We look at regulatory bodies, the potential for ethical dilemmas and conflicts of interest and provide a brief overview of the Solicitors Regulation Authority’s new guidance on a range of ethical and professional issues for in-house lawyers.
The role of the legal professional is heavily regulated.
This is especially true if you work in financial services and tend to get more involved the more senior you become. There are also some grey areas regarding ethics and legal professional privilege, which have recently been clarified by SRA guidance.
The laws that regulate lawyers
As a lawyer, you’ll be subject to a wide range of regulatory and ethical guidelines. In some circumstances, your advice may be protected by legal professional privilege (LPP), though recent judgments suggest the restrictions on LPP are quite limiting for in-house lawyers.
Here, we look at the most common obligations for in-house lawyers.
Regulatory requirements
The Solicitors Regulation Authority
The legal profession in England and Wales is regulated by the Solicitors Regulation Authority (SRA). The SRA:
- Sets the standards for qualifying as a solicitor;
- Monitors the performance of organisations that provide legal training;
- Drafts the rules of professional conduct to make sure they protect the interests of clients;
- Provides authoritative guidance and rules to solicitors on ethical issues, laws and regulations that affect their work;
- Administers the roll (register) of solicitors;
- Provides information to the public about solicitors, their work and the standards the public is entitled to expect; and
- Sets requirements for solicitors' continuing professional development.
The Financial Conduct Authority
The Financial Conduct Authority (FCA) Senior Managers Regime regulates senior managers in a variety of roles in financial services.
For some time before the implementation of the regime, the FCA consulted on whether Heads of Legal, as the senior-most legal role in an organisation regulated by the FCA, should fall within its accountability guidelines, which are known as the Senior Managers Regime (SMR).
Following that consultation, it concluded that they should not. The FCA’s conclusions were reached because it was felt that as so much of a lawyer’s work related to legal advice, legal professional privilege would be likely to restrict the FCA’s use of its powers under the regime against Heads of Legal. However, although not subject to the Senior Managers Regime, senior lawyers working in financial services are likely to be subject to the FCA’s Certification Regime, and to its Conduct Rules.
Continuing Professional Development – Continuing Competence
Every solicitor in England must maintain their competence to carry out their role. This means that you must keep your knowledge and skills up-to-date, including any relevant legal, ethical and regulatory obligations relevant to your role.
The SRA expects that you will reflect on the quality of your practice, in all aspects of your role, identify your learning and development needs, keep an up-to-date record of your learning and development activity, and evaluate the effectiveness of your learning and development. You must be able to demonstrate that you have reflected on your abilities to deliver competent legal practice, and bridged any gaps in your competence through learning.
You can find the SRA’s guidance on continuing competence requirements at SRA | Understanding your continuing competence requirements | Solicitors Regulation Authority. The SRA also provides several templates which you can used to keep your development record which you can find at SRA | Learning and development template | Solicitors Regulation Authority.
If you are a solicitor or registered European lawyer, as part of the annual practising certificate and registration renewals, you must declare that you:
- have up-to-date understanding of the legal, ethical and regulatory obligations relevant to your role; and
- have reflected and addressed any identified learning and development needs; and
- are competent to perform your role.
Industry specific regulation
Though not specifically linked to you personally, there’s likely to be a great deal of regulation specific to the industry sector in which your organisation operates. This could govern how it uses customer data, handles dangerous substances, ensures its products are safe, and even what claims it can make in its advertising and marketing materials. As the in-house lawyer, you’ll be expected to have a full grasp of these regulations, and to ensure that you are operating within your competence.
Conflicts and Ethics
In November 2024 the SRA published a range of significant new guidance to support in-house solicitors working in England and Wales. It says that ‘the guidance addresses the unique challenges and issues facing in-house solicitors working across a range of employers and sectors. We developed it following requests from the profession and issues identified in our thematic review. It is published at a time when high-profile cases such as the Post Office shine a light on the role of in-house lawyers.’
The guidance includes notes on identifying who your client is, and reporting concerns of wrongdoing. It also addresses legal professional privilege, balancing ethical obligations and managing legal risk. The SRA has also published guidance for employers of in-house solicitors aiming ‘to enhance their understanding of solicitors’ professional obligations, and strengthen the support that employers provide to help solicitors to meet them.’
The SRA says the guidance sets out to:
- provide practical examples, resources and checklists
- provide more information on acting for third parties and managing conflicts of interest
- offer guidance focused solely on legal professional privilege for the in-house solicitor
- give clearer guidance on managing internal investigations and providing support for individuals involved.
Links to the various guidance notes can be found at:
- Identifying your client when working in-house
- Reporting concerns about wrongdoing when working in-house
- Internal investigations
- Guidance for employers on a solicitor's professional obligations
- New separate document for governing boards, chief executives and senior officers in organisations employing in-house solicitors
- New guidance on legal professional privilege when working in-house
Crucially, the guidance advises that solicitors must report serious wrongdoing you may uncover within your organisations - or consider leaving if you are still unable to stop it. Whilst it identifies the difficulty of balancing the duty to the client with the wider public interest, it stresses that in-house lawyers have an obligation to offer what it describes as ‘candid’ legal advice, and ensure that their organisation understands its legal obligations.
The guidance requires solicitors to report material concerns internally, and also to bring appropriate matters to the attention of regulatory and prosecuting authorities to ensure appropriate transparency and accountability.
The guidance reminds in-house solicitors that they operate under the duty to act in the best interests of each client and keep client affairs confidential unless otherwise required by law, but also to act with independence, honesty and integrity and uphold the role of law and public trust in the profession.
It continues that: ‘if the principles come into conflict, those which safeguard the wider public interest take precedence over an individual client’s interests, for example, the interests of your organisation. This includes acting with integrity, independence and in a way which upholds public trust and confidence in the solicitors’ profession.
It provides that ‘you should, where relevant, inform your employer in advance of the circumstances in which your duty to the court and other professional obligations will outweigh your duty to them.’ The guidance also notes that solicitors are expected to report breaches of the law or regulatory requirements, together with circumstances where loopholes are being exploited.
The guidance adds that where wrongdoing continues despite a solicitor’s intervention or reporting to their manager, ‘you should carefully consider whether you can meet your regulatory obligations and continue working for your organisation’ and that ‘you will need to reflect on whether you can personally continue to act with independence, integrity and in a way that upholds the rule of law and the proper administration of justice, whilst working where the wrongdoing persists.’
Legal Professional Privilege
The SRA has also published guidance on the application of legal professional privilege to in-house solicitors at SRA | Legal professional privilege when working in-house - Guidance | Solicitors Regulation Authority, building on the Law Society’s previous note on Legal Professional Privilege at Legal professional privilege | The Law Society.
The guidance covers:
- identifying the client in relation to any given instructions for the purpose of privilege
- understanding what communications attract privilege, particularly when your role and any given communications can mix both legal and non-legal elements
- when privilege can be lost or in fact never existed.
It also sets out steps which the SRA indicates solicitors should take to report wrongdoing relating to privilege within the client and/or where the client is seeking to withhold material that is not privileged.
The guidance outlines the nature and complexities of both litigation privilege and legal advice privilege, indicating what they cover, when they arise, and when they may be lost or waived. It also discusses the relationship between privilege and investigations, wrongdoing, whistleblowing and the statutory duty to report.
Conclusion
While taking care to ensure your organisation stays compliant, you’ll also have regulatory obligations of your own. As well as demonstrating competency, legal knowledge and adhering to the SRA Code of Conduct, if appropriate, it is critical that you understand how your professional obligations require you to act in circumstances of ethical dilemma and in relation to legal professional privilege.