CEO, Obelisk Support
People, environment and purpose – is it time to recast our legal ecosystem along these values?
I am delighted that Obelisk Support’s latest report – World in Motion: why the legal profession cannot stand still’ – is tackling this head-on and sets out to investigate how the next generation of lawyers is expecting the legal profession to shift to a business model that prioritises sustainability beyond profitability. We see the new legal system being supported by four key pillars that will help drive the change the profession needs to see: purpose and profit; environment; access to the profession; and ethics.
Having been one of the key strands to come out of our 2022 Legal Reset culture report, ethics returns this year, and we explore further its importance for the new generation of students, trainees, associates and in-house counsel. Aided by a fascinating roundtable we held, this report investigates culture more closely taking into account the voices – and expectations – of tomorrow’s legal leaders.
Legal sector organisations and in-house legal team seeking to attract and retain talented employees cannot simply up junior lawyers pay.
They need to consider the values of the organization and its purpose. That means implementing diversity initiatives, considering environmental and sustainability credentials, and looking at the suppliers they use. For law firms and other legal services providers, it means considering which clients they are prepared to act for and the pro-bono work they undertake.
This needs to be contextualised as part of the wider debate that has sprung up especially in the last year about the profession’s ethics. Last year, the Legal Services Board – the oversight regulator for the profession – expressed concerns about the ethics of in-house and commercial lawyers in particular, citing a host of topical issues, including: the role of lawyers in the Post Office scandal, governance failures at the Royal Institute of Chartered Surveyors for which a City law firm was in part blamed, the contentious use of nondisclosure agreements in employment disputes, the leaked Pandora and Panama papers, SLAPPs(strategic lawsuits against public participation),and weaknesses in sanctions and anti-money laundering compliance.
The next generation is clear in its assessment that the legal profession cannot avoid moving with the times and needs to evolve to match a changing world. As society shifts away from the one-eyed pursuit of profit, it must be underpinned by the law.
The next generation is aligned to this need to balance profit and purpose – an overwhelming number of respondents to our survey of junior lawyers (86%) conducted for this report showed that they are looking to effect positive change in society through their work as a lawyer.
A legal profession that matches these new priorities of purpose, equality and environmental awareness needs to be at the heart of this. And the legal businesses that reflect this will be the trusted partners of their clients.
Is the pushback against profits per equity partner(PEP) finally starting? And does it have something to do with another acronym rapidly gaining ground in the City – ESG?
This stands for environmental, social and governance, a set of standards measuring a business’s impact on society, the environment, and how transparent and accountable it is.
The fixation on profits per equity partner as the definitive measure of law firm success has long ruled the City legal landscape but this year’s results season has witnessed the first cracks in its supremacy. Mishcon de Reya decided that it would no longer disclose PEP, describing the metrics as ‘unhelpful’, CMS revealed its turnover but not profit, while Freshfields Bruckhaus Deringer announced that, from next year, disclosure would be limited to the mandatory accounts filed several months after the year-end.
While law firms are businesses like any other and look to maximise profits, these moves suggest that there is a growing realisation that there are alternative ways to measure success.
ESG issues are increasingly on the lips of clients, staff and partners; it is no longer enough just to pump up salaries (although that obviously remains crucial) – law firms have to show that they are good businesses, as well as successful ones.
As with most things, more focus on sustainability in the round represents both an opportunity for law firms – ESG is a thriving new practice area for many – and a threat, as they have to show their own credentials both to clients and staff. A survey conducted in 2021 by the Law Firm Sustainability Network in the US found that 87% of responding law firms had received requests for proposals that included the firm’s environmental efforts.
Indeed, in 2023 BT Group renewed Addleshaw Goddard’s place on its legal panel because of the firm’s commitment to driving diversity and inclusion across all areas of its organisation. Microsoft’s longstanding law firm diversity program offers law firms a bonus of up to 3% of their annual fees if they meet the diversity targets set by the technology behemoth.
In this report, we will look at how sustainability has become a vital focus of the modern law firm and hear from junior lawyers working in law firms and in-house about the progress the legal profession is making in terms of its culture and ethics. What is really important to them? What are their priorities, and are those at the top of the profession listening? Who are the trailblazers leading the way and what can other firms and corporate teams learn from them?
With special thanks to our contributors
Legal Services Board
Immediate Past President (2022-23)
The Law Society of England and Wales
Regulatory Associate Solicitor
Kingsley Napley LLP
Stephenson Harwood LLP
In-house Advisor – Brand Protection
Legal Officer and Case Presenter
General Pharmaceutical Council
Former Contracts Manager
The Four Pillars
We see the new legal ecosystem being supported by four key pillars that will help drive the change the profession needs to see.
PURPOSE AND PROFIT
In some ways, lawyers’ jobs are inherently purposeful when looked at in the wider context of supporting access to justice and promoting the rule of law. But those principles may not always seem present when pulling an all-nighter on a complex banking transaction.
Environmental issues, aside from being apriority in and of themselves, are a good example of where purpose and profit can rub together, not always easily.
There is an increasing number of organisations in the law pressing for greater environmental commitments, such as General Counsel Sustainability Leaders (formerly Lawyers for NetZero), Legal Sustainability Alliance, Lawyers Are Responsible and the Chancery Lane Project. A significant moment came in April 2023, when the Law Society of England and Wales published groundbreaking guidance on the impact of climate change on solicitors.
It is particularly notable for accepting that climate-related issues may be valid considerations for law firms in deciding whether to act for potential clients. While the principle of access to justice and right to legal representation are “fundamental”, it says that solicitors are not “obliged to provide advice to every prospective client that seeks it” and had “wide discretion” in choosing whether to accept instructions.
The guidance says: “Some law firms are evaluating risks to their commitments in this area and some are placing limitations on the instructions they will accept citing their own organisation’s climate change commitments…
Turning away clients for ESG reasons is now ingrained at Bates Wells, the London law firm that was the first legal practice in the UK to become a B Corporation, a global movement that seeks to balance profit with purpose. Obelisk recently joined its ranks, just the 11th legal services business in the UK to do so.
Some solicitors may also choose to decline to advise on matters that are incompatible with the1.5°C goal, or for clients actively working against that goal if it conflicts with your values or your firm’s stated objectives.”
Olivia Brooks works in the corporate team at Bates Wells. She told the roundtable that B Corp certification motivates a lot of people to join the firm. “I can’t believe that I’m at a firm where we actively turn down work that does not align with our values,” she says. “I trained at a firm where, we didn’t have the privilege to say no to things. Whereas at Bates Wells, certain things are an absolute no-go, like oil and gas, but they go so much further than that.”
Becoming a B Corp goes way beyond signing a charter and issuing a press release.
It requires demonstrable change. Businesses must show” high social and environmental performance”, make a legal commitment by changing their corporate governance structure to be accountable to all stakeholders, not just shareholders, and exhibit transparency by allowing information about their performance measured against the standards to be publicly available.
Renowned for its testing nature, B Corp certification focuses on five areas of a business impact: governance, workers, community, environment and customers.
These considerations flow into our second pillar. The Law Society guidance predicts that the interpretation of SRA principles in the context of climate change is “likely to evolve over time” and certainly the ethical pressure is starting to rise. In2022, an open letter organised by Plan B.Earth – a charity that supports strategic legal action against climate change – and the Good Law Project said lawyers should be ethically obliged to advise clients of the serious risks, legal or otherwise, of pursuing activities that risked exacerbating climate change.
The guidance says: “Some law firms are evaluating risks to their commitments in this area and some are placing limitations on the instructions they will accept citing their own organisation’s climate change commitments…
The pressure is slowly ratcheting up on big law firms. US organisation Law Students for Climate Accountability (LSCA) turned its attention to the UK this year and its report The Carbon Circle, the UK Legal Industry’s Ties to Fossil Fuel Companies, says large UK law firms play an “indispensable role” in supporting the fossil fuel industry.
It says fossil fuel projects worth “a gargantuan £1.48 trillion” were facilitated by a group of 55 large London law firms between 2018 and 2022, more than two and a half times the £546bn in renewable energy transactions they handled. LSCA encourages students to ask firms about their fossil fuel work and client selection processes, and recommends that associates assigned to fossil fuel clients should request to opt out of that work.
Our survey found that respondents evenly split over whether their employer is doing what it should be to address the challenges presented by climate change, while a quarter were not sure.
The group Lawyers Are Responsible has taken the LSCA findings on and begun standing outside magic circle firms on a weekly basis (the report said these five alone were responsible for over £285bn of work on fossil fuel transactions over the four years), handing out leaflets and engaging staff in conversation about the issue.
It has written to them, calling on them to phase out existing fossil fuel work. This might seem more than a longshot, but Slaughter and May, for one, has at least been prepared to engage in a dialogue.
Lawyers Are Responsible is a new type of campaign group in the law, one willing to take more direct action. It made a splash when it launched, after barrister signatories to its Declaration of Conscience pledged not to prosecute climate protestors or advise on fossil fuel projects, sparking a debate about the cab rank rule.
Grace Kendrick worked for six months in the Department of Business’s international climate finance team before training as a lawyer and recently qualifying into the energy and infrastructure team at CMS.
She works on renewable and clean energy and says there are “a lot of open conversations” in what was once called the oil and gas team. “It’s changing but it’s not going to be overnight.”
Plenty of lawyers may think their area of practice is unconnected with climate change.
Caroline May, sustainability partner at Norton Rose Fulbright and chair of the Law Society’s working group on climate change – which drafted the guidance –said last year that a lot of lawyers understood the importance of the issues the world is facing but may struggle to understand how it affects their daily practice.
In a Law Society Q&A, she went on: “However, I think on closer examination (and once you start demystifying the agenda), people quickly see how it is cross cutting and may impact their daily practice and that of their clients whether it be insurance risks, latent environmental liabilities, or public health issues such as air/water quality.”
It is by no means just the ‘E’ of ESG that law firms and in-house teams need to respond to. The ‘S’ looms large as well in the forms of diversity, equality and inclusion (DEI) and wellbeing – these are essentially about how easy it is to access the legal profession.
The solicitors’ profession may have become majority female in 2017 but you would not know it by looking at its upper echelons. The most recent Law Society figures found that, while women made up 53% of practising solicitors in 2021, only18% of those in private practice were partners, compared to 39% of men, figures that have barely shifted in 15 years.
Those from Black, Asian and minority ethnic(BAME) backgrounds made up 18% of solicitors. A quarter of BAME solicitors were partners, compared to 35% of White counterparts; BAME solicitors were three times as likely to be sole practitioners.
These demographic trends will only accelerate–among those starting law degrees, women outnumbered men by more than two to one, while35% of students were from BAME backgrounds.
The proportion of solicitors working in-house grew to 25%, in line with the 1% annual increase seen for some time, although the Law Society said this was still a likely underestimate as some were not officially recorded as working in-house.
Social mobility has only been measured in recent years, in part due to the pressure of the Social Mobility Commission.
In 2016, it noted how privately educated people still dominated the legal profession, with barriers to entry for those from less affluent backgrounds even more acute at the bar than among solicitors.
This will take time to change – the most recent figures from the Solicitors Regulation Authority, for 2021, show that 22% of lawyers working at firms it regulates declared that they attended an independent/fee-paying school, compared to a national average of 7.5%.
According to an analysis last year by Law.com, the gap is significantly bigger in the City, with just 38% of partners and40% of lawyers at 68 firms (the top 50 plus large US firms) being state educated. Of the 23 firms that provided data about whether their lawyers attended Oxbridge, the average was 38%.
Of course, this is not just a legal sector issue. Research by the City of London Socio-Economic Diversity Taskforce last year found financial and professional services “deeply unrepresentative of the communities they serve”.
There are also significant issues with intersectionality. Research commissioned in 2020 by several leading City law firms from the Bridge Group, for example, showed that Black employees at the firms were much more likely to be from lower socio-economic backgrounds.
It found that solicitors from lower socio-economic backgrounds took around 18 months longer to reach partner than those from higher ones; being female and/or from a non-White background” amplify the inequalities in rates of progression”.
Motivated by DEI
Many of our roundtable participants were motivated by DEI issues. Anna Vroobel, a medical negligence solicitor at national firm Irwin Mitchell, sits on its DEI board and leads the disability diversity group. She says her involvement came from self-interest after becoming a disabled person post-qualification, which made her realise “quite how poorly the legal sector is set up to support people who are having additional challenges”.
She says: “Taking disability as an example, there are so many people who are barred from even actually getting training contracts – even work experience – because of others’ attitudes or literally not being able to get through the door.”
That is still a problem – earlier this year, the Bar Standards Board wrote to chief planning officers in central London to express concern at the difficulties chambers face in adapting historic buildings for disabled access.
Grace Kendrick worked multiple part-time jobs to fund her studies at Bristol University and, “having broken a barrier myself”, became involved with DEI initiatives there too, such as the 93% Club, for people who went to state schools, as well as at CMS, which has various diversity networks.
Shortly before the roundtable, she had co-organised the firm’s first mobility roadshow and she recounted how it led to two partners who had worked together for years discovering each had come from a social mobility background. “That for me was a big moment because I realised that it takes the young lawyers to move things forward,” Grace says. “We’re a new generation.”
She continues: “We talk about these things because we know it’s important, and the more you talk about it and share your experience, it can inspire those behind you and it can help them to break the barriers too, making a much more diverse workplace. One of the partners actually said, ‘I don’t know why it matters. I’m here now. No one judges me in my role as partner based on my background’. I said, ‘Well, it is important because you are inspiring everybody around you and also the future of your workplace too’.”
The idea that you can be what you see is critical for law firms. When looking to move, it was important for Olivia Brooks to feel that making partner as a female was a tangible goal at a prospective employer.
“It wasn’t in my previous team, where the partnership was majority older, male partners, whereas 50% of the partnership at Bates Wells is female and 35% work part-time. It feels very achievable because it’s something that I can physically see.”
Abigail Pidgen says her general counsel at Arup is a Black woman, while women head up various teams. “Senior leadership across the business is extremely diverse, so it’s not just that I entered a business that says it is driven by principles – I can actually see it. Being able to live that is really powerful and I appreciate it every day.”
Paying it forward
It is, of course, nonsense to suggest that all younger lawyers are, or should be, motivated solely by higher ideals and should only be engaged in legal work with a social justice or similar purpose. Just on a practical level, the salaries on offer in the City are obviously attractive to those weighed down by student debt.
At the same time, the notion of ‘paying it forward’ from being in a privileged profession is strong. Lara Oseni said she moved to the General Pharmaceutical Council because of what it offered her personally in terms of career progression. But she is now thinking about what she can give back to the profession. “How am I sending the elevator back down to others who are trying to enter the profession, who, maybe like me, might have had to overcome certain barriers?”
She continues: “I now think that the place I work shouldn’t just be somewhere I get a paycheque from. I want to be doing something in my daily work that is benefiting junior legal professionals and the organisation/firm I work for, for generations to come. As a previous chair for the inclusion network at my workplace, it felt rewarding being able to be a part of positive organisational change. This then encouraged me to want to drive change in the profession more generally and is part of the reason I joined the Law Society’s Junior Solicitors Network.”
Some employers are genuinely committed to ESG but plenty are still paying lip service – almost all of our survey respondents agree that some organisations are guilty of window dressing when it comes to tackling DEI and other ethical issues. And yet half say their own employer has a purpose beyond profitability.
