Ethics beyond the horizon: Why regulate the global practice of law?

• Author: Whelan, Christopher J.

ABSTRACT

This Article explores whether global self-regulation of the legal profession is desirable. The Author explains that as global law practice has grown over the past decade, so has the desire to formulate global rules of professional responsibility. The Article focuses on large law firms offering transnational legal services in many countries. The Author addresses whether and for whom the aspiration to deliver core values at the global level is desirable. He does so by comparing the rhetoric of global self-regulation with the reality of global law practice. In reality, the global law practice has undermined the power of nation states because large law firm clients are powerful enough to manipulate nation states; lawyers are not capable of independent professional judgment because competition for profits puts loyalty to clients at a premium; and lawyers are capable of manipulating the rule of law to their clients' advantage. The Author concludes that global rules of professional responsibility based on core values will add value to private clients, but they will add little to the public interest.

1. INTRODUCTION

   Global law practice is part of the process of globalization. (1) As it has grown in the last decade or so, (2) so too has global professional regulation. (3) Professional services are an important element in the development of international trade, (4) and self-regulation is one of the defining characteristics of a profession. (5)

   Although global law practice can take many forms, (6) this Article focuses on those law firms--predominantly U.S. and English--that offer transnational legal services in other countries. Anglo-American law firms enjoy a competitive advantage in global practice due to the dominance of Anglo-American capital markets and financial institutions and of New York and English law in regulating international financial transactions. (7) Anglo-American law firms also have experience in mergers and acquisitions and take-overs and in dealing with complex transnational transactions. (8)

   Globalization has accelerated a trend towards universal standards of professional responsibility. The General Agreement on Trade in Services, part of the agreement establishing the World Trade Organization, "may serve as a basis for further development of cross-border legal practice standards." (9) Similarly, NAFTA "establishes a framework for evaluating and possibly changing the cross-border regulation in the signatory countries." (10) Professional bodies too have co-operated in the development of transnational professional standards, possibly in recognition of a need for harmonization, but also, perhaps, to preempt external regulation. (11)

   One of the stated objectives of the Council of the Bars and Law Societies of the European Community (CCBE), is the co-ordination and harmonization of the practice of the legal profession. (12) In principle, the CCBE Code regulates the cross-border activities (13) of over 500,000 lawyers in twenty-eight countries (14) throughout Europe with a population well in excess of 500,000,000. Laurel S. Terry hoped that the CCBE Code "[would] provide the first step towards a comprehensive code of ethical conduct for lawyers throughout the world." (15) John Toulmin QC, former President of the CCBE, argued that a world-wide code could be founded on the U.S. Model Rules, the Japanese Code, and the CCBE Code. (16)

   Global self-regulation may be inevitable, but is it desirable? There are lingering doubts about any kind of self-regulation and, indeed, about the whole idea of professionalism more generally. As George Bernard Shaw famously put it, "[Professions] are all conspiracies against the laity." (17) Certainly, self-regulation of the legal profession on a domestic level has been a way of protecting lawyers from competition. (18) At the international level, similar concerns have been expressed about professional rules: (19) "One does not have to be too cynical to believe that the CCBE's primary objection [to MDPs] might be its own loss of market share rather than protection of clients or the public interest." (20)

   It has been argued that the function of professional codes, with their emphasis on a public service ideal, is ideological--"masking unpleasant institutional realities...." (21) Professional rules have been used in the past to exclude "undesirables" from the profession, (22) including, at one time, all foreign practitioners. (23) As professional rules constitute "de facto lawmaking by a private group," (24) their quality is suspect and their enforcement and effectiveness questionable. (25)

   Not all proponents of enhanced professionalism and self-regulation are conspirators, monopolists, or xenophobes. (26) For them, the public service ideal of the profession is a meaningful one. It functions "as a noble aspiration, prompting successful attempts at piecemeal improvement." (27) Professional rules should be adopted only if they further public interest goals. (28) The same goes for regulation of global practice, in which a number of concerns have been identified. (29)

   The development of large multinational law firms has been seen as "leading to an erosion of ethical standards to the detriment of the client." (30) It has been argued that "the maintenance of strict moral and ethical standards, and the safeguard of belonging to a regulated profession, are more than ever necessary in the complex business world of today." (31) Moreover, with elite firms stressing "their internationalization," (32) their activities at a global level are likely to have an impact on the domestic market for legal services. (33)

   A particular concern has been expressed about the concept of "global lawyer" in international business and capital markets:

   While it is sound from a business perspective, the concept carries with it the danger of professional statelessness, a condition in which lawyers over time become disassociated from the legal profession's fundamental values, such as lawyer independence. Lawyering for a global organization runs the risk of creating a new legal elite whose commitment to this understanding [that the lawyer will help the legal system remain the centrepiece of our fragile sense of community, help it to function within our culture as the crucial mechanism for social cohesion and stability] is at best tenuous, and, at worst, nonexistent. (34) Underpinning calls for global self-regulation there is a vision of the lawyer's role founded on what are claimed to be the core values of the legal profession and the "lore of lawyering." (35) Recently, for example, former ABA President Philip S. Anderson identified four "core principles" on which he hoped there would be universal agreement. (36)

   First, "the practice of law is a learned profession." (37) It requires specialized training and the "lawyer must gain an understanding of the shared values of the profession." (38) Second, a lawyer must be independent. The "lawyer must zealously represent the client;" (39) strict confidentiality must be maintained; and conflicts of interest must be "avoided absolutely." (40) Third, lawyers must be regulated "to ensure competence and ethical conduct." (41) The "practice of law must be governed by ethical principles." (42) Regulation "promotes the concept that a lawyer serves the public interest in addition to the client." (43) Fourth, a "lawyer has an obligation to the public in addition to obligations to a particular client, and a lawyer has a responsibility to respect the concept of the rule of law." (44) The "legal profession, operating within the rule of law and a transparent system of justice, strengthens the disparate institutions of the world's governments and reenforces [sic] the fabric of society." (45)

   In a similar vein, Rupert Woolf, the current CCBE President, stated that lawyers "[must] strive to maintain their share of the market," but "[a]t the same time we will need to defend the core values of the profession, namely independence, autonomy, self-regulation and respect for the rule of law." (46) These core values "constitute fundamental rights of the citizens." (47) In short, the core values of the legal profession, it is claimed, mean the "profession of law is more than a job; it is a high calling." (48)

   What is significant about global self-regulation is the belief that the core values should be replicated at an international level. (49) According to the CCBE, despite their diversity in different countries, which make their professional rules "inherently incapable" of "[general] application," "nevertheless are based on the same values and in most cases demonstrate a common foundation." (50)

   Similar values can be seen in U.S. codes, despite differences in the details of the rules. (51) The preamble to the ABA Model Rules sets out: "A Lawyer's Responsibilities." It declares: "A lawyer is a representative of clients, an officer of the legal system and a public citizen having special responsibility[ies] for the quality of justice." (52) Later, it states, "Virtually all difficult ethical problems arise from conflict" between these three responsibilities. (53) "Such issues must be resolved through the exercise of sensitive professional and moral judgment guided by the basic principles underlying the Rules [of Professional Conduct]." (54)

   The core values of the profession, it is asserted, should transcend the context of legal practice. (55) In relation to multidisciplinary partnerships, for example, which might exist at either national or international levels, an ABA Commission recommended that, in its proposed annual certification, the MDP must acknowledge that it will "respect the unique role of the lawyer in society as an officer of the legal system, a representative of clients and a public citizen having special responsibility for the administration of justice." (56)

   The CCBE Code strongly endorses this view. In its preamble it sets out "[t]he function of the lawyer in...