Webster, Michael (2021) Investigating the decision-making process in large law firms when addressing conflicts of interest in legal transactions in light of outcomes-focused regulation. PhD thesis, University of Warwick.

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Abstract

Outcomes-Focused Regulation (OFR) was introduced to the solicitors’ branch of the legal services market in October 2011 by the Solicitors Regulation Authority (SRA) to meet regulatory reforms introduced by the Legal Services Act 2007. Pursuant to this, responsibility for regulating solicitors and law firms was licensed to the SRA by the Legal Services Board (LSB), the new oversight regulator for the legal services market in England & Wales. In turn, the SRA devolved regulation to law firms under a system of outcomes-focused regulation (OFR). Firms must report “serious breaches” of the SRA’s Codes of Conduct to the SRA, and develop effective systems & controls to ensure compliance within their particular fields of practice. The Codes of Conduct are fundamental tools for the operation of OFR, as these outline the broadly-worded overarching ethical Principles, as well as the outcomes that must be achieved in order to demonstrate compliance with the Principles.

This empirical research contributes to the assessment of the effectiveness of OFR as a method of regulating solicitors the largest law firms in England and Wales, by specifically considering whether OFR is an effective model of regulation for conflicts of interest. There is currently very limited evidence for this in literature, case law, or Solicitors Disciplinary Tribunal authority. Conflicts of interest (COI) forms the lens through which to analyse this, given that COI are recognised as a frequent challenge for large law firms operating at the global level. This research therefore analyses qualitative data obtained from interviews conducted with General Counsel, (in-house ethics specialists), at twenty of the UK’s largest law firms in order to address 3 Key Research Questions:

1) How do large law firms determine what standards to follow in respect of conflicts of interest?
2) In light of devolved regulation to law firms, what do systems to manage decision-making look like in respect of conflicts of interest?
3) How are conflicts between the SRA’s rules on conflicts of interest and other conflicts rules in foreign jurisdictions reconciled?

The findings suggest that SRA OFR is not an effective model of regulation for conflicts of interest in large law firms for a variety of reasons. In particular, conflicts of interest are xix perceived as a global issue, and not merely a domestic one. They are identified and tracked at a global level by centralised conflicts centres, and decision-making has recently been removed from solicitors in large law firms to be managed by this centralised compliance function. This has been driven in no small part by powerful sophisticated clients who can determine what at COI is through the use of Outside Counsel Guidelines (OCGs). These bear no relationship to rules governing COI under SRA OFR.

In any event, SRA OFR is regarded as lacking the required degree of clarity and certainty to be of any value at the global level by General Counsel, and especially in instances where there is conflict between COI regimes when conducting cross-jurisdictional work. Therefore, SRA OFR is not being followed in respect of COI, and in place of the SRA’s enforcement regime, law firms and their clients operate privately negotiated enforcement mechanisms under Outside Counsel Guidelines (OCGs). These can specify a range of ‘soft’ contractual sanctions that do not require external enforcement. However, this raise concerns around transparency and accountability under the UK’s decentred system of legal services regulation, and especially given that breaches of COI are not being reported to the SRA by law firms, and could also be shielded by the doctrines of privity of contract and client confidentiality.

Item Type:	Thesis (PhD)
Subjects:	K Law [LC] > KD England and Wales K Law [Moys] > KF Common Law, British Isles
Library of Congress Subject Headings (LCSH):	Practice of law -- Great Britain, Legal ethics -- Great Britain, Law firms -- Law and legislation -- Great Britain, Conflict of interest -- Great Britain
Official Date:	May 2021
Dates:	Date Event May 2021 UNSPECIFIED
Institution:	University of Warwick
Theses Department:	School of Law
Thesis Type:	PhD
Publication Status:	Unpublished
Supervisor(s)/Advisor:	Webb, Julian S.
Sponsors:	Economic and Social Research Council (Great Britain) ; Legal Services Board (Great Britain)
Format of File:	pdf
Extent:	xx, 293 leaves : 1 colour illustration
Language:	eng

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