 171, 188–91.
  • Interview, 11 am, 7 April 2008. Australian courts have held that for a claim of privilege to be upheld, in-house counsel must have an independent professional relationship with their em loyer; see, for example, Rich v Harrington [2007] FCA 1987; Seven Network v News Ltd [2005] FCA 142; Standard Chartered Bank of Australia v Antico (1993) 36 NSWLR 87; Southern Equities Corp Ltd (in liq) v Arthur Andersen & Co (No 6) [2001] SASC 398.
  • Interview, 11 am, 7 April 2008.
  • Interview, 11.30 am, 6 June 2008.
  • Interview, 3 pm, 18 March 2008.
  • Interview, 11 am, 8 April 2008; Interview, 3 pm, 18 March 2008.
  • Interview, 3 pm, 18 March 2008.
  • Interview, 11 am, 8 April 2008.
  • McCabe v British American Tobacco Australia Services Ltd [2002] VSC 73 (unreported, Eames J, 22 March 2002) [284]–[286].
  • Interview, 12 noon, 18 March 2008.
  • Interview, 11 am, 7 April 2008.
  • See Camille Cameron and Michelle Taylor-Sands, “‘Corporate Governments' as Model Litigants” (2007)
  • (2) Legal Ethics 154.
  • Interview, 3 pm, 18 March 2008.
  • Supra n. 5.
  • Supra nn. 6–11.
  • For example, despite the public outcry about the behaviour of internal and external lawyers and their client in the McCabe tobacco case, no lawyer has yet had any disciplinary action taken against them, partly at least because of the lack of information available to public authorities about exactly what happened within the legal team and in conversations with clients: for further detail see William Birnbauer, “Top Lawyers Face Scrutiny” The Age (Melbourne), 19 August 2007 (online edition); William Birnbauer, “Smoking Gun Aimed at Big Tobacco” The Sunday Age (Melbourne), 19 August 2007, 4; Christine Parker, “Peering Over the Ethical Precipice: Incorporation, Listing, and the Ethical Responsibilities of Law Firms” University of Melbourne Legal Studies Research Paper No. 339, 23. available at SSRN: <http://ssrn.com/abstract=1132926.>
  • See Parker and Evans, supra n. 5, 78.
  • Nelson and Nielson, supra n. 22.
  • Robert E. Rosen, “The Inside Counsel Movement, Professional Judgment and Organizational Representation” (1989) 64 Indiana Law Journal 479.
  • Interview, 4 pm, 17 March 2008.
  • Christine Parker, Robert Eli Rosen and Vibeke Lehmann Nielsen, “The Two Faces of Lawyers: Professional Ethics and Business Compliance with Regulation” Georgetown Journal of Legal Ethics (forthcoming).

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