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HOME > Publications > Professional Articles > Assessing the Role of Solicitors in the Fight Against Corruption

Assessing the Role of Solicitors in the Fight Against Corruption

Author: Dongke He 2022-05-27302
[Summary]随着国际商贸与科技的高速发展,各国对 “白领犯罪” 的打击力度与国际间资产流通的监管也日趋严格。值得注意的是,这一趋势作用在如英国事务律师的职业身份上却意味着其部分角色功能的转变。比如当客户因需聘请部分外国律师为其提供法律服务的同时,外国律师也有一定义务 “秘密监察” 客户的资产来源与委托内容等。那么,客户到底是聘请了一位 “法律顾问” 还是 “法律监察” ? 故此,外国律师当如何在看似冲突的角色中自处?中国客户又可如何充分利用中国涉外律师作为其国际业务中的 “缓冲角色” ,代为进行转委托前的各项合规审查,以期可最大化消除中国客户的各类隐藏风险,从而保证案涉项目的平稳推进?

1. Introduction


In 1939, Edwin Sutherland has introduced the concept of “white-collar crime” during a presidential address to the American Sociological Society.[1] In his definition, the term describes a type of crime that “committed by a person of respectability and high social status in the course of his occupation”.[2] Today, the Federal Bureau of Investigation has explained these words as crimes that characterised by deceit, concealment, or violation of trust and are not dependent on the application or threat of physical force or violence. The motivation behind these crimes is financial, that is, to obtain or avoid losing money, property, or services or to secure a personal or business advantage.[3]


In the past, the scope of white-collar crimes involving embezzlement, bribery, conspiracy, obstruction of justice, perjury, money laundering, antitrust violations, tax crimes, and regulatory violations. However, developments in commerce and technology have broadened its possibilities to include cybercrime, health-care fraud, and intellectual property crimes in the digital age today.[4] Although there are some studies found that public awareness of crime have mostly focused on street crimes such as burglary and theft, and largely ignored white-collar crime;[5] the social impact of latter crime is greatly exceeded that of street crime, both in terms of financial costs as well as physical harmfulness according to Cedric.[6]


Against this background, the topics of transparency and anti-corruption are becoming increasingly prominent in recent years across the globe. Organisations such as Transparency International, Revenue Watch and the Extractive Industries Transparency Initiative are putting their efforts to highlight the issue. These groups, in conjunction with the amendments to the Foreign Corrupt Practices Act (“FCPA”) in the United States in 1998 and the introduction of the Bribery Act 2010 (“UKBA”) in the United Kingdom, along with many other laws and initiatives around the world, have ensured that this issue is now firmly in the public eye.[7]


According to Frank, regulatory agencies have been criticised as being ineffective in combatting white-collar crimes against powerful corporations, because guilty companies generally have more expertise, staff, and time to devote to their defence than the government has for prosecution. In addition, the amount of money governments assign to corporate crime generally is much smaller than that allocated for street crime.[8] In 2002, the United Kingdom government has introduced the Proceeds of Crime Act (“PCA”) and it has adopted arguably one of the toughest approaches, that criminalising even the professional advisers’ failure to report suspicion of their clients’ money laundering to the Serious Organised Crime Agency (“SOCA”).[9] Across the continent, the European Union also consolidated a similar approach since 2005,[10] which requires financial operators and some non-financial operators, including lawyers, to report any suspicious or unusual transactions or activities.[11] These adoptions, however, have imposed some positive duties on the legal profession and have some inevitable impacts on the existing lawyer-client relationship.


In the writer’s opinion, these changes have modified the role of lawyers from the traditional legal adviser to an “accessory supervisor”, as these compulsory duties have ensured that lawyers are obliged to assist regulatory agencies to combat white-collar crimes from the inside of corporations. Therefore, questions of in what extent should lawyers play the role of “accessory supervisor”, and whether these approaches will infringe the principles of professional secrecy and independence of lawyers are raised.


Following the above discussion, the writer has chosen to focus this research on questioning the position of solicitors in the fight against white-collar crimes. Because the scope of this dissertation is limited, the writer thus will not cover all possible types of white-collar crimes. Instead, the research will focuses on criticising the role of solicitors in the fight against bribery and corruption.


 

2. Chapter I - Liability of Solicitors for Corruption


Unlike Edwin firstly introduced the concept of “white-collar crime” in 1939, the prohibition of corruption is not a new topic in the United Kingdom and it can be traced back to 1215, where the Magna Carta declared “to no one will we sell, to no one will we deny, or delay right or justice”.[12]


2.1 Development of Anti-Corruption Laws in the United Kingdom


Broadly speaking, corruption as a criminal offence in the United Kingdom that originally developed at common law before it has been codified into statute. The case of Whitaker[13] is a good example that confirmed it is a misdemeanour at common law for a public officer to accept a bribe as an inducement to him to shew favour or forbear to shew disfavour to any person towards whom an impartial discharge of the officer’s duty demands that he should shew no favour or that he should shew disfavour. In 1889, the government initiated their commitment to draft a law on corruption by passing the Public Bodies Corrupt Practices Act. This Act becomes the first statute in the area of anti-corruption and was primarily focused on bribes given and received in the public sector.[14] Following this approach, the government also introduced the Prevention of Corruption Act in 1906 and it extended corruption law in the private sector by creating an offence relating to agents acting on behalf of principals. Later, the Prevention of Corruption Act 1916 brought some changes to the previous statutes that ensuring the current anti-corruption law is still well designed to fit for purpose.


Prior to the introduction of the UKBA, the legal framework of anti-corruption in the United Kingdom was almost based on the above three statutes. However, the implementation of the UKBA has modernised the whole structure and the reason behind is clear: the existent statutory provisions are becoming inconsistent, anachronistic and inadequate to comply with the United Kingdom’s obligations under international anti-corruption conventions; and so they are in need of consolidation and revision.[15] In short, the UKBA received Royal Assent on 8 April 2010 and is scheduled to be brought into force since 1 July 2011. It has repealed all previous statutes and replaced those provisions with a consolidated scheme of bribery offences intended to deal with bribery both domestically and abroad. Despite the inheritance of the Act that continue indicates the consequence of committing a bribery either in the private or public sector, the most controversial part of this Act is that it has adopted an approach that criminalising the failure of commercial organisations to prevent bribery.[16] Under this Act, it is now an offence for a “relevant commercial organisation” to fail to prevent bribery by an “associated person”, regardless of whether the commercial organisation aware of the bribery in question. This approach was summarised by the former Secretary of State for Justice, Jack Straw, as he concluded that a strong legal architecture is necessary in tackling corruption but in and of itself it is not sufficient. The ultimate solution must be to bring about behavioural change within businesses themselves, creating corporate cultures in which no form of corruption is tolerated.[17] Following this mind, however, it arises questions such as what kind of duties can be imposed on legal professionals in the area of anti-corruption, and how harsh can such duties be reasonably imposed on them.


2.2 Solicitors’ Liability of Participating in a Corrupt Activity


It is understandable to say solicitors are like any other person that must comply with the laws of the country. Since the UKBA has modernised the legal framework of anti-corruption and providing a consolidated scheme of bribery offences. Therefore, solicitors are obliged to comply with the relevant provisions of this Act. The following paragraphs of this part will discuss what liabilities will be held to solicitors if they get directly involved in a bribery offence.


2.2.1 Principal Liability


In the topic of criminal law, the principal is an actor who carries out the offence and is primarily responsible for the offence.[18] According to section 1 of the UKBA, a person is committing an offence if he offering a financial or other advantage to another person in exchange for an improper performance of the relevant function or activity.


The term “relevant function or activity” is interpreted as any function of a public nature and any activity connected with a business, or which is performed in the course of a person’s employment or by or on behalf of a body of persons.[19] And the concept of “improper performance” means the person who is in any of the above conditions that failed to satisfy the expectation of what he is obliged to perform his duty either in good faith or impartiality, or in a position of trust by virtue of performing it.[20] On the other side, however, it is also an offence for the person who solicits or accepts a financial or other advantage in exchange for an improper performance of the relevant function or activity.[21]


It is worth to note that offences created by section 1 and 2 of the UKBA are both applying to corrupt activities committed in the public sector and in the private sector. Therefore, the person is committing an offence, no matter he gives a financial or other advantage either to the Commissioners of HM Revenue & Customs or a company director. Also, it is an offence both for the head teacher and the store manager to solicit or accept a financial or other advantage from the offender of section 1 of the UKBA, in exchange for an improper performance of the relevant function or activity regardless of the result of such performance. Moreover, if a person bribes a foreign public official such as a senior official of the National Bureau of Investigation of Philippines, and intending to influence the senior official in his official capacity in order to obtain or retain business or an advantage in the conduct of business, then the person is breaching section 6 of the UKBA. Under section 6(3) of this Act, a bribe can be conducted by the person who offers, promises, or gives any financial or other advantage either to the foreign public official or to another at the official’s request or with the official’s assent or acquiescence, in the condition that the official is neither permitted nor required by the written law applicable to him to be influenced in his official capacity by the offer, promise or gift. More important, there is no requirement in this section should the offender must intend the foreign public official to carry out his function improperly.


Compared with other jurisdictions, it is not inappropriate to say the UKBA is one of the complete and toughest statute in the world that specifically tackling bribery activities. On the one hand, the UKBA has consolidated all relevant provisions that criminalising corrupt activities committed both in the public and private sectors. It is worth to note that not all jurisdictions are treating bribery within the private sector as a criminal offence.[22] In the United States, although 18 United States Code § 201 provided that it is an offence for the person who offering a bribe or gratuity to a public official, and the public official is also prohibited to accept a bribe or gratuity from the offender of 18 United States Code §§ 201(b) and (c);[23] it left “commercial bribery” free from its federal anti-corruption framework. Therefore, it is a matter of state law to criminalise briberies within the private sector. In reality, a person is committing an offence if he offering a benefit to an employee with intention to influence the employee’s work-related conduct without the employer’s consent in New York,[24] but he may be charged free from the same conduct in another state of the United States.


On the other hand, although it was the FCPA largely dominates the international anti-corruption enforcement prior to the UKBA, and organisations may consider that their anti-corruption procedures are sufficiently robust for the purposes of the FCPA;[25] the implementation of this Act has imposed even a harsher compliance requirement and so it is not sufficient anymore for these organisations to continue merely rely on their adopted FCPA-compliance programmes and best practices to do business in the United Kingdom.


First of all, unlike the FCPA does not extend organisations' anti-corruption liabilities in the area of bribery prevention, section 7 of the UKBA has created an offence of failure by a commercial organisation to prevent bribery. This is a strict liability that the organisation commits the offence even if it does not have knowledge of all the relevant factors, unless the organisation can argue that they had adequate procedures in place which were designed to prevent bribery by people associated with the organisation.


Secondly, there is an affirmative defence under the FCPA for the organisation to argue that the accused bribery payments were made reasonable and bona fide as their business expenses.[26] However, even the UKBA does not allow this excuse in the United Kingdom and so organisations should ensure that business expenses paid to third parties are always reasonable in the circumstances. Change a word, all business expenses paid to third parties are must by “necessity”.


Thirdly, the FCPA also allowing facilitation payments to be made by organisations to foreign officials for the purpose to speed up or secure the performance of routine governmental action.[27] The only condition for this exception is that the organisation must ensure these payments were directed to speeding up the administrative act solely, and it must not contain any element relating to influence the decision-making process. Not surprised, there is no such exception under the UKBA unless the organisation can prove that such payment is permitted by the written law applicable to the territory concerned according to section 6 of the UKBA. It is the organisation need to ascertain what the law is to avoid the commission of an offence under this section. If the law in a particular country is unclear, then the organisation will risk offending should they offer, promise or give any relevant advantage.


Following the above discussion, it is understandable to conclude that the UKBA has created a comprehensive and toughest anti-bribery framework in the United Kingdom. All of the above provisions are applicable both to the general public as well as professionals including solicitors, and so it is crucial for solicitors understand where is the new boundary line delineated by the UKBA when they carrying out instructions received from clients and during their own legal practices. Generally speaking, the typical scene for a solicitor to be charged as a principal offender under the UKBA is that he directly pays a bribe or actively arrange a bribe for his own purpose or for the client’s case either to a public official or the employee of an organisation,[28] or even in the case relating to a foreign public official.[29]


In any case of it, if the solicitor is found guilty of a bribery offence and tried as a summary offence, he may be imprisoned for up to 12 months and fined up to £5,000. If the solicitor is found guilty on indictment, however, he will face up to 10 years' imprisonment and an unlimited fine.[30]


2.2.2 Accessory Liability


Although the previous section has explained the concept of principal in a crime as well as what kind of liability shall the principal takes if he carrying out corruption offences in the United Kingdom, the law recognises two main varieties of participation in a crime as Andrew concluded.[31] And so it is possible for other persons to participate as a secondary party for the same offence through giving assistance or encouragement to the principal. In cases relating to corruption offences, the accessory liability of such secondary party usually results from general criminal laws and specific anti-corruption statutes. Moreover, both individuals and corporate entities can be convicted as an accessory to the principal offender.


In the United Kingdom, there are three main statutes that established accessory liability applicable to individuals in the area of corruption offences. First of all, section 14 of the UKBA has specifically provided that where an offence under section 1, 2, or 6 of the Act is committed by a body corporate and the offence is proved to have been committed with the consent or connivance of a senior officer, then that person is guilty and liable to be proceeded against. The role of a senior officer is defined as a director, manager, secretary, or other similar officer of the body corporate in accordance with section 14(4)(a) of the Act.


Secondly, in the view of general criminal statutes, section 8 of the Accessories and Abettors Act 1861 (“AAA”) also provided that if a person who aid, abet, counsel, or procure the commission of an indictable offence, whether the same be an offence at common law or by virtue of any Act passed or to be passed, then he will be tried, indicted, and punished as a principal offender. It is very important to note that although the person in any of the above conditions is actually participating an offence as a secondary party to the principal both by the fact and law, he will be treated in the same way as if he had actually committed the offence himself whatsoever following this provision.


Furthermore, sections 44-46 of the Serious Crime Act 2007 (“SCA”) have introduced three offences of assisting or encouraging an offence. These are inchoate offences and all applicable to the area of corruption offences. In short, section 44 of the SCA has criminalised the act of a person that capable of encouraging or assisting the commission of an offence, with the intention to assist or encourage the commission of that offence; section 45 of the SCA then provided that a person is committing an offence if he does an act capable of encouraging or assisting the commission of an offence, and he also believes that the offence will be committed and his act will encourage or assist its commission; section 46 of the SCA also stipulated that the offence is committed if a person does an act capable of encouraging or assisting the commission of one or more of a number of offences, with the condition that he believes one or more of those offences will be committed and his act will encourage the commission of one or more of the offences.


In the review of the above statutes, section 14 of the UKBA is undoubtedly designed to regulate the behaviour of senior officers in an organisation. The typical scene of an organisation’s senior officer to be prosecuted under this section is that the officer is turning a blind eye to a corporate culture which allows facilitation payments to be made, or signing off on excessive “commissions”. Therefore, directors and managerial employees of any organisation should pay more attention about their dangers of accessory liability in corporate criminal cases.


On the other side, both the AAA and the SCA are the general criminal statutes that establish accessory liability applicable to general crimes. And so it may not be inappropriate to say there is no provision in the United Kingdom that specifically establish individuals’ accessory liability in cases relating to bribery offences, other than the offence created by section 14 of the UKBA.


Around the globe, there are some notable approaches adopted in other jurisdictions that established specific relevant offences for accessory liability. First of all, there is a specific offence in Bulgaria that applies to any person acting as a “mediator” in the giving or receiving of a bribe.[32] In this way, a lawyer could be prosecuted as a principal for what is essentially an offence committed by themselves as an accessory. Where a lawyer acts as a mediator in an unsuccessful attempt to bribe an official, he may also commit an offence of “unsuccessful intermediation” and be liable in the same way.[33] [34]


Secondly, lawyers in Germany can also be liable both for offences as accessories by aiding[35] or abetting[36] to an offence, and a more specific offence of “assistance after the fact”.[37] According to section 257 of the German Criminal Code (“GCC”), the offence of “assistance after the fact” is interpreted as a person does an act that providing assistance to another who has committed an unlawful act, with the intent of securing for him the benefits of that act. It is worth to note that both the offences of aiding and abetting are designed to criminalise the act of a person who is acting as an “accessory before the fact” to the principal offender, by providing assistance or encouragement to the principal to commit an offence. However, the offence of “assistance after the fact” is the way that criminalises the act of someone who is acting as a secondary party, and providing assistance to help another person to secure that person’s benefit what he received from his criminal activity. In reality, a lawyer could be prosecuted under section 257 of the GCC if the lawyer assisted an organisation’s director to secure his benefit from his previous corrupt activity, by preparing untrue legal documents for him.


Thirdly, in the United States, the Omnibus Trade and Competitiveness Act of 1988 (“OTCA”) has amended the FCPA since its first introduction. Title V of the OTCA is known as the “Foreign Corrupt Practices Act Amendments of 1988” and it has enacted a “knowing” standard in order to find violations of the originally enacted FCPA. This standard was intended to encompass “conscious disregard” and “wilful blindness”.[38] According to this amendment, if a recommending attorney knows or has reason to know the foreign lawyer will take action to violate the FCPA, then the attorney could face prosecution of conspiring to violate the domestic concern section of the FCPA.[39] [40] And so attorneys in the United States cannot simply wash their hands of a transaction once they recommend a foreign lawyer. To be safe, they have to use due diligence and maintain an active role even after the hand off.


