Robert Wyld, a past Co-Chair of the IBA Anti-Corruption Committeeand a consultant at Johnson Winter & Slattery, said: ‘ The legal profession cannot operate in a vacuum separate from their clients or social pressures, which is why the Principles outlined in the report are so important. Where conduct gives rise to issues of ethical duty, or indeed criminality, a lawyer should be careful to ensure the client is guided towards the legal way of doing business. If the client declines or resists such advice, the lawyer should give serious consideration to whether to continue to act for the client. In Australia, a lawyer’s primary duties are to the court and the administration of justice. This focus on duties beyond the client reflects the underlying ethical basis of how a lawyer should act, to advance the client’s interests in a way that is consistent with the administration of justice. The Principles seek to promote that approach to legal practice.
‘A lawyer’s reputation is years in the making, yet can be irreparably tainted when the lawyer loses objectivity and their client engages in illegal conduct (which might involve the lawyer). These Principles encourage lawyers to take a considered view of their obligations and, reflecting the local legal system of their home country, support a “best practice” approach to responding to potentially illegal conduct that can occur in cross border legal work.’
Following the London Anti-Corruption Summit in May 2016, the IBA-OECD Task Force on the Role of Lawyers and International Commercial Structures was formed to develop professional conduct standards and practice guidance for lawyers involved in establishing and advising on international commercial structures. Initiated by former IBA President David W Rivkin, Co-Chair of the International Dispute Resolution Group of Debevoise & Plimpton, and Nicola Bonucci, OECD General Counsel and Director for Legal Affairs, the Task Force comprised lawyers and policy leaders experienced in anti-money laundering, anti-corruption, trade and government affairs.
Mr Bonucci commented: ‘The Principles constitute an important first step in developing standards with regards to the role of lawyers in detecting, identifying and preventing illegal activity. They constitute high-level guidance that can assist policy formulation, and we encourage their use by professional regulatory bodies and public authorities, based on a dialogue between the profession and governments.’
Natalie Limbasan, a legal advisor at the OECD, added: ‘The OECD promotes a “whole of society” approach to corruption and integrity, and the role of the legal profession is just one aspect of this. We welcome the initiative taken, and encourage other professional service providers to echo the approach.’
The Principles are based on global research undertaken by the Task Force, with assistance from bar associations and law societies in Africa, the Baltic states, Central America, Central and Western Europe, North Asia and Scandinavia.
To establish the Principles, the Task Force identified key questions to consider in relation to the legal profession’s role in detecting and preventing illegal activity. These included asking what liability lawyers incur for inadvertently breaching client confidentiality, what use can be made of illegally garnered information and what steps should be taken when previously legal transactions become illegal. Also under consideration were questions of how accurately to advertise legal services involving corporate structures and what steps governments should take to make commercial transactions more transparent.
Outlined below, the aim of the Principles is to support legal professionals in the detection and prevention of illegal conduct in international commercial transactions.
Principle 1: Non-facilitation of illegal conduct – Through the establishment of companies, trusts and partnerships, as well as the conduct of internal investigations and the design of compliance programmes, a lawyer may be unwittingly associated with illegal conduct. A lawyer should not facilitate such conduct, and should undertake the necessary due diligence to avoid doing so inadvertently.
Principle 2: Misuse of the duty of confidence and privilege – A lawyer’s duty of confidence to a client is of fundamental importance to the legal profession, as is legal privilege. However, a lawyer should not use the confidential nature of the lawyer–client relationship to shield wrongdoers. Where there are considerable grounds to believe that the client is relying on confidentiality or privilege to hide illegal activity, a lawyer should consider ceasing to act.
Principle 3: Client due diligence – A lawyer should undertake proportionate enquiries to verify the client, determine the origin of the funds being handled and identify the ultimate beneficiary of the transaction to ensure that the conduct is legal in their jurisdiction. Particular attention should be paid to clients whose transactions or profile fall within international benchmarks for jurisdictions with increased risk of bribery, corruption and commercial crime.
Principle 4: Action where client conduct is, may be or becomes illegal – Where the client’s conduct is, may be or becomes illegal (even if it was originally legal), a lawyer should advise them on the consequences and recommend that they pursue alternative solutions. If the client persists in the conduct, the lawyer should consider ceasing to act.
Principle 5: Multijurisdictional risk – Where transactions involve multiple jurisdictions and a lawyer has reasonable grounds to question the legality of the conduct or transaction concerned in another jurisdiction, a lawyer should advise the client to obtain expert advice in that jurisdiction. A lawyer should consider ceasing to act if this advice is refused or not followed.
Principle 6: Use of illegally obtained information – A lawyer should strongly discourage a client from illegally obtaining information from private parties or public officials. To facilitate this, legal frameworks should be as consistent as possible across jurisdictions.
Principle 7: Disclosure of beneficial ownership – A lawyer should obtain and maintain up-to-date beneficial ownership information and take reasonable measures to verify its accuracy in relation to the client. Beneficial ownership information should be available to state regulators, investigators and enforcement agencies.
Principle 8: Advertising by lawyers on international commercial structures – Any advertising by lawyers on international commercial structures should be transparent, accurate and truthful. Governments, bar associations and law societies should collaborate to create regulations regarding this.
A panel discussion, moderated by journalist and author Owen Bennett-Jones, took place at the launch of the Principles. The panel comprised Mr Bonucci, Mr Wyld, Ms Limbasan and Mr Visco.
Click here to watch the discussion.
IBA President Horacio Bernardes Neto, a partner at Motta Fernandes Advogados in São Paulo, Brazil, said in his opening remarks: ‘The fact that the IBA started this Presidential Task Force immediately after the leak of the Panama Papers is very good evidence that the legal profession through the IBA is not faceless and reacts promptly and efficiently to actual events, and does not hesitate to start discussions on whatever matter may interest the profession. One of the key features of this report is the attempt to combine and strike a balance between the role of lawyers in civil society, and the core lawyers of the legal profession, in particular confidentiality and legal privilege.’
Mr Rivkin (via video-link) explained how the Task Force came about during his presidency (2015–2016) of the IBA, when he and Mr Bonucci realised that governments would likely impose obligations on lawyers that may violate their professional obligations around lawyer–client confidentiality, and went on to say: ‘ By the OECD and the IBA coming together – which we have done many times before – we could discuss the appropriate balancing of governments’ interests and lawyers’ interests in a way that would work towards the restriction of, and elimination of, corruption, but at the same time do it in a way that would allow the legal profession to continue to serve our important role in society in serving our clients...I am certainly very pleased and think it [the report] serves exactly the purposes that we hoped it would accomplish.’
The Report of the Task Force on the Role of Lawyers and International Commercial Structures was launched at an evening event on Monday 20 May 2019 at the offices of Debevoise & Plimpton, at 65 Gresham St, London EC2V 7NQ, United Kingdom. Audience Q&A followed the panel discussion, with a drinks and canapés reception completing the event. A recording of the launch can be watched on the IBA website here: