Code of Ethics

BEST PRACTICE GUIDELINES FOR IN-HOUSE COUNSEL

KEY PRACTICE AREAS


This section deals with in-house counsel's ethical duties in key areas of in-house practice.

Professional representations

Generally

In-house counsel:

• must be aware that the mere fact that they are in-house counsel does not in any way diminish their professional responsibilities as members of the legal profession; their duties to court and client remain paramount;
  
• must act at all times in the best interests of the client organisation;
  
• may, as part of their task, give professional advice and assistance to management and staff; and
  
• must not deliberately mislead or obfuscate.
  
  
  Confidentiality
  
  In-house counsel:
  
  
• act first and foremost for the organisation for which they work and not for any one individual;
  
• must take great care and carefully consider before accepting confidential communications from staff, especially where any such communications could create a conflict between the in-house counsel and the client; and
  
• must, if they accept such communications, do what they can to advise or assist the individual concerned while respecting the confidentiality of the communication
  
  MORAL HAZARDS
  
  Jurisdictional Clashes
  
  In-house counsel:
  
  
• must inform themselves of local rules, ascertain the appropriate legal standards and apply them consistently overall.
  
• Whistle-blowers
  
  In-house counsel:
  
  
• should encourage an environment which permits internal whistle-blowers to come forward without fear of retribution; and
  
• should work to help protect the anonymity of whistle-blowers and the integrity of their communications.
  
  Gifts / Entertainment
  
  In-house counsel:
  
  
• should encourage a policy of transparency and open disclosure and avoid conflicts of interest.
  
  Unenforced or "toothless" laws
  
  In-house counsel:
  
  
• should bring management's attention to any relevant situations and ensure appropriate disclosure. Beyond this, normal legal risk assessment procedures apply; and
  
• must not assist a breach or the concealment of a breach of the law.
  
  Conflicts of Interest
  
  In-house counsel:
  
  
• must avoid conflicts of interest; they are illegal by statute in some jurisdictions, compromise the independence of counsel and could impinge on client's privilege; and
  
• faced with an unavoidable conflict, must be conscious of the conflict throughout their dealings, declare it openly and clarify the capacity in which they are acting.
  
  Risk Assessment
  
  In-house counsel:
  
  
• when acting in relation to a transaction, must exercise caution, trading-off legal risk against the desire to facilitate a successful consummation of the transaction.
  
  Use of the employer's property / assets
  
  In-house counsel:
  
  
• must exercise the same caution with and respect for property, as any other employee is required to do.
  
  LEGAL PROCESSES
  
  Privilege
  
  In-house counsel:
  
  
• have an obligation to ensure that their organisations are aware of the conditions under which privilege will apply or could be claimed;
  
• have a duty to advise employees within their organisation that they are not and cannot be their personal legal adviser in any situation where that could conflict with their duty to represent the organisation itself. They should advise such employees to take separate representation;
  
• must always consider who is the client? Counsel should regard the organisation itself as the client; and
  
• may make a claim for privilege if a case for privilege exists but not if it is clearly known that the privilege has in fact been lost.
  
  Choice of Counsel
  
  In-house counsel:
  
  
• must endeavour to avoid choices of counsel being made solely on personal grounds (theirs or others). Relationships with counsel should be arm's length and based on commercial criteria.
  
  Opinion shopping
  
  In-house counsel:
  
  
• must beware of in-house "opinion shopping" and of clients who "trade-off" in-house views against external views. Where practical, they should install appropriate controls to prevent this;
  
• must state their views unequivocally particularly where they have another view from the one obtained;
  
• should record all advice given, particularly if that advice is being ignored by the client;
  
• must ensure that external counsel, when consulted, are appropriately briefed with all the relevant facts; and
  
• must endeavour to obtain the best available advice in the circumstances and inform the client of all advice obtained, at the same time stating their own view.
  