Generally speaking, the typical work of corporate and commercial solicitors is about to help businesses with the legal side of commercial transactions such as drafting legal documents and bargaining with other parties on behalf of the clients. Therefore, solicitors are more likely to play the role of accessory rather than the principal offender, if they get involved in a corrupt activity by drafting documents or arranging transactions for their client. Following the above discussion, accessory liability attachable to solicitors is resulting from the general criminal statutes including the AAA and the SCA. And so a solicitor is playing the role as an accessory if he assisted his client to carry out a corrupt activity,[41] no matter whether such activity was succeeded, or even ever committed.[42]


Compared with other jurisdictions, it is worth to note that unlike section 257 of the GCC, which adopts the concept of “accessory after the fact” in Germany. A person who gives assistance after the commission of a crime in the United Kingdom does not become thereby a party to the crime.[43] He may, however, be prosecuted for a separate offence of assisting an offender.[44] In this way, if a solicitor has provided any assistance towards his client for the purpose to impede the client’s apprehension or prosecution, then the solicitor is likely to be charged with the offence of assisting an offender under section 4 of the Criminal Law Act 1967 instead. Moreover, since the “knowing” standard enacted by the OTCA has established accessory liability applies to any related person with the condition that the person knows the money or thing of value will be used corruptly; the only equivalent provision applicable in the United Kingdom is section 14 of the UKBA and it is only targeting the senior officers of an organisation. It is, however, rarely applicable to solicitors.


3. Chapter II - Anti-Corruption Duties of Solicitors


The previous chapter has explained what kind of liabilities will be held to solicitors if they intentionally committed a bribery offence either on their own or with their clients. However, the criminal law does not recognise the positive conduct as its sole element to consist the actus reus. In fact, an omission can also constitute an actus reus and give rise to liability when the law imposes a duty to act and the defendant is in breach of that duty.[45]


For example, the “knowing” standard introduced by the OTCA has exposed the dangers of accessory liability in corporate crimes relating to attorneys in the United States. And so it is advisable for those attorneys to use due diligence and maintain an active role even after they hand off the transaction to a foreign lawyer.[46] In this way, the due diligence is required attorneys to evaluate the risk level first by answering questions such as where is the deal happening? Is it a place where bribery is widespread and condoned? Is there a government-linked customer? Are permits and licences needed? Attorneys are also recommended to do more checks specifically on the bona fides and the reputation of the foreign lawyer being recommended. After this evaluation, the active role is also recommending attorneys to periodically evaluate the relationship between the client and the foreign lawyer. It is important for attorneys to review the pending transaction to see whether the risk of the FCPA violation has increased. If this is the case, then attorneys need to take any necessary actions to avoid such violation, either by redirecting the foreign lawyer or even recommending someone else.[47]


Generally speaking, the typical role of a solicitor is about to act as a legal adviser that accept clients’ instructions and carry it out accordingly. It is both legally and ethically required solicitors to act in the best interests of each client during their legal practices.[48] However, on the other side, there are some specific duties enacted by the laws as well as the relevant regulations that imposing overriding legal obligations on solicitors to act beyond the role merely as a legal adviser.[49]


In certain circumstances, solicitors are required not to act for all of their clients’ interests, and they may even be required to play the role like a “supervisor” against their clients’ activities instead. Therefore, it is crucial for legal professionals understand where is the limit of the role they played as a legal adviser, and in what extent should they act like a “supervisor”.


The rest paragraphs of this part thereby will focus on the examination of the approaches adopted in different jurisdictions that imposing anti-corruption duties on legal professionals for the purpose to uphold the proper administration of justice, and it will also discuss how harsh can such duties be reasonably imposed on lawyers to strike a balance between the role to act in the clients’ best interests and the role to uphold the proper administration of justice.


3.1 General Duties


In doctrines of criminal law, the actus reus normally requires an action of some sort, that is, something done by the defendant. According to Andrew, this standard doctrine in fact comprises two rules. On the one hand, behaviour specified in an actus reus can prima facie be satisfied only by a positive act on the part of the defendant, and not by the defendant’s omission. On the other hand, there are certain exceptions to the previous prima facie rule. These exceptions usually arise when the defendant has a duty to intervene and prevent the prohibited harm from occurring, whereupon his failure to do so counts as an omission satisfying the behavioural element of that actus reus. The first rule is general in nature; the exceptions, and the duties on which they are based, are specific and confined.[50]


Broadly speaking, there are three main types of anti-corruption duties that can be imposed on legal professionals.[51] First, a lawyer may be required by the law to cease to continue acting for his client once the lawyer becomes aware that his commitment would get him involved in a corrupt activity. Second, a lawyer may also be required to use due diligence and maintain an active role during the transaction he is handling for the client. This approach generally requires the lawyer to take reasonable steps to prevent commitment of any corrupt activity within his control. Third, there is an arguably approach that requires lawyers to report any suspicious corrupt activity during their legal practices.


3.1.1 Duty to Stop


In the United Kingdom, the solicitors’ duty to stop a corrupt activity is primarily derived from the professional conduct matter. According to Principle 7 of the SRA Principles 2011 and Outcome 1.3 of the SRA Code of Conduct 2011 (“Code”), solicitors are required to examine whether the instructions they received from the client are compatible with the law and the Code before they decide should they act, or terminate the instructions. Following this requirement, a solicitor is obliged to cease to act for his client once he found the client is instructing him for planning or arranging a corrupt activity, either by drafting documents or arranging transactions, for the payment of a bribe.[52] [53] [54] Moreover, solicitors are also obliged not to attempt to deceive or knowingly or recklessly mislead the court,[55] when they are exercising the right to conduct litigation or acting as an advocate.[56] [57] [58] [59] In this way, if a client is trying to persuade his solicitor to construct any fact or draft any document to hide the client’s corrupt activities during the litigation. Then it is mandatory for the solicitor to inform his client about his outweighed duty owed to the court and he should cease to act if the client insist doing so.[60] [61] [62] [63] It is worth to note that the duty of confidentiality still applies to solicitors in this situation.[64]


3.1.2 Duty to Prevent


Generally speaking, the duty not to participate a corrupt activity can be satisfied by solicitors’ commitment of complying with the law and the Code.[65] However, section 7 of the UKBA still created a strict liability that applies to law firms in relation to the matter of solicitors’ duty to prevent corrupt activity.[66]


According to this provision, a relevant commercial organisation is committing an offence if any person associated with it bribes another person intending either to obtain or retain business for the organisation, or to obtain or retain any advantage in the conduct of business for the organisation. In reality, a law firm can be prosecuted under this section if a solicitor employed by this commercial organisation has participated in a bribery activity during his employment, and the law firm also failed to prevent this employee from undertaking such conduct.[67] As the result, the law firm will be fined upon its conviction under section 7 of the UKBA,[68] and any person guilty of such offence is also liable on conviction on indictment to a fine.[69]


Following this approach, the UKBA has established a vicarious liability applies both to law firms and managing partners regarding the duty to prevent bribery. The only defence available under this prosecution is that the defendant had in place adequate procedures designed to prevent persons associated with it from committing bribery. Although the concept of adequate procedures is not clearly defined in the UKBA, section 9 of the Act still imposed a duty on the Secretary of State for publishing a guidance about the procedures that relevant commercial organisations can put it in place to prevent persons associated with them from bribing as mentioned in section 7(1) of the UKBA.


Based on this requirement, the Ministry of Justice has published a guidance about what procedures can be considered as adequate in accordance with the above provisions. In short, the guidance has set out six key principles and it provided that the procedures to prevent bribery should be proportionate to the bribery risks faced by the organisation and the nature, scale and complexity of the organisation’s activities; senior management should be committed to preventing bribery and a senior person should have overall responsibility for the programme; the organisation should carry out periodic, informed and documented assessments of its internal and external exposure to bribery, and act on them; appropriate checks should be carried out on persons performing services for the organisation, and those persons should in turn be required to carry out similar checks on the persons they deal with; bribery prevention policies should be clearly communicated internally and externally, and there should be continuous training; the risks and procedures should be regularly monitored and reviewed to ensure that they are being followed in practice.[70]


It is clear to conclude that solicitors at managerial positions in a law firm are obliged to satisfy their duty to prevent bribery within their control, and the paper-compliance is not sufficient to achieve this goal. Managing partners are expected to adopt a zero-tolerance, anti-bribery culture that is integrated into their routine operations, fully and visibly supported at the highest levels in every law firm.


3.2 Boundary Line


Although the above discussion has explained the solicitors’ duty to stop and prevent a bribery activity, there is still left an arguably approach that the above paragraphs did not mention. This approach, however, is proposing whether the legal professionals should be obliged to supervise their clients’ activities, and should lawyers be required to report any suspicious activity to the relevant parties during their legal practices.


