Corporate Social Responsibility of Law Firms

As the world becomes more and more globalised the need for a different model of the corporate leader in Asia is becoming apparent. Especially since there is an increasing number of Asian corporations entering the global market, corporate leaders now need to take into account transnational standards and strategies in order to stay ahead of competitors and to remain attractive and successful on the international stage. Corporate Social Responsibility (CSR) is one of these considerations. In a technological era where information is accessible to all those who have access to the Internet around the world, consumers are information rich and more aware of the characteristics and qualities of the companies, products and services that they choose. What is more, there has been an increasing acceptance of the fact that CSR is related to a company’s ability to draw and retain international consumers.[1] A study has even revealed that 80% of students spend at least an hour researching the social reputation of a potential employer,[2] therefore making CSR a matter that all current corporate leaders should address.

There should not be any differences in the level of expectation regarding CSR for Professional Service Firms (PSFs) compared to other product-focused companies. It is true that these two different types of businesses are different. For one, PSFs do not have to concern themselves with limiting the amount of industrial waste they produce, nor the child-labour practices of a manufacturer in their production chain. Furthermore, the employees of these firms are normally well paid and receive various benefits along with their salaries.[3]

As an example, law firms are a type of firm that falls into this category of PSFs. Nevertheless due to the fact that law firms often have huge multinational corporations as clients, ones which are so powerful and influential that they have more financial and political authority in certain matters than governments,[4] they should also endeavour to encourage their clients to be socially responsible by paying more attention to how their actions might impact the rest of the society- whether it be economically, socially or politically. At the moment, there seems to be only a few firms that are doing this,[5] as issues regarding clients can be very controversial. On the one hand it does seem legitimate to pinpoint that the main priority for law firms is, and should be, to provide the best legal services as opposed to focusing on socially responsible activities. On the other hand, there does seem to be some questions of ethics that are raised seeing that firms often advise and assist clients on how to pay less in taxes.[6] However, what is indeed true is that more and more corporations are also concerned as to whether the law firms’ CSR record is adequate before becoming a client,[7] making it more of a reason to take such matters into account in order to remain competitive on a global stage.

Regardless, it must be pointed out that there are plenty of policies and practices through which law firms can address issues in order to promote CSR in their daily business. The main example in law firms is Pro-Bono work, where lawyers volunteer to work on a case without receiving any remuneration, a practice that started as early as the 9th Century in Great Britain.[8] Students at law schools are also provided with the opportunity to carry out pro-bono work, which shows the value which it has: pro-bono increases firm morale and promotes business development for the firm as well as retain more productive lawyers.[9] Thus, it is beneficial for law firms to consider pro-bono work if it is to remain competitive on the global market.

However, there are other ways in which law firms can contribute to the community. One such way is through supplemental community service activities. As an example, the Tokyo office of Morrison and Foerster has an in-kind donation team that supports families in Tohoku, Japan and the lawyers and staff have set out on a number of volunteer trips there to work on different community projects. Moreover, implementing environmentally friendly initiatives is another way in which law firms can be more socially responsible. Energy conservation is one simple way to not only support a sustainable future but also to reduce costs for the firm.[10] Programming electronic devices to switch to standby-mode after a designated amount of time or installing motion sensor lights are all ways to save energy. However, there are numerous other schemes that can be implemented at the office such as recycling and water conservation initiatives that will prove to be economical and appeal both to clients and employees.

Promoting women in the workplace is always an issue that law firms can assist in addressing. At the Davos World Economic Forum meeting this year, Prime Minister Shinzo Abe identified Japan’s female workforce as the country’s most underused resource.[11] This is not only relevant to Japan but across the world, and also specifically for law firms: it has been shown that law firms normally recruit a high percentage of female associates, but those in partnership remain at around 15% (whilst the number of top corporate women and board members is frequently lower).[12] With studies revealing that men perform better when working with women, not only would the formation of women support networks be appealing to prospective employees and clients, but it would also be in the interest of high performance for the law firms themselves.

