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Skip to 0 minutes and 54 seconds SPEAKER 1: It’s got nothing to do with my profession, I guess. No. If it’s legal of course but no, not over and above.

Skip to 1 minute and 3 seconds SPEAKER 2: So all the client cares about is minimizing the cost and making the most profit it possibly can. So I’ll put those objectives first, and I don’t have any guilt.

Skip to 1 minute and 14 seconds SPEAKER 3: So, the target is having a negative impact? Yes, I think you would raise it and say, you must be aware there is a potential goodwill impact of buying this company. Yes, I think you would say that. But that I think, in the circumstance you’ve raised, that is giving advice to say, if you buy this company and it’s doing this sharp practice, this could blow back at you. And then it becomes the client’s call as to whether they want to do it. They’re doing nothing illegal but it looks very sharp.

Skip to 1 minute and 48 seconds SPEAKER 4: In a scenario like that where the local laws are not as, you know, to the same standard as the client’s laws. I think that is more of a sort of reputational issue, a sort of a corporate responsibility issue. And if we come across this in a lot of, it could be things like human rights, it could be things like corruption where laws generally differ and in those scenarios where clearly the crime would be compliant locally, and there isn’t anything in their own laws as a buyer that would say, you know, that applies the same standard.

Skip to 2 minutes and 17 seconds We do, or what I do quite a lot is say, look, this is not a legal risk, but it is a reputational risk. Do you want to be associated with this company that does this? And in most cases, they might come back and say, actually we will still go ahead with the investment, but we’re going to put in undertakings in the document that this is remedied. That’s sort of how I’ve dealt with it. It’s not a hypothetical scenario. It happens a lot.

Skip to 2 minutes and 54 seconds SPEAKER 5: We had some US client who was over, and this particular colleague sort of had said, for about the third time, that they thought the client should do x rather than y. He, the client, said, I’m the client, and I’m allowed to be bleeping stupid if I want to. And there’s a balance between, in the end, you are an advisor, you are not a principal.

Skip to 3 minutes and 11 seconds SPEAKER 6: I don’t really think a legal advisor is there to do the decision making for the client. You can advise and you can offer different options and permutations in what you think with your experience, what might happen. But I think the decision has to be the client’s final decision. So to be a check on their decision making, I think other than saying, look, these are your options, this is what we think, I think it would be very difficult to go beyond that threshold.

Skip to 4 minutes and 0 seconds SPEAKER 7: That is not something I would feel terrible about. I think that that’s inherent in M&A. And that if the proper procedures are gone through, it wouldn’t cause me to lose sleep over that.

Skip to 4 minutes and 12 seconds SPEAKER 8: If it was overt and they sat there in a meeting and I had a client turn around and say, obviously when we buy it and we’re going to sack everybody, I would probably feel a bit bad. But it wouldn’t stop me from doing the deal because that’s what I’m employed to do by my law firm. Which makes me sound horrible, doesn’t it? Oh my god. If that’s what they’ve decided commercially they’re going to do, then they’re going to get legal advice from someone to do it. And then we’re not physically the ones making people redundant, we’re just facilitating the transaction– which somebody would do for them whether it’s us or someone else.

Skip to 4 minutes and 46 seconds We’re basically providing a service, which is legal advice. We’re not getting involved in any of the ethics. We’re not making anybody resign or sacking them or anything.

Skip to 4 minutes and 55 seconds SPEAKER 9: Can you feel uncomfortable about the knowledge that if you crash? These two businesses together, there’s going to be some fallout with people dropping off the cliff?

Skip to 5 minutes and 7 seconds SPEAKER 10: Yes, you’re aware of it. I guess I’ve got pretty cynical, hardnosed about that over the years. That’s business. If I felt so strongly about obligations to keep as many people in work as is humanly possible at the detriment of profit and running a profitable business, I wouldn’t be doing the job I’m doing now. I’d probably be a human rights lawyer or something like that. So I’ve made my bed in that context, and I lie in it pretty comfortably.