Broadly speaking, both the duties to stop and prevent a bribery activity are protective obligations that designed to uphold the proper administration of justice by solicitors. The commitment of these duties should not bring any concern over lawyer-client privilege and professional duties of secrecy. However, the obligation of requiring lawyers to report any suspicious activity to the relevant parties is an approach that extended legal professionals’ duty to proactively supervising their clients. And this approach will inevitably touch the boundary line of the principles of professional secrecy and independence of lawyers.


In the United States, for example, the Sarbanes-Oxley Act 2002 (“SOA”) has imposed a strong reporting obligation on attorneys in cases they are representing companies with shares publicly traded on an exchange. Under this Act, all in-house attorneys and outside counsel representing these public companies are required to report evidence of material violations of federal and state securities laws to the chief legal counsel or the chief executive officer of the company.[71] This obligation also includes breaches of the FCPA and other corruption legislation.[72]


Moreover, the Code of Federal Regulations is also providing that an attorney appearing and practising before the U.S. Securities and Exchange Commission (“Commission”) in the representation of a public company may reveal to the Commission, without the company’s consent, confidential information related to the representation to the extent the attorney reasonably believes necessary to prevent the company from committing a material violation that is likely to cause substantial injury to the financial interest or property of the company or investors; or to rectify the consequences of a material violation by the company that caused, or may cause, substantial injury to the financial interest or property of the company or investors in the furtherance of which the attorney’s services were used.[73]


In fact, these laws are born with controversial in the United States and some legal professionals are even arguing that this approach adopted to govern the professional conduct of attorneys is threatening to change the role of attorneys from the person who advice public companies on securities matters as a trusted counsellor to the one acting like an informer.[74] Following this argument, it concerns the implementation of such reporting obligation on attorneys will damage the relationship between legal professionals and their clients.


Attorneys could be deprived of information they need to properly advise the client because company employees may be deterred when they communicate with legal professionals over their concerns of attorneys’ reporting obligation, and so employees are more likely to limit the information their attorneys should have in order to counsel the company properly.[75] As the result, public companies are inevitably impeded from obtaining legal advice when it is most needed. Attorneys’ ability to promote client legal compliance would also be jeopardised. In short, this argument believes it would be more likely to harm than protect companies and their investors from governance violations, and hence undercut the purposes of the SOA.


On the other side, however, it is safe to say there is no equivalent obligation imposed on solicitors in the United Kingdom by the time of writing. Nevertheless, solicitors are expected to report any suspicious activity of money laundering to the SOCA as mentioned in the previous chapter. The SOCA is replaced by the National Crime Agency (“NCA”) since 2013.


Although the concept of money laundering is the process by persons that concealing the transformation of profits from illegal activities and corruption into ostensibly “legitimate” assets,[76] solicitors are targets for these persons in their efforts to “launder” their proceeds of crime.[77] For example, if there is a store manager who received a bribe from another person and he intends to conceal such illegal source of income by purchasing a property in the United Kingdom. Then this manager is very likely to instruct a solicitor to proceed with such transaction.


Generally speaking, solicitors are obliged to know their clients and understand the transactions they have been instructed upon.[78] Moreover, solicitors are expected to assess the risks of each transaction they are handling for their clients, and they are also obliged to implement anti-money laundering measures as appropriate in accordance with the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017 (“MLR”). In this typical situation, it is likely for a solicitor to raise his suspicion of money laundering if the manager is purchasing a property without a mortgage and for a significant amount of money, which is in fact by the amount that manger received from his previous corrupt activity. This solicitor should then report his suspicion to the law firm’s nominated officer under the requirements of the PCA and the MLR to prevent an offence under section 328 of the PCA.[79] The nominated officer is also obliged to report this matter to the NCA as required by section 331 of the PCA. During this process, solicitors are not allowed to tip off their clients,[80] nor should they prejudice any investigation initiated by the appropriate officer.[81]


It is worth to note that although the solicitor is obliged to report his suspicion of money laundering over the manager’s instruction of property purchasing, the solicitor is not required to investigate and report the client’s corrupt activity itself. Change a word, solicitors should exercise their duty to stop and prevent a bribery if they found their client is asking them to get involved in a corrupt activity, however, solicitors are obliged to disclose confidential information in the absence of their clients’ consent only when they aware the instruction they received is in relation to money laundering, which is, the offence after another.


In fact, the MLR is a response made by the United Kingdom’s government to the European Union’s Fourth Money Laundering Directive. Europe is always the high water mark of reporting obligations under anti-money laundering legislation since 2005, which is the year it passed the Third Money Laundering Directive (“Third Directive”).


The Third Directive has consolidated its previous two directives and incorporated a number of further recommendations proposed by the Financial Action Task Force.[82] Under this system, it started requiring legal professionals to report any suspicion of money laundering of their clients to the competent authorities during legal practices. The Third Directive also created offences of “tipping off” a client where a report has been made, and it has imposed several obligations of client due diligence on lawyers for the purpose to prevent these legal professionals being involved in money laundering practices of their clients.[83] Similar to the fate of the SOA, the Third Directive also received some negative replies across its Member States because it again touched the boundary line of the principles of professional secrecy and independence of lawyers. Member States including France, Italy, Germany, and Bulgaria were bringing their concerns over whether the reporting obligations under money laundering legislation have generated conflict with national laws that set out the professional duties of secrecy.[84] Specifically, both France and Belgium were raising a question of whether the extension to lawyers of the obligation to inform the competent authorities when they come across facts which they know or suspect to be linked to money laundering infringes the principles of professional secrecy and independence of lawyers. These principles, however, are the constituent element of the fundamental right of every individual to a fair trial and to the respect of every individual’s rights of defence.[85]


For the answer, the Court of Justice of the European Union has confirmed the exception rule established under article 23 of the Third Directive is exempting lawyers from the reporting obligation whenever they are defending or representing their clients in court, or to give advice “as to the manner of instituting or avoiding judicial proceedings”.[86] In another example, France also introduced two relevant exceptions by implementing the Third Directive and it allows lawyers to be exempted from the reporting obligation whenever they are actively giving assistance to the client and representing it before the court on the matter; or when they are providing general advice to their clients, otherwise than in connection with any proceedings at all, unless the advice has been given specifically for the purpose of money laundering or terrorist financing.[87]


Broadly speaking, the approach adopted both by the SOA and the European Union’s anti-money laundering legislation has showed the trend of governments’ intention of re-delineate the boundary line between personal privacy and the influence of the state. Under the MLR, it now requires the risk assessments to be undertaken by both the supervisory authorities such as the Financial Conduct Authority and HM Revenue & Customs and a relevant person.[88] In a review of some legal practitioners in the United Kingdom, the reviewers also believe the government and the Director of the Serious Fraud Office are enthused by the approach that suggesting the relevant persons should be obliged to take reasonable steps to prevent commitment of some specific criminal activities in their organisation.[89] As the result, the government has introduced the new corporate offences of failure to prevent the criminal facilitation of tax evasion which,[90] also applicable to solicitors in the same way like section 7 of the UKBA.


Although it is safe to say the United Kingdom’s government is currently concentrated on consolidating the solicitors’ duty to prevent various criminal activities within their reasonable control, it is just one step away from adopting the ultimate goal of asking legal professionals to proactively fight crimes against their own clients. Indeed, lawyers as the intermediary that usually stand on the front line in dealing with their clients and the competent authorities, and so they may be considered as the best collaborator in assisting these supervisory authorities to combat crimes. However, this approach may be criticised as a dangerous propose that enforcing lawyers to change their role from a trusted legal adviser to a supervisor of disclosing their clients’ confidential information to the relevant authorities. If lawyers have lost their value of independence and trustworthiness to their clients, then the whole legal system will be fundamentally harmed and even collapsed from another side. Therefore, it is a question left both to the governments and legal professionals to consider where shall the boundaries lie.


As this question is still unanswered, what the desired role of solicitors would be thus will be continuing discussed in the following chapters.


 

4. Chapter III - Corruption Threat & Preventive Practices


Based on the above discussion that explained how the current laws are regulating the behaviour of lawyers and how it defines the role of legal professionals. In this chapter, the following paragraphs will be focused on discussing what corruption risks and challenges lawyers are actually facing in their workplaces, and how the organisations other than governments and bar associations are proposing the role that lawyers should adopt for the fight against bribery and corruption. Although the laws have already set up the bottom line that every legal practitioner must seek to comply, an understanding of what specific risks and challenges lawyers are likely to face and what they need to counter during their legal practices is the way to effectively delineate this bottom line to achieve its desired goals.


4.1 Corruption Risks to the Legal Profession


In April 2010, the International Bar Association (“IBA”) and the Organisation for Economic Co-operation and Development (“OECD”) and the United Nations Office on Drugs and Crime have launched a project titled as the Anti-Corruption Strategy for the Legal Profession.[91] This project is focused on discussing how lawyers are playing their role in fighting against bribery and corruption in international business transactions, and assessing the impact on the legal practice of international anti-corruption instruments and associated national legislation.


