Peering Over the Ethical Precipice: Incorporation, Listing, and the Ethical Responsibilities of Law Firms
56 Pages Posted: 13 May 2008 Last revised: 13 Aug 2014
On the 21st of May 2007 the incorporated law firm Slater and Gordon listed on the Australian Securities Exchange with a fully subscribed offer of $35 million dollars worth of A$1 shares - the first law firm in the world to list. This paper argues that Slater and Gordon's listing could have profound implications for the future of the profession and its ethics - but not just for the obvious reasons. There are plenty of obvious temptations and pressures implicit in the full incorporation and listing of law firms. But incorporation and listing are also providing a new - and well overdue - opportunity for the profession and its regulators to recognise the ethical responsibilities of law firms - as firms and businesses. Because incorporation and listing make obvious the organisational and commercial aspects of law firms, they are also forcing the profession, its regulators, academics and commentators to recognise that law firms need to develop organisation-level ethical infrastructures that encourage and nurture individual ethical responsibility in the face of corporate and competitive pressures.
First, the paper briefly sets out the logic behind Slater and Gordon's listing, and some background information of the extent to which Australian law firms are taking advantage of the opportunity of full incorporation - and why. It also explains the main two ethical dangers that law firms that incorporate and list are likely to face. Second, the paper uses the story of one of Slater and Gordon's most high profile pieces of litigation - the McCabe tobacco litigation - to show that the ethical dangers that commentators worry will come with incorporation and listing are a formalisation and accentuation of existing ethical pressures on legal practice, rather than a fundamental change in those pressures. Third, the paper argues that there is an opportunity to improve ethical practice in law firms that could come with the advent of incorporation and listing. The legislative framework for full incorporation of