  Discovery
  
  In-house counsel:
  
  
• must strictly comply with the rules of discovery once proceedings have commenced;
  
• have a duty to inform those concerned within their own organisation of their obligations in relation to discovery;
  
• if they have reasonable grounds to believe that proceedings will commence, must also strictly comply with the rules of discovery;
  
• if they are aware that discoverable documents have been or are going to be destroyed, must disclose that fact to the other side and to the Court;
  
• may take the view that the destruction of documents is permissible but only if destruction occurs in the normal course and no proceedings have been commenced or are contemplated; and
  
• must be cognisant of the fact that the public interest may be a relevant consideration in relation to the retention / disclosure decision in a given situation.
  
  Use / abuse of legal process
  
  In-house counsel:
  
  
• have a duty to inform their client of the existence and significance of the abuse of process rules and to ensure that they are observed; however
  
• if there is a legitimate business interest at stake, are of course entitled to take full advantage of the dispute resolution process.
  
  Indemnities
  
  In-house counsel:
  
  
• must ensure that the quality of any professional advice obtained is not influenced by whether or not an indemnity from the organisation exists;
  
  
  
  KEY RELATIONSHIPS
  
  This section deals with in-house counsels' ethical obligations in respect of key professional relationships.
  
  STAKEHOLDERS GENERALLY
  
  In-house counsel:
  
  
• should promote the adoption of compliance and other procedures and policies within their organisations which take account of the legitimate interests of all the organisation's stakeholders while protecting and nurturing the social fabric and the physical environment of the world in which the organisation operates.
  
  MANAGEMENT / BOARD
  
  In-house counsel:
  
• should preferably report to a senior executive such as the Chairman, CEO or CFO;
  
• should not proffer legal advice to the Board if they are themselves a Board member; and
  
• should be wary of advising individual Board members. Their advice should preferably be to the organisation as a whole.
  
  SHAREHOLDERS
  
  In-house counsel:
  
  
• must take account of the legitimate interests of shareholders;
  
• must avoid any relationship with a shareholder which involves the shareholders wanting to discuss confidential company matters; and
  
• must disclose any interest held by counsel, which could affect counsel’s judgement or integrity.
  
  BUSINESS PARTNERS
  
  In-house counsel, in their relationships with business partners must observe:
  
  
• employee's duty of fidelity;
  
• any applicable obligations of confidentiality; and
  
• any applicable obligations of privacy
  
  CUSTOMERS
  
  In-house counsel:
  
  
• should treat customers just as they would any other member of the community;
  
• must avoid conduct with or statements to customers which could contravene laws or give a customer a right of action against the organisation; and
  
• must disclose any material interest, which they have with a customer if that is relevant to a particular transaction.
  
  EXTERNAL LAW FIRMS
  
  In-house counsel:
  
  
• should observe good commercial practice and generally, should ensure that their organisation has formal, written arrangements on appropriate terms with its key legal services suppliers. The agreement should evidence an arm's-length relationship and contain clear rules for dealing with conflicts.
  
  REGULATORS / GOVERNMENT / OFFICIALS
  
  In-house counsel:
  
  
• may seek to get to know and to promote good relationships with regulators / government / officials where that is in the interests of their employer and/or will enhance the organisation¡¦s reputation as "a good corporate citizen";
  
• must take care that such relationships remain at arm's-length and professional at all times;
  
• must ensure that they understand any relevant Acts and as far as possible, endeavour to ensure that regulators do not exceed their authority as a result of any personal relationship; and
  
• must avoid providing them with information which breaches any obligation of privacy or confidentiality.
  
  COMMUNITY
  
  In-house counsel:
  
  
• should observe the rules of -
  o courtesy and consideration
  o fidelity and integrity
  o confidentiality
  o privacy; and
  
• must disclose any interest held by counsel which may affect counselled judgement or integrity
  
  COMPETITORS
  
  In-house counsel:
  
  
• should encourage good relations with competitors but only in an attempt to achieve best legal practice. In particular, if any contact with a competitor could lead to a breach or a perception of a breach of the trade practices legislation, that contact should be avoided; and
  
• must always disclose any interest held in a competitor if that interest could affect counsel’s judgement or integrity in a particular transaction.