In fact, this project began with a survey carried out by the IBA, which was designed to assess the knowledge and understanding of the legal profession in terms of bribery and corruption. The purpose of this survey was not only about to determine what lawyers knew about international bribery, but what they understood about their role and their own risks.[92] In the result, the survey has found there is a number of lawyers admitted that they knew some of their colleagues and competitors had probably been involved in bribery schemes, and some lawyers also had experienced losing clients simply because they did not want to get involved in a bribery activity. In short, this finding has indicated that bribery and corruption were not a hypothetical issue existed in the lawyers’ workplace, and at the same time there was an amazing degree of ignorance among legal professionals over their own role and risks.


4.1.1 Typical Situations of Corruption Risks


According to Nicola,[93] the Director for Legal Affairs of the OECD, the typical way legal professionals exposed to bribery and corruption risks is that lawyers are acting as an intermediary that put in between two or more trading parties. Following the above discussion, the typical work of corporate and commercial lawyers is about to help businesses with the legal side of commercial transactions and this includes draft legal documents and negotiate with other parties on behalf of their clients. And so these lawyers are likely to be linked to a bribery offence and play the role as an accessory if they get involved in this activity by drafting documents or arranging transactions for the client.


Broadly speaking, a lawyer can be involved in a bribery activity with or without his knowledge or acquiescence. A lawyer may active participating a bribery offence and the case of United States of America v. Jeffrey Tesler, et al.[94] is a typical example. In this case, Jeffrey is a solicitor that hired by a joint venture traded as Kellogg, Brown & Root Inc. for the position as a consultant, and he is also controlling a shell company called Tri-Star Investments (“TSI”). Between 1994 and 2004, Jeffrey agreed with his conspirators to pay bribes to Nigerian government officials, including top-level executive branch officials, in order to obtain and retain engineering, procurement and construction contracts for the joint venture. As the result, the joint venture has paid approximately $132 million in consulting fees to the TSI and Jeffrey admitted that he had used these fees to pay bribes to Nigerian officials. Following the subsequent prosecution of the violation of the FCPA, Jeffrey has been sentenced to 21 months imprisonment, with a fine of $25,000 and a special assessment of $200. Moreover, Jeffrey’s case has also been referred to the Solicitors Disciplinary Tribunal by the Solicitors Regulation Authority on 27 September 2012,[95] and the tribunal has ordered Jeffrey to be struck off the Roll of Solicitors for the breach of Rule 1.02 and 1.06 of the Solicitors Code of Conduct 2007.


Apart from this typical example of legal professionals’ active involvement, it is more crucial for lawyers to aware their risks of getting involved in a corrupt activity unconsciously. For example, a client may request his lawyer to set up an offshore structure presented as lawful, but which may be in fact used for laundering slush funds. Lawyers may also be asked to act as intermediaries in hiring distributors, agents and vendors on behalf of their clients. In these situations, however, lawyers can be exposed to bribery and corruption investigations if these participated transactions are ultimately designed for illegal purposes.


On the opposite side of examining the corruption threats to the legal profession, there is a concern raised by reviewing the available career options of solicitors, as whether private practitioners and in-house lawyers are facing the same risks regarding bribery and corruption investigations and lawyer-client privilege protection.

Following Nicola’s opinion,[96] on the one hand, it is theoretically to believe that an external lawyer has a higher degree of lawyer-client privilege than an in-house lawyer, particularly in European countries where lawyer-client privilege for in-house lawyers is very little recognised. On the other hand, the lawyer-client privilege does not necessarily exclude or protect lawyers in all possible ways. Indeed, the concept of legal advice privilege as an example, it only applies where the information passed between the client and a solicitor acting in the capacity of a solicitor.[97] Change a word, only the legal advice communicated between the client and the solicitor can be privileged. In this way, it is prima facie the communication made between a corporate client and its external lawyers will enjoy a higher possibility to claim privilege than the internal information changed between executive officers and in-house lawyers. However, it is still worth to note that there are some limitations in place to prevent lawyer-client privilege being used as a sheet to cover all information which a client does not wish to be disclosed. For example, the communication made for the purpose to commit a fraud or a crime is absolutely not privileged.[98] Also, solicitors should bear in mind regarding their duty of disclosure imposed by the laws as discussed in the previous chapter.


For the answer of this concern, Nicola concluded that although the external lawyers are prima facie enjoy a higher degree of lawyer-client privilege than in-house lawyers, they may essentially face the same risks of bribery and corruption investigation. This is because the information disclosed by the solicitor is not the only source the investigator can gather from, and there are other means available to the supervisory authorities to get incriminating information of suspects. In the example of Jeffrey’s case, the information on the bribery scheme in fact was not directly gathered from the solicitor himself, but came through different channels that beyond the solicitor’s control. Therefore, the lawyer-client privilege may be considered as a protection in some extent, but it is certainly not an absolute protection to every legal professional.


4.1.2 Viable Strategies for Minimising the Risks


Following the above discussion of the typical examples regarding corruption threats, there are some viable approaches developed from the above situations for lawyers to minimise their risks.[99] However, the fundamental thing that every legal professional need to understand is that lawyers can and may be used as intermediaries in carrying out bribery and corrupt activities.


First of all, it is advisable for lawyers distinguish the role between a pure legal adviser and a more active role of instruction executor. Lawyers should understand they are generally prohibited to provide legal advices for the purpose to guide their clients to commit offences, and this principle is globally implemented by imposing the “duty to stop” on the legal profession.[100] In another situation that lawyers are required by their clients to carry out instructions such as representing the client in a legal contract or assisting the client to set up a corporate vehicle, lawyers should consider their risks of participating an offence as an accessory, and so they must exercise due diligence in an appropriate level to eliminate these threats.


Second, in the area of workplaces, private practitioners are advised to establish a risk-based assessment policy in their law firm to prevent corrupt practices. Law firms should have internal controls and compliance systems that are adapted to the size of their client’s business, and lawyers should understand how their client’s business is carried out, and even the country in which the client’s business operates and the countries that the client’s business is associated. Furthermore, managerial lawyers should also understand their associates’ behaviour may trigger the law firm’s vicarious liability in certain circumstances. And so it is advisable for law firms consider the training programmes to minimise the risks.


Third, in considering the role of in-house lawyers, it is understandable to say that certain companies in today’s difficult economic climate may tend to cross legal lines to obtain business.[101] In this situation, in-house lawyers are likely to face the pressures from the management once the decision has been made. Generally speaking, it is worth to note that although the decision may benefit the company’s business in a very short term, the management should not disregard its negative impact of the company’s health in the medium and long term. As the result, there is no better reason for in-house lawyers not to convince the hierarchy to reconsider their business development strategy and re-balance the risks and benefits between right and wrong. If such persuasion has failed, then the in-house lawyers should consider the “way-out” strategy for the commitment of their professional duties. According to Nicola, it is important to remember that once a lawyer has accepted a decision made by his management, then it creates a precedent. And it is very difficult for the lawyer not to accept another similar decision since the precedent has been set. In short, the containment strategy of allowing a bad decision to be taken once, and only this once, does not work in practice.[102]


4.2 Anti-Corruption Practices & Guidelines for Lawyers


In addition to the corruption risks and challenges discussed above, there are some organisations other than governments and bar associations have also established their own practices and guidelines for the purpose to promote anti-corruption business environment around the globe. Broadly speaking, it is not inappropriate to consider the law firm as a legal entity that should adopt good practices and guidelines to counter bribery and corruption risks like any other business entity.[103] Following this mind, it is worth to assess what type of role should lawyers adopt by implementing these practices and guidelines in their law firm.


4.2.1 United Nations Global Compact


According to the survey examined by Arnold & Porter LLP,[104] there are some law firms in Australia have signed the United Nations Global Compact (“UNGC”) to promote their commitment of anti-corruption policies. Generally speaking, the UNGC is described as a strategic policy initiative for businesses that are committed to aligning their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption.


In the field of anti-corruption, this principle was originally adopted in 2004 and it commits the UNGC participants not only to avoid bribery, extortion and other forms of corruption, but also to proactively develop policies and concrete programmes to address corruption internally and externally with their associated businesses.[105] In short, the UNGC suggests that signatories should consider the following three fundamental elements when they are implementing this principle. First, every participant should introduce anti-corruption policies and programmes within their organisation and their business operations. Second, participants should also report their anti-corruption work in their annual Communication on Progress. This is a statement produced by the participants that outlines their efforts to operate responsibly and support society, and these participants are also expected to share experiences and best practices through the submission of examples and case stories. Third, participants are recommended to join forces with industry peers and with other stakeholders to scale up anti-corruption efforts, level the playing field and create fair competition for all.


By implementing this principle, law firms are likely to set up their own codes of conduct for countering corruption risks within the organisation. The obligation of publishing annual Communication on Progress should theoretically help managing partners to spot the potential corruption risks of their handling cases, and assist the law firm to assess the effectiveness of their anti-corruption policies. In the result, this principle would guide law firms to construct an anti-corruption culture that is integrated into their legal practices.