A more recent phenomenon in the legal sector that likens PSFs to other product-focused companies is outsourcing. Legal Process Outsourcing is the practice of law firms obtaining legal support services from external companies. For instance, Cobra Legal Solutions in India provides cost efficient services for law firms based elsewhere such as in the UK or the US.[13] Therefore, just like production or manufacturing chains, law firms can implement CSR through making sure that the companies to which they are outsourcing are also compliant with the standards that the law firms themselves advocate. This could concern matters such as client confidentiality and ensuring that those carrying out the work are bound by the necessary legal standards since this would be an area of concern for the final consumers in the chain – the clients.[14]

 

Another interesting matter that has come up more recently concerns the ethical duty of lawyers and law firms to protect the data of clients. With the convenience of technology and increased mobility comes the risk associated with the data that it stores and transfers.[15] Preserving clients’ records and files and protecting confidential information has given an extra dimension to due diligence. Furthermore, due to cyber-attacks against law firms on the rise[16] lawyers now have an ethical obligation to be more cautious.

With regards to the situation in Asia, firms are not so active concerning CSR (although Japan is an exception in the region, having fared better by implementing various policies in firms, there is always room for improvement). This is true even for the US where there seems to be less CSR activity compared to the UK.[17] Therefore, how can this situation be improved in the future and how could this issue be best tackled?

On one side of the spectrum efforts have been made by national governments through the enactment of regulations and government policies: “Womenomics” aims to promote women in the workplace in Japan and the Companies Act 2006 in the UK can require quoted companies to report on CSR related issues. Despite this, there seems to be a lack of incentive for national governments to put in any real and effective legislation due to the fact that the ultimate goal for the legislating politicians is to earn votes and win elections. Furthermore, it is important to point out that national laws are increasingly becoming insufficient to promote CSR as the impact that the actions of companies have are stretching beyond the scope and reach of national borders due to globalisation.[18] Thus, one can call this a territory “beyond law.”[19]

Further along the spectrum we have private bodies that work with public institutions, an example being the World Economic Forum, which is “an international institution committed to improving the state of the world through public-private cooperation.”[20] In the area of CSR, the Founder of the World Economic Forum, Klaus Schwab, published an article on working with governments and civil society in order to “help businesses better coordinate their approaches and improve performance.”[21]

Finally, global non-governmental bodies may be able to more readily address the matters which national governments have not been able to effectively tackle in this area. An example of such a body is the American Chamber of Commerce. In Japan, the ACCJ is active in sharing best practices and global standards, and thus they can be seen as taking a softer approach in contrast to governments imposing concrete legislation. Pragmatic recommendations seem to be more advocated rather than enacting laws especially with the legal industry. This is because they are slow to change due to it being a profession that has not done anything differently over the last hundred years and is the only industry that is proud of that. Therefore it seems that they would not be so receptive to any immediate and radical changes.[22]

 

In this reflection paper we have seen that in order to embrace the new model of the corporate leader, global strategies need to be adopted, CSR policies being one of them. The fact that PSFs, such as law firms, should not be exempt from implementing such policies was addressed although traditionally it would have been more product-focused companies that implement CSR. Nonetheless, due to the changing attitudes of prospective employees and current graduates, the increasingly difficult task for many law firms of attracting and retaining the best staff[23] and the many benefits of implementing such policies, it seems desirable that law firms all over the world take on CSR more seriously. There are plenty of ways in which this can be achieved, as addressed above, such as introducing green initiatives, and pro-bono activities, which lead to more productive employees and loyal and content clients.

Despite these benefits not all law firms have been able to be socially responsible. This paper looked at three possible actors that could aid in this process: national governments by themselves, Public-Private cooperation and finally, global non-governmental bodies. For the moment there seems to be limits on what the national governments can do on their own. Although cooperation with the government is desirable, since a more gradual approach is what law firms would adhere to, bodies such as the ACCJ that are non-governmental, more global, and more pragmatic, seem to be the preferred actors that can push things forward and allow corporate leaders of law firms, even as part of the sector for PSFs, to be more socially responsible in a globalising world.

 Author: Esther Kim

 

 


 

[1] FIAS, Corporate Social Responsibility in China’s Information and Communications Technology (ICT) Sector, July 12, 2007, available at: http://www.eiccoalition.org/media/docs/publications/CSRinChinasICTSectorEnglish.pdf, p. 7.

[2] Lisa Kellar Gianakos, “Being Green” in Practice Innovations, July 2009, available at: https://info.legalsolutions.thomsonreuters.com/signup/newsletters/practice-innovations/default.aspx

[3] The Lawyer, Why Firms Should Embrace CSR, 4 December 2006, available at: http://www.thelawyer.com/why-firms-should-embrace-csr/123341.article

[4] David Crowther and Lez Rayman-Bacchus, Perspectives on Corporate Social Responsibility, Ashgate Publishing Limited, Aldershot, 2004, p. 6.

[5] Managing Partner, Is CSR a double-edged sword for law firms?, 24 January 2013, available at: http://www.managingpartner.com/blog/csr-double-edged-sword-law-firms

[6] Lisa Kellar Gianakos, “Corporate Social Responsibility in Law Firms” in Legal Solutions, January 2011, available at: https://info.legalsolutions.thomsonreuters.com/signup/newsletters/practice-innovations/2011-jan/article4.aspx

[7] See supra note 5.

[8] Deborah L. Rhode, Pro Bono in Principle and in Practice: Public Service and the Professions, page 4.

[9] Robert A. Katzman, The Law Firm and the Public Good, Brookings Institution Press, Washington D.C., 1995, page 72.

[10] See supra note 2.

[11] World Economic Forum, Changing Corporate Culture Key to Closing Japan’s Gender Gap, available at: http://www.weforum.org/news/changing-corporate-culture-key-closing-japan-s-gender-gap

[12] Elaine M. Egan, “A New Approach to Leadship: How Women are Influencing Leadership Values” in Legal Solutions, October 2011, available at: https://info.legalsolutions.thomsonreuters.com/signup/newsletters/practice-innovations/2011-oct/article3.aspx

[13] Cobra Legal Solutions, available at: http://www.cobralegalsolutions.com/index.php/about-us

[14] Time, Call My Lawyer … in India, 3rd April 2008, available at: http://content.time.com/time/magazine/article/0,9171,1727726,00.html?imw=Y

[15]Lynn Watson, “At the Crossroads of Lawyering and Technology: Ethics” in Legal solutions, January 2013, available at: https://info.legalsolutions.thomsonreuters.com/signup/newsletters/practice-innovations/2013-jan/article6.aspx

[16] Mike Mintz, Cyberattacks on Law Firms-a Growing Threat, 19th March 2012, available at: http://blog.martindale.com/cyberattacks-on-law-firms-a-growing-threat

[17] See supra note 6.

[18] Tineke Lambooy, Corporate Law and CSR: Will There Be a Constitution for
Multinational Companies in 2030?, in: Sam Muller et al. (Eds.), The Law of the Future and the Future of Law, Torkel Opsahl Academic EPublisher, Oslo, 2011, p. 276.

[19] Jan Eijsbouts,Corporate Responsibility- Beyond Voluntarism, Regulatory Options to Reinforce the License to Operate, Inaugural Lecture- Maastricht University, Maastricht, 20th October 2011, p. 24.

[20] World Economic Forum, available at: http://www.weforum.org/

[21] World Economic Forum, Corporate Global Citizenship, available at: http://www.weforum.org/issues/corporate-global-citizenship

[22] See supra note 6.

[23] The Lawyer, Why firms should embrace CSR, 4 December 2006, available at: http://www.thelawyer.com/why-firms-should-embrace-csr/123341.article