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The ethics of choosing clients

Feature Articles

Cite as: Jan/Feb 2015 89 (1/2) LIJ, p.46

Law firms should consider the best approach to take when faced with ethical questions, particularly when deciding  which clients to serve. 

By Rufus Black

Ethics special issue

Law firms face important ethical questions when it comes to potential clients who engage in what some see as morally questionable enterprises – from selling tobacco, gambling products, armaments and pornography to engaging in environmentally harmful activities.

The overall approach

While it might sound like a rather “academic issue”, the first step is for a firm to decide the approach it will take when solving ethical questions, because different approaches lead to very different answers when deciding who to serve and how.

The utilitarian approach

This is the most widely used form of ethics today – the right thing is that which will produce the greatest good for the greatest number.

When it comes to applying utilitarian thinking to business ethics, a common approach articulated by Milton Friedman is:

“There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud”.1

If you follow this utilitarian logic then so long as a client runs a legal business the only question is whether the client can be served profitably. There are, of course, important second order effects to be considered in determining profitability – the impact on the firm’s reputation from serving businesses regarded as unethical and the impact on the firm’s ability to attract talented staff who do not want to serve businesses they judge as unethical. The answers need to be weighed in any utilitarian calculation, but in principle, who a firm decides to serve is a profit maximising decision.

The non-utilitarian approach

Even before the global financial crisis, there had been a growing shift away from this narrowly utilitarian view to one that maintains that corporations have a wider set of ethical and social responsibilities. For those holding these views, the question of what is an ethical business is more complex.

Practically, the judgment that a business is unethical can lead to the decision not to provide them with goods or services, or not to invest in them.

Those who hold this broader view of the social and ethical responsibilities of corporations have drawn on a range of non-utilitarian traditions of ethical reasoning including Kantian, Aristotelian or natural law theories.2 Often they have done this relatively unsystematically and with little or no explicit awareness of the form of ethical reasoning they are using. If you are to use a non-utilitarian approach, you must be explicit about the approach and systematic in its application.

Who decides?

With a range of ethical approaches open, one answer is to let each individual in the firm decide how they will reason ethically and, therefore, which clients they will serve. The difficulty with this approach is that individual decisions have implications for others. The choice of one partner to serve a business that many regard as unethical will lead to the firm as a whole being associated with serving such clients. Clearly, that has implications for all partners and employees. Therefore, the decision to let everyone decide is an important philosophical position in its own right.

Choosing options

If a law firm decides to adopt a particular ethical approach, then there is the important matter of how this is to be done.

The starting point is what approach best fits with the firm’s identity. Some firms have a clear sense of where their staff generally stand in a particular ethical tradition. Some would recognise that their employees would not be happy with a utilitarian answer, and that if a given business is legal, the firm is willing to serve them, and therefore a non-utilitarian approach best fits their general outlook.

If the firm’s identity doesn’t provide a clear direction, then there is a need to debate the merits of different approaches and to recognise that the decision will be an identity defining choice.

Implications of a non-utilitarian approach

If a law firm decides on a non-utilitarian approach then there are some further analytic steps on whether and how ethically questionable clients can be served.

For the purposes of this analysis, we will use a natural law theory approach, as articulated by the contemporary Oxford jurisprudential philosopher John Finnis3 for three reasons:

  • It is the theory that has addressed the question of involving oneself in other people’s wrongdoing with the greatest analytic precision;
  • It is a theory of ethics from which the common law grew, which means lawyers find it aligns well with the ethical logic embedded in legal traditions;
  • The practical conclusions are very similar to those produced by Kantian traditions. So even if you don’t agree with natural law theories, the practical answers are likely to have a wide appeal among many non- utilitarian thinkers.

Obligation to serve a client

It is certainly a central tenet of the rule of law that a person brought before a court should be able to have their case competently presented. In our legal system, to help ensure that this requirement is met, the obligation has evolved that barristers must accept the brief of any client who seeks their assistance if they are not otherwise engaged. Today, that is supported by the provision of legal aid to help meet the cost of representation if a client is unable to do so.

However, our system has not made it obligatory for solicitors’ firms to accept clients. Rather, we have implicitly adopted the view that solicitors’ firms are private business and that while the services they provide are a public good, they are able to determine to whom they provide that good. Our system relies on having a plurality of firms that collectively ensures that all businesses and individuals can access basic legal services. In cases where there is market failure in relation to basic services, which happens primarily in relation to individuals, it is addressed through the provision of legal aid services.

Choosing clients

Given that private solicitors’ firms can choose who to serve, how do they make that choice when it comes to clients with ethically questionable business activities?

The first part of that answer depends on how the firm understands its purpose. For a utilitarian, the purpose of the firm is to maximise the return for its shareholders or owners within the bounds of the law. However, a natural law approach, while certainly agreeing that making an adequate return for investors and owners is an important obligation, starts by asking what is the intrinsic purpose of the business.

Some law firms see their intrinsic purpose simply as the provision of legal services. If they view themselves this way, then their purpose doesn’t really limit who they service so long as the client has a legal need and they are competent to meet it.

Other law firms understand the purpose of their business in broader terms, for example, they might see themselves advancing a more equitable Australia through making union clients their focus. While broad, that purpose does imply some real choices about what businesses the firm will seek to serve.

It is on the basis of fit that some firms might also choose not to serve clients. Such a decision doesn’t necessarily require a strong view that a business is unethical, but rather that serving this client doesn’t fit with what you have chosen to focus your firm’s talent and resources on. You might, for example, be interested in advancing the health of Australians and focus on the clients in the healthcare sector, and so even if you thought a fast food company was an ethical business, you might choose not to serve them because it doesn’t fit with your firm’s purpose.

Is the business unethical?

There is likely to be a wide range of clients that would fit most law firms’ vision and purpose, but might still be ethically questionable. Therefore, how do we determine if a client, or potential client, runs an unethical business.

Unethical products or services

There are many ways products or services could be unethical.

  • There are products and services where any form of consumption is inherently unethical. For example, some will argue that any use of prostitution or pornography treats a person as a means to an end, and is, therefore, unethical;
  • There are products or services which are unethical because of the harmful side effects they produce. Tobacco might be argued to provide a pleasurable experience, relaxation, or the facilitation of social interaction and so its consumption is not inherently unethical. However, the problem is whether you can reasonably accept the harmful side effects of tobacco consumption on people’s health and the devotion of substantial, scarce and expensive medical resources to treat preventable tobacco related illness rather than other conditions. Some take the view that the harmful side effects can’t reasonably be accepted and that, therefore, these business are unethical. Others will respond that society has decided to mitigate these harmful side effects so that they can reasonably be accepted as part of a societal choice to allow people the freedom to engage in risky activities or ones where they suffer some harm;
  • There are goods or services which are unethical because of the harm caused in producing them. Poor working conditions, child labour and environment destruction have given rise to this concern in recent times.

Is the business conduct unethical?

Regardless of the goods or services a business produces, the way it conducts its business can be unethical. Today, most forms of unethical business conduct – false advertising, mistreatment of employees, abuse of market power – are illegal as well as unethical. Nevertheless, there is still room for legal but unethical conduct, especially where businesses operate in countries with limited restrictions on business conduct.

If the law firm follows a non-utilitarian approach, then it needs to ask whether any of its clients or potential clients are producing goods or services that are unethical or conducting their business in an unethical manner. This doesn’t mean they can’t be served, as we will see below, but if a business is unethical it triggers a different set of questions about what that firm can do for them.

Limits to serving an unethical business

Even if a business is unethical, there are still circumstances in which serving it can be ethical. Before exploring those circumstances, it is important to recognise that life often involves some form of cooperation with other people’s wrongdoing. For example, taxpayers fund wars they may consider unjust, or we might buy a car made with steel produced by a highly polluting smelter.

Some involvement in the wrongdoing of others is inescapable, but is it justified? Because this is a common problem, much ethical reflection has gone into answering this question. For a law firm, the acute form of this question is when is it reasonable to serve clients with unethical businesses.

There are three questions you need to answer to ensure involvement does not make you complicit in wrongdoing.

Is what I am doing inherently good?

There is a wide range of services, which are good in themselves, that are required even by unethical businesses, for example: advice on how to draw contracts that comply with employment law; advice on the implications of changes in tax law; and advice on leasing corporate office space. In these cases it is important that employees, even in unethical businesses, have properly drawn legal relationships with their employer.

Then there is a range of other services like writing contracts for customers or providing advice on how best to protect intellectual property where the advice per se might be a good thing but the purposes for which it is used may be questionable. For example, making sure there is a sound contract with a customer is a good thing but where the contract is for the sale of armaments to a government engaged in hostilities against its own people we have a problem. This is where the second test comes in.

Do I share in their unethical plans?

When serving a client actually involves sharing in their unethical plans, it is clear that you have become complicit in their wrongdoing. It is not always easy to determine whether or not in serving them you necessarily have to share in their intention. A good way to test your intention is to ask whether, to successfully serve the client, their unethical plan needs to proceed or succeed.

In the example of the arms contract, the law firm does have to share their client’s unethical plan because the only reason they need this particular service is to fulfil the unethical end of selling arms to wicked governments. If they do not proceed to sell the arms, they do not need the contract.

Can I fairly accept the side-effects?

There will be situations where the services provided are ethical and don’t involve you in the client’s unethical plans, but where there are still ethical issues because of the side effects of serving them.

For example, as a leading law firm you might draw employment contracts for workers at an arms manufacturer which sells its weapons for unjust purposes. There may be nothing wrong with drawing the employment contracts per se. However, the side effect of you serving the arms manufacturer is that they gain respectability by making it known that a highly reputable firm is prepared to serve them, which in turn makes it easier for them to develop relationships with other governments. The question is whether you can fairly accept this side-effect of your otherwise good actions.

There are a range of other side-effects or second order effects that can give rise to similar issues:

  • The effect on your employees of working for clients whose businesses they consider unethical. These effects can be dramatically increased if employees have friends or family members who have suffered as a result of those clients’ unethical actions, for example from being exposed to harmful products.
  • Where ethical participation with a wrong-doer risks a slippery slope into involvement in unethical work. This is especially the case where your business becomes dependent on the ethical work so that it becomes difficult to say no to requests to be involved in unethical work. If there is a risk of this sort of situation occurring, considerable safeguards are needed.
  • Victims of wrongdoing can perceive that those who are assisting wrongdoers are themselves unethical.
  • If your law firm serves clients who have unethical businesses, then careful decisions need to be made about how they are served within these parameters.

Conclusion

There are few areas of ethics that are as complicated as involvement with the unethical conduct of others. However, navigating these issues successfully repays the effort in a strong employee value proposition, reputation and better risk management. Over time, as the forms of analysis become more familiar, sorting through these issues will be quicker and easier and simply part of the way you do good business.


Associate professor RUFUS BLACK is Master of Ormond College at the University of Melbourne, deputy chancellor of Victoria University, and founding chair of the Board of Teach for Australia. He is a director of Corrs Chambers Westgarth and of the Walter and Eliza Hall Institute of Medical Research.

  1. Friedman, The New York Times Magazine, September 13, 1970, 122-6.
  2. For a good survey of different theories see Michael Sandel, Justice, Allen Lane, 2009.
  3. John Finnis, Natural Law and Natural Rights, Oxford University Press; 1980.

Comments

Jennifer Pakula
Very heartening to see such a good discussion of the broader implications of acting ethically.
9/02/2015 8:15:55 AM


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