4.2.2 Good Practice Guidance on Internal Controls, Ethics, and Compliance


Apart from the principle promoted by the UNGC, the OECD has also published their relevant guidance since 2010,[106] and it is designed to help companies to establish and maintain an effective internal controls, ethics, and compliance programmes or measures for preventing and detecting the bribery of foreign public officials in their international business transactions. According to Nicola,[107] this guidance provides a very basic but comprehensive set of advice and actions that any law firm should consider when dealing with international business transactions.


In brief, the guidance designed for companies is consisted of 12 key recommendations and it requires a company to establish a clearly articulated and visible corporate policy of prohibiting foreign bribery. This policy should be supported and committed from senior management, and individuals at all levels of the company should also be obliged to comply with. The company is recommended to set up independent monitoring bodies for internal reporting and supervising, and the ethics and compliance programmes or measures should specifically cover the matters of gifts, political contributions, facilitation payments and more. The relevant individuals should be required to exercise risk-based due diligence when they are acting on behalf of the company to build contractual relationship with third parties including agents, consultants, and representatives. The company should secure an effective financial and accounting procedures to maintain a fair and accurate books, records, and accounts. This is a protection to ensure that they cannot be used for the purpose of foreign bribery or hiding such bribery. Moreover, the policy should ensure the company has established an effective internal system that encourage and provide positive support for the observance of the policy, as well as an appropriate disciplinary procedures to address violations at all levels of the company. At last, the policy should be periodically reviewed, and individuals at all levels of the company should also receive periodically training for compliance.


5. Chapter IV - Desired Role of Solicitor


Broadly speaking, the previous chapters have provided an overview of the role of legal professionals in the background of anti-corruption, as well as their relevant duties and challenges based on the examination over the legal requirements and practical concerns. Following these discussions, it is now appropriate to consider the role what solicitors are playing today when they are carrying out instructions for the clients, and what contribution solicitors are expected to provide during their fight against corruption. The paragraphs below thus will be focused on answering the questions generated from the beginning of this dissertation, these are, whether solicitors in today’s environment are still acting the role as a pure legal adviser that simply carrying out instructions for the client or, they are expected to play the role like a “supervisor” that help the relevant authorities to supervise their handling cases in the name of upholding justice? If solicitors are obliged to adopt the role of “supervisor”, then where shall the boundaries lie between the role to act in the clients’ best interests and the role to uphold the proper administration of justice?


5.1 Adviser or Executor


As Nicola advised,[108] lawyers should distinguish the role between adviser and executor when they are carrying out instructions for the client in the background of anti-corruption. Indeed, the most client’s instructions can be divided into these two major categories. First, a client may simply seek legal advice from a lawyer to help him to understand his available options and thus to make a viable decision. Second, a solicitor may be asked to set up a corporate vehicle on behalf of his client to achieve the client’s business objective.


5.1.1 Legal Adviser


In the scenario that a client is seeking legal advice from a solicitor in the United Kingdom, there are three main aspects the solicitor should aware during the process of producing his legal advice.


First, it is undoubtedly to say solicitors are obliged to provide practicable advices that comply with the laws and regulations, and so the served advice must not induce the client to commit an offence. This duty is derived both from solicitors’ professional conduct matter as well as the requirement of the rule of law. If there is a solicitor who produced a legal advice and it contains an element that ultimately guided his client to commit an offence in relation to bribery, then the solicitor is in breach of Principles 1 and 7 of the SRA Principles 2011, and he may also be prosecuted as an accessory to the principal offender under the relevant provisions of the AAA or the SCA.[109] [110]


Second, solicitors at managerial positions should also bear in mind that section 7 of the UKBA has created a strict liability applicable to them in relation to the matter of solicitors’ duty to prevent bribery. Both the law firm and its partners can be prosecuted under this section if an associate employed by this law firm has participated in a bribery activity during the employment, and the law firm has failed to prevent this employee from undertaking such conduct. Although there is an available defence under the condition that the defendant had in place adequate procedures designed to prevent persons associated with it from committing bribery, it is worth to note that solicitors at managerial positions are advised to active monitoring their employees’ work to prevent bribery, and the paper-compliance is certainly not sufficient to persuade an excuse. In other words, managing partners are expected to exercise their due diligence to adopt a zero-tolerance, anti-corruption culture that is integrated into their routine operations, fully and visibly supported at the highest levels in the law firm.


Third, in certain circumstances, if a solicitor suspects his client is seeking legal advice from him for the purpose to conceal the client’s illegal source of income, which is in fact the amount the client received from the previous corrupt activity. Then the solicitor is obliged to report such suspicion to the law firm’s nominated officer and the NCA without tipping off the client. The failure of reporting such suspicion without a reasonable ground will cause the solicitor to commit an offence either under section 330 or 331 of the PCA. Moreover, it is worth repeating that solicitors should exercise their duty to stop and prevent a bribery if they found their client is asking them to get involved in a corrupt activity, but solicitors are obliged to disclose confidential information in the absence of their client’s consent only when they aware the instruction they received is in relation to money laundering, which is, the latter offence.


After review of the above aspects, it is understandable to conclude that the task of producing a legal advice for the client does not necessarily prove the fact that the solicitor is still playing the role as a pure legal adviser in today’s environment. On the one hand, corruption threats are attachable to solicitors if they are simply producing the legal advice without checking their client’s identity and understand the transaction they have been instructed upon. On the other hand, solicitors at managerial positions are obliged to exercise their due diligence to minimise corruption threats within the law firm. Since the government and the Director of the Serious Fraud Office are enthused of imposing duties of requiring law firms to take reasonable steps to prevent commitment of specific criminal activities within the organisation, it is reasonable to predict that more and more similar duties will be imposed on solicitors in a foreseeable future.[111] As the result, the solicitors’ role is likely to be ultimately shaped as the one that help the relevant authorities to supervise their handling cases in the name of upholding justice.


5.1.2 Instruction Executor


Compared with the scenario that the client is simply seeking legal advice from a solicitor, in fact, it is more crucial for solicitors to understand their corruption risks when they are carrying out instructions such as representing the client in a legal contract or assisting the client to set up a corporate vehicle in the United Kingdom.


As the above discussions advised, solicitors should understand that they can and may be used as intermediaries when they are carrying out the client’s instructions. A solicitor can be convicted either as a principal offender or an accessory if he voluntarily participated in bribery schemes and, he may also get involved in a corrupt activity without his knowledge or acquiescence. Although there are several practicable recommendations developed for the purpose to help solicitors to minimise their corruption risks, the fundamental thing every solicitor should bear in mind is that solicitors must exercise due diligence in an appropriate level to eliminate these threats.


First of all, for the persons practising as private practitioners, this group of solicitors is advised to establish a risk-based assessment policy across the law firm to prevent corrupt practices. On the one hand, solicitors should aware that they are obliged to examine the client’s instruction before they decide to act, or to terminate the instructions. Also, they are expected to monitor the whole process when they are handling the client’s transactions, and they are expected to spot and eliminate any potential corruption risk by exercising their due diligence during the time they are carrying out the client’s instructions. On the other hand, managerial solicitors are advised to establish their own codes of conduct within the law firm for countering corruption risks. The codes of conduct should be proportionate to the corruption risks faced by the law firm as well as the nature, scale and complexity of the law firm’s handling cases. The law firm should also allow bribery prevention policies to be clearly communicated internally and externally, and there should be continuous training across all levels of the firm. Furthermore, the risks and procedures should be regularly monitored and reviewed to ensure that they are being followed in practice.


Second, in considering the role of in-house solicitors, this group of solicitors is advised to promote a good anti-corruption practice guidance to be adopted by the company. In an example of the OECD’s Good Practice Guidance on Internal Controls, Ethics, and Compliance, this guidance can help the company to build and maintain an anti-corruption environment that will ultimately benefit the company’s health as well as the solicitor’s commitment of his professional duties. Following the recommendations of this guidance, an effective policy is expected to be established for providing guidance and advice to directors and employees regarding complying with the company’s ethics and compliance programme or measures, including when they need urgent advice on difficult situations in foreign jurisdictions. More important, the solicitor should ensure that the company has set up a policy of allowing internal and confidential reporting by, and protection of, directors and employees, not willing to violate professional standards or ethics under instructions or pressure from hierarchical superiors, as well as for directors and employees willing to report breaches of the law or professional standards or ethics occurring within the company, in good faith and on reasonable grounds and, undertaking appropriate action in response to such reports.[112] It is important for the in-house solicitors to remember that the containment strategy of allowing a bad decision to be taken once, and only this once, does not work in practice.