Either way, they should realise that this generation will continue to push them. Take the law firm celebrating that 33% of its partners are women. “The question I always ask is, ‘What’s next?’, “says Grace Kendrick. “You can’t just leave the conversation at, ‘Congratulations, you’ve reached your target. It’s an ongoing change and you always have to keep pushing for the next big change and thinking about what you want to do next.”
Holly Moore agrees. “I don’t think anyone at any level can get complacent and be like, ‘Okay, we’ve reached 33%’, or whatever your figure is.
Now, aim for 35%, 40%, 50% – and why are we not just aiming overall to be better?
Maybe lawyers are focused on numbers and statistics, just to show everyone else, but why are we not just aiming for the bigger picture.
As soon as I finished my apprenticeship, I was in touch with HR, with directors, saying, ‘Why have we not hired anyone else? Let’s do it.’ We’ve now got two more solicitor apprentices and we’ve got some employees internally doing the SQE, which is great but, again, that’s a small change in a massive pond. So it takes a lot of people to make the change.“
“The ‘What’s next?’ question is such a good one because there’s so many facets that make up ethics, purpose and values,” adds Abigail Pidgen. “If a company says, ‘Look, we had 2% female partners and now we have 33%, look how great we are’, then we have to ask, what’s your social mobility metric? What’s your accessibility for disabled lawyers? There are so many different things that you need to be doing well in and need to doing better at. You should not mask other areas that you’re failing in with the one area you’re doing well in.”
For Priya Dasani, the growing numbers of people from diverse backgrounds will have a snowball effect. “I’m hoping it’s going to be a slow change that suddenly quickens, because when we get people in those positions of power, and it might take a bit of time to get them there, then all of that change from then on will be pushed forward.”
Reshaping the Legal Ecosystem
The world is changing. There is growing dissatisfaction with maximising profit as the driving force behind economic activity.
B Corps, employee-owned businesses (a small but growing trend in the law) and others are starting to push back and look for another way. Whether running law firms or advising companies in-house, lawyers are central to making this work.
This can seem antithetical to the traditional partnership model, where short-term profits per partner are the focus, but the movement to embed new principles into the practice of law and management of legal practices is growing. Clients, mindful of their own responsibilities, are pressing for their supply chains to reflect these new priorities. The legal equivalent of ‘Nobody ever got fired for hiring IBM’ is under threat –what an organisation stands for is becoming a starting point. With so much fresh thinking in the market, there will be less reverence for the established institutions.
Some law firms are embracing this, while legal business such as Obelisk Support are driving change, providing businesses with modern trusted partners, and lawyers with employment options they have never had before.
Businesses are now in an era of ‘show, not tell’ and law firms are not immune from scrutiny. It is not enough to draft the policies and send out the press releases – they have to prove they mean something. When told proudly about a firm’s parental leave policy, a visiting general counsel we know of demanded to be taken round the office there and then and introduced to those who had actually taken advantage of it. Could you meet a challenge like that?
What are your values? Everyone has them but law firms have been slow to explore and express them. What does the next generation of partners want to inherit? Succession is more than just a TV programme.
We envisage that the law firm of the future will be values-driven in a way that supports diversity in its many forms and creates the platform for motivated staff to deliver for their clients. Obelisk Support was founded on the principle of #HumanFirst and we have never had reason to doubt the path this has taken us down, of which B Corp certification is the latest manifestation.
In-house teams are embracing this too, both by looking at what they can do internally and also using their buying power to demand and reward law firms that see how the world is changing.
Some of the gains have come about by chance, pandemic-led flexible working being the most obvious. Do not throw these away because of how they happened – flexible working is a core facet of DEI.
It’s not going to happen as quickly as many hope but the barriers are coming down. PEP will still be the metric that many law firm partners look at first. It has been suggested that PEP should be recast as people, environment and purpose. Weare on the way.