Skip to 5 minutes and 43 seconds SPEAKER 11: It’s not for me to judge whether my oil and gas client should or shouldn’t be doing business in Venezuela the fact is they are, and they’ve asked me for help doing it. It’s also not for me to judge whether the Venezuelan environmental standards are despicably low and that the Venezuelan government wants to make them weaker thereby meaning that this awful trade will damage the environment in Venezuela unnecessarily. If I was king of the universe I’d make a lot of changes. I can’t judge that for my clients.

Skip to 6 minutes and 12 seconds SPEAKER 9: The kind of transactions you work on, do you ever think about the consequences of the decisions that your clients take?

Skip to 6 minutes and 21 seconds SPEAKER 10: Probably not, no, is the honest answer. We just got the deals done, get the next one in. You probably want me to say something different there, but no, we don’t. Thinking about it, I probably should feel quite guilty about that. I guess you just get so tied up in the deal and so kind of we’re here to do what our clients want us to do, we’re not here to get involved and get personally upset about things. If we don’t advise them, somebody else will, and that will be our competitors. So, no I don’t.

Skip to 6 minutes and 57 seconds SPEAKER 6: Maybe you do get to the point where there are some clients, or some jurisdictions, or some industries, where you don’t work or don’t want to work.

Skip to 7 minutes and 5 seconds SPEAKER 9: Has that ever happened to you? Have you ever had to say no to a client or have you seen a partner saying no to clients and walking away?

Skip to 7 minutes and 14 seconds SPEAKER 6: I haven’t personally, and I haven’t seen it.

The Consequences of Client Actions: The Job Losses Dilemma and the Environmental Pollution Dilemma

Read the below discussion on whether (or how) lawyers should think about the consequences of actions taken by their clients, and then watch the video in which members of Birmingham Law School read out from the transcripts of interviews Steven has conducted with corporate finance lawyers over the last three years. In these excerpts, Steven gives his interviewees two hypothetical situations to problematize and asks them to what extent they think about the consequences of what their clients do.

Do you think lawyers can or should be held responsible for the actions of their clients? If you were a lawyer, to what extent would you think about the consequences of what your client was planning on doing?

Steven asked his corporate finance lawyer interviewees for examples of ethical dilemmas they faced in their work. None were offered up. Given this, Steven decided to introduce hypothetical ethical scenarios to the interviews and to ask the interviewees how they would respond.

One dilemma concerned the potential for environmental pollution linked to a company purchase. It said:

‘Imagine your client is buying a company in a developing country, the target is in compliance with all local environmental law, but the laws there actually are not very effective, and you know that post-purchase, the company’s going to have a significant detrimental impact on the environment.’

Most of the interviewees saw no legal issue with this dilemma (given the target was in compliance with local laws) and few said they would raise the potential for environmental harm as part of a moral dialogue with the client. The idea of the lawyer not being the decision maker was a common part of the responses to the dilemma. What do you think about this? If you were the lawyer here, how concerned would you be that the company was going to going to have a significant detrimental impact on the environment?

The second hypothetical concerned the consequences of one large company taking over another. It said:

‘Imagine you are acting for a company on a public takeover. You know that, once the takeover is effected, it is likely that 2,000 people working for the target will lose their jobs.’

Only one of the interviewees saw this particular scenario as engaging ethical questions with which they might need to grapple. This sole exception saw the potential for concern, but said that they (happily) had never come across the situation before. Most interviewees instead framed their responses in terms of compliance with the relevant English law and guidance from the regulator, the Takeover Panel (which would, under various conditions, permit the job losses).

In the video , you will hear the responses of some of those interviewed to the above two dilemmas and you will hear their views on the extent to which they reflect on actions taken by their clients.

After watching the video, reflect on any new information or ideas that you have come across, then share your thoughts in the discussion area.

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This video is from the free online course:

Corporate Lawyers: Ethics, Regulation and Purpose

University of Birmingham