5.2 Desired Role of Supervisor


Following the above discussions, it is understandable to indicate that whatever the type of the client’s instruction is, solicitors in today’s anti-corruption environment are playing their role more and more like a “supervisor” that obliged to monitor their handling cases, rather than the classic legal adviser who simply accept client’s instructions and carry it out accordingly. On the one hand, solicitors are advised to exercise their due diligence to eliminate their corruption risks when they are producing legal advice or set up a corporate vehicle for the client. On the other hand, both the law firms and companies are required by the law to adopt policies to prevent corrupt practices within the organisation. However, there is still left one question remaining unanswered, that is, if solicitors are obliged to supervise the cases they are handling, then where shall the boundaries lie between the role to act in the client’s best interests and the role to uphold the proper administration of justice? Before answering this question, it is worth to look back at the types of solicitors’ anti-corruption obligations.


5.2.1 Internal Supervisor


In this dissertation, the term of “internal supervisor” is used to describe the type of protective anti-corruption obligations, that requiring solicitors to exercise due diligence during the time they are carrying out the client’s instructions and, report breaches of the law or professional standards or ethics to the relevant officers within the organisation.


Following this mind, both the solicitors’ duty to stop and prevent a corrupt activity are covered in this category. First, solicitors are obliged to examine the client’s instruction before they decide should they act or terminate it. If there is a client who intents to persuade his solicitor to deceit the court, then it is mandatory for the solicitor to inform his client about his outweighed duty owed to the court and he should cease to act if his client insist doing so. However, the solicitor’s duty of confidentiality still applies in this situation. Second, section 7 of the UKBA has established a strict liability that requires law firms and its partners to take reasonable procedures to prevent corrupt practices within the organisation. This vicarious liability, in fact, is promoting every law firm to adopt a zero-tolerance, anti-bribery culture that is integrated into their routine operations, fully and visibly supported at the highest levels in the law firm. Third, in the example of the OECD’s Good Practice Guidance on Internal Controls, Ethics, and Compliance, it is worth to note that this guidance is also recommending the company should construct an internal and confidential reporting system.


Based on the above examples, it is clear to indicate the “internal supervisor” is an approach that suggesting the role of solicitors in the background of anti-corruption should be the one that obliged not to get involved in any corrupt activity and, committed to promote anti-corruption policies and practices for the purpose to minimise and eliminate potential corruption risks within the control. This approach, however, respects the independent value of solicitors and does not touch the boundary line of legal professional privilege.


5.2.2 External Supervisor


On the opposite side of the above category, the term “external supervisor” thus will be used in this dissertation to describe the type of “aggressive” anti-corruption duties that require solicitors to actively supervise the cases they are handling and, report any suspicion to the external supervisory authorities for the purpose to uphold the proper administration of justice. Broadly speaking, both the MLR and the Code of Federal Regulations are good examples that follow this mind. This approach, inevitably, will influence the relationship between solicitors and their clients.


As the previous chapter mentioned, this approach was born with controversial and there is one argument believes that lawyers should not be enforced to change their role from a trusted counsellor to an informer. Otherwise, it would be more likely to harm than protect the value of lawyers’ independence and trustworthiness to their clients, and hence it will ultimately undercut the purposes of this approach. Apart from this argument, it is also worth to consider the different position between the role as a solicitor and an investigator. Generally speaking, it is not difficult to understand that the information communicated between a client and his solicitor is generally covered by the concept of legal professional privilege. The rationale behind this concept is because it enables a client to speak freely to his solicitor without worrying that the information passed over might be disclosed at a later date. However, this concept surely does not cover the communication made between a suspect and an investigator. In certain circumstances, the information changed between these two may even be considered as a “confession” and so it may be referenced during a litigation afterwards. Therefore, if a client believes his solicitor is obliged to report any suspicious information changed among themselves to the supervisory authority for initiating an investigation, then how likely would this client to freely provide the information his solicitor needed to achieve the client’s business objective? This criticise in fact is worth left to every legislator to consider, before every time the government decides to impose a new type of “duty to report” on legal professionals.


In summary, it is safe to conclude that the solicitors’ duty to report in the background of anti-corruption is mainly derived from the MLR, which is a response made by the United Kingdom government to the European Union’s Fourth Money Laundering Directive. On the one hand, the concept of money laundering can be considered as a “secondary crime” because the offender is usually committing this offence after a previous illegal activity. And so it is understandable for solicitors to report such suspicion as this offence is equivalent in a way that seeking assistance to commit a fraud or a crime.[113] Of course, there is no doubt for solicitors to make a report in the circumstance such as under a court order or get involved in a serious crime.[114] However, it is worth repeating that the scope of these exceptional circumstances should be limited for the purpose to uphold the value of solicitors’ independence as the above discussion concerned.


On the other hand, although both the SOA and the OECD’s guidance have proposed a similar internal reporting system to be applied in companies, and there is a concern over the implementation of such reporting obligation will damage the relationship between lawyers and their clients, it is still important to differentiate between the solicitors’ option to make an internal report within the organisation, and the obligation to report a suspicion to an external investigator. For the internal reporting system, it is an approach that helps the company as a whole to combat corruption risks and, it would also benefit the in-house solicitors to stay away from getting involved in a corrupt practice. As the result, the company will be ultimately benefitted from its anti-corruption culture in the medium and long term. For the latter obligation, however, it risks the value of solicitors’ independence and trustworthiness.


In short, it is more appropriate to recognise the role of solicitors as an “internal supervisor” that obliged to promote client legal compliance and minimise the corruption risks during their legal practices. Solicitors, however, are not the one that existed for the sole purpose to counter crimes.


 

6. Conclusion


In brief, solicitors in today’s anti-corruption environment are playing their role more and more like a “supervisor” that obliged to monitor their handling cases, rather than the classic legal adviser who simply accepts client’s instructions and carry it out accordingly.


First of all, solicitors are obliged to examine the instruction before they decide should they act or terminate it. And they are expected to exercise their due diligence during the whole process to spot and eliminate potential corruption risks both for themselves as well as the client. It is important for every solicitor to understand that a solicitor can be convicted either as a principal offender or an accessory if he voluntarily participated in bribery schemes and, he may also get involved in a corrupt activity without his knowledge or acquiescence.


Second, solicitors at managerial positions should understand that section 7 of the UKBA has created a strict liability applicable to them in relation to the matter of solicitors’ duty to prevent bribery. Both the law firm and its partners can be prosecuted under this section if an associate employed by this law firm has participated in a bribery activity during the employment, and the law firm has failed to prevent this employee from undertaking such conduct. As the result, managing partners are expected to exercise their due diligence to adopt a zero-tolerance, anti-corruption culture that is integrated into their routine operations, fully and visibly supported at the highest levels in the law firm.


Third, for the persons practising as in-house solicitors, this group of practitioners is advised to promote a good anti-corruption practice guidance to be adopted by the company. It is crucial for the solicitor and directors of the company to understand that a good practice guidance can help the company to build and maintain an anti-corruption environment that will ultimately benefit the company’s health as well as the solicitor’s commitment of his professional duties. Moreover, in-house solicitors should bear in mind that once a solicitor has accepted a decision made by his management in relation to a bribery or corrupt practice, then it creates a precedent. And it is very difficult for the solicitor not to accept another similar decision since the precedent has been set.


Apart from the above aspects, there are also some “aggressive” anti-corruption obligations have imposed on solicitors, and the MLR is a typical example of it. Under this regime, solicitors are obliged to report their suspicion of money laundering to the law firm’s nominated officer and the NCA without tipping off the client. The failure of reporting such suspicion without a reasonable ground will cause the solicitor to commit an offence either under section 330 or 331 of the PCA.


On the one hand, the concept of money laundering can be considered as a “secondary crime” because the offender is usually committing this offence after a previous illegal activity. And so it is understandable for solicitors to report such suspicion as this offence is equivalent in a way that seeking assistance to commit a fraud or a crime. Indeed, since solicitors are usually playing the role as an intermediary that stand on the front line in dealing with their clients and the competent authorities, and so they may be considered as the best collaborator in assisting these supervisory authorities to combat crimes.


On the other hand, however, the reporting obligation will inevitably influence the relationship between solicitors and their client. It is worth to consider the different position between the role as a solicitor and an investigator. Generally speaking, it is not difficult to understand that the information communicated between a client and his solicitor is generally covered by the concept of legal professional privilege. The rationale behind this concept is because it enables a client to speak freely to his solicitor without worrying that the information passed over might be disclosed at a later date. However, this concept surely does not cover the communication made between a suspect and an investigator. In certain circumstances, the information changed between a suspect and the investigator may even be considered as a “confession” and so it may be referenced during a litigation afterwards. Following this argument, if a client believes his solicitor is obliged to report any suspicious information changed among themselves to the supervisory authority for initiating an investigation, then how likely would this client to freely provide the information his solicitor needed to achieve the client’s business objective? In other words, if lawyers have lost their value of independence and trustworthiness to their clients, then the whole legal system may also be fundamentally harmed and even collapsed from another side. Therefore, it is a question left both to the government and solicitors to consider where shall such obligations’ boundaries lie.


Following the above statement that solicitors in today’s environment are playing their role as a “supervisor” rather than the classic legal adviser in the background of anti-corruption. In fact, it is more appropriate to recognise the role of solicitors as an “internal supervisor” that obliged to promote client legal compliance and minimise the corruption risks during their legal practices. Solicitors, certainly, are not the one that existed for the sole purpose to counter crimes.


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[1] American Sociological Association, “Edwin H. Sutherland” <http://www.asanet.org/about-asa/asa-story/asa-history/past-asa-officers/past-asa-presidents/edwin-h-sutherland> accessed 8 January 2018.

[2] Bruce Zagaris, International White Collar Crime (2nd edn, Cambridge University Press 2015) 1.

[3] FBI, “White-Collar Crime” <https://www.fbi.gov/investigate/white-collar-crime> accessed 8 January 2018.

[4] Laurie Levenson, “White-collar crime”, The Encyclopædia Britannica (2018) <https://www.britannica.com/topic/white-collar-crime> accessed 9 January 2018.

[5] Cedric Michel, “Public knowledge about white-collar crime: an exploratory study” (2015) Crime Law Soc Change (2016) 65:67-91 <https://0-doi-org.wam.city.ac.uk/10.1007/s10611-015-9598-y> accessed 8 January 2018.

[6] ibid.

[7] Arnold & Porter LLP, “The role of lawyers in the fight against corruption” <http://www.trust.org/contentAsset/raw-data/af585d7d-6a7f-4c65-9b5c-3b5534118c74/file> accessed 24 May 2017.

[8] Frank Hagan, “Corporate crime”, The Encyclopædia Britannica (2018) <https://www.britannica.com/topic/corporate-crime> accessed 9 January 2018.

[9] Proceeds of Crime Act 2002, ss 330-331.

[10] Directive 2005/60/EC of the European Parliament and of the Council of 26 October 2005 on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing.

[11] Arnold & Porter LLP (n 7) 13.

[12] Saleem Sheikh, “The Bribery Act 2010: commercial organisations beware!” (2011) International Company and Commercial Law Review, 22(1), 1-16, 1.

[13] R v. Whitaker [1914] 3 KB 1283.

[14] R v. Natji [2002] EWCA Crim 271.

[15] David A and Nichola H, “The Bribery Act 2010: All Bark and No Bite...?” (2010) Archbold Review. Sweet & Maxwell, (5), 6.

[16] Bribery Act 2010, s 7.

[17] David (n 17).

[18] Andrew Simester, Spencer, Sullivan and Virgo, Simester and Sullivan's Criminal Law (5th edn, Hart Publishing 2013) 203.

[19] Bribery Act 2010, s 3(2).

[20] ibid ss 3-5.

[21] ibid s 2.

[22] Arnold & Porter LLP (n 7) 9.

[23] Offices of the United States Attorneys, “2041. Bribery Of Public Officials” <https://www.justice.gov/usam/criminal-resource-manual-2041-bribery-public-officials> accessed 2 May 2018.

[24] New York Penal Law § 180.00.

[25] Sam Eastwood and Holly Quinnen, “Differences between the UK Bribery Act and the US Foreign Corrupt Practices Act” (2011) <http://www.nortonrosefulbright.com/knowledge/publications/52195/differences-between-the-uk-bribery-act-and-the-us-foreign-corrupt-practices-act> accessed 12 April 2018.

[26] 15 United States Code § 78dd-1(c)(2).

[27] ibid § 78dd-1(b).

[28] Bribery Act 2010, s 1.

[29] ibid s 6.

[30] ibid s 11.

[31] Andrew (n 20).

[32] Bulgarian Criminal Code, art 225c(4).

[33] ibid art 305a.

[34] Arnold & Porter LLP (n 7) 10.

[35] German Criminal Code, s 27.

[36] ibid s 26.

[37] ibid s 257.

[38] Michael Seitzinger, “Foreign Corrupt Practices Act (FCPA): Congressional Interest and Executive Enforcement, In Brief” (2016) R41466 <https://fas.org/sgp/crs/misc/R41466.pdf> accessed 26 May 2018.

[39] 15 United States Code § 78dd-2(a)(3).

[40] 18 United States Code § 371.

[41] Accessories and Abettors Act 1861, s 8.

[42] Serious Crime Act 2007, ss 44-46.

[43] Halsbury’s Laws (5th edn, 2016) vol 25, para 51.

[44] Criminal Law Act 1967, s 4.

[45] Andrew (n 20) 66.

[46] William Nelson, “At Risk For Recommending Foreign Lawyers” (2011) <http://www.fcpablog.com/blog/2011/2/3/at-risk-for-recommending-foreign-lawyers.html> accessed 26 May 2018.

[47] ibid.

[48] Keir Bamford, Browne, Embley, King, Morgan and Rawcliffe, Legal Foundations (College of Law Publishing 2016) para 8.6.

[49] ibid para 12.1.3.

[50] Andrew (n 20) 66.

[51] Arnold & Porter LLP (n 7) para 1.2.1.

[52] SRA Code of Conduct 2011, IB 1.7.

[53] ibid IB 1.10.

[54] ibid IB 1.26.

[55] ibid O 5.1.

[56] ibid O 5.2.

[57] ibid O 5.4.

[58] ibid O 5.5.

[59] ibid O 5.6.

[60] ibid IB 5.4.

[61] ibid IB 5.5.

[62] ibid IB 5.7.

[63] ibid IB 5.9.

[64] ibid O 4.1.

[65] ibid O 1.3.

[66] Keir (n 50) 83.

[67] Bribery Act 2010, s 7(2).

[68] ibid s 15(3).

[69] ibid s 11(3).

[70] Jonathan Pickworth and Jo Dimmock, “Bribery & Corruption 2018 | United Kingdom” (2018) <https://www.globallegalinsights.com/practice-areas/bribery-and-corruption-laws-and-regulations/united-kingdom> accessed 31 October 2018.

[71] 15 United States Code § 7245.

[72] Arnold & Porter LLP (n 7) 15.

[73] 17 Code of Federal Regulations § 205.3(d)(2).

[74] Peter M and Stanley K, “Sarbanes-Oxley 307: Trusted Counselors or Informers” (2004) 49 Vill. L. Rev. 833.

[75] ibid 837.

[76] Christine Duhaime, “What is Money Laundering?” (2014) <http://www.antimoneylaunderinglaw.com/aml-law-in-canada/what-is-money-laundering> accessed 21 November 2018.

[77] Keir (n 50) para 15.1.

[78] ibid para 15.2.1.

[79] Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692, regs 19, 21.

[80] Proceeds of Crime Act 2002, s 333A.

[81] Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692, reg 87.

[82] Arnold & Porter LLP (n 7) 8.

[83] ibid 13.

[84] ibid 14.

[85] ibid.

[86] Case 305/05 Ordre des barreaux francophones et germanophone and Others v. Conseil des ministres [2007] ECR I-5305.

[87] Monetary and Financial Code, art L561-3.

[88] Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, SI 2017/692, reg 18.

[89] Jonathan (n 72).

[90] Criminal Finances Act 2017, ss 45-46.

[91] International Bar Association, “Risks and threats of corruption and the legal profession” (2010) <http://www.ibanet.org/Document/Default.aspx?DocumentUid=AE4B6ED2-4871-487B-B653-31424494D97B> accessed 5 January 2018.

[92] Nicola Bonucci, “Corruption Threats and the Legal Profession” (2012) <https://www.ethic-intelligence.com/en/experts-corner/international-experts/290-corruption-threats-and-the-legal-profession.html> accessed 5 January 2018.

[93] ibid.

[94] No. 09-CR-00098 (W.D. Tex. Nov. 3, 2011).

[95] Solicitors Regulation Authority v. Jeffrey Tesler [2012] SDT 11076-2012.

[96] Nicola (n 94).

[97] Keir (n 50) para 12.4.

[98] R v. Cox and Railton (1884) LR 14 QBD 153.

[99] Nicola (n 94).

[100] Arnold & Porter LLP (n 7) para 2.1.1.2.

[101] Nicola (n 94).

[102] ibid.

[103] ibid.

[104] Arnold & Porter LLP (n 7) para 2.2.

[105] United Nations, “Principle Ten: Anti-Corruption” (2018) <https://www.unglobalcompact.org/what-is-gc/mission/principles/principle-10> accessed 30 November 2018.

[106] Organisation for Economic Co-operation and Development, “Good Practice Guidance on Internal Controls, Ethics, and Compliance” (2010) <http://www.oecd.org/daf/anti-bribery/44884389.pdf> accessed 3 December 2018.

[107] Nicola (n 94).

[108] ibid.

[109] Accessories and Abettors Act 1861, s 8.

[110] Serious Crime Act 2007, ss 44-46.

[111] Jonathan (n 72).

[112] Organisation for Economic Co-operation and Development (n 108).

[113] Cox and Railton (n 100).

[114] Keir (n 51).