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Legal advisors responsible for ethical governance

Legal advisors responsible for ethical governance

By Karin Derkley



Lawyers have a role to play in restoring community trust in institutions, an International Women’s Day event was told.

Victorian Bar president Wendy Harris QC said legal advisers could identify when an organisation's culture did not support ethical behaviour and needed to ask not just 'can we?', but 'should we?'.

"Sometimes the law technically allows your client to do something that may sit on the wrong side of the ethical divide," Ms Harris said at an alumni breakfast seminar series hosted by Melbourne Law School at the RACV club.

Banks but also many other institutions had driven loss of community trust, Ms Harris said, citing an IPSOS study which showed that only 41 per cent of Australians trusted how democracy worked in Australia, and that trust had dropped 31 per cent from 2013 to 2018.

"That is probably not surprising as we have all watched as government, media, political parties, religious institutions, business and corporate Australia, sporting associations, convenience stores and restaurateurs, have taken a PR beating.

"So how should we as leaders, managers, lawyers, advisors respond to this, help restore trust in institutions?

The role of advisers was to move from asking "can we?" to asking "should we?"

Lawyers are very good at addressing the 'can we?' part of the question, she said. "That’s what we’re trained to do and what our clients and employers pay us to do, but I believe we should also be dealing ourselves into the 'should we?' part of the question."

To do this, so-called soft skills – emotional intelligence, empathy and communication – needed to be deployed. Also, individuals needed to speak up.

"We need to have the courage and confidence to give voice to what instinct tells us is and isn't right. Don't be the person who sits back and lets a poor decision be made simply because no one's brave enough to question it. Don't be afraid to challenge existing business models or practices."

Women were not innately more ethical than men or less prone to bad decision-making, but studies of of female leadership showed they had strengths that could be built on and leveraged in this context, Ms Harris said.

One US study showed companies that had at least three female board directors had a ten percentage point higher return on equity, and a 37 per cent increase in earnings per share. Another study showed that companies with more women directors experienced lower rates of litigation.

"The authors hypothesised that the composition of these boardrooms was likely to reflect greater diversity, more robust decision making, and better use of female talent through the organisations," she said.

Women directors were more likely to seek advice and listen to it when faced with important decisions, she added. And they were less risk averse than their male counterparts.

Leadership and role-modelling in this way did not just come from the top, she said. "Every single person in this room is a leader in your organisation. Have the courage and the confidence to put your hand up and say when something's not right."

But organisations also had to ensure they had the right professional advisors to oversee operations, to have a culture of openness and transparency and empower those advisers and their professional staff to interrogate those systems and speak up, she said.

"Ethical governance isn't as easy as we'd like it to be because there is often no clear delineation between the 'can we?' and the 'should we?' But that cannot and should not dissuade us from navigating these difficulties with a clear destination in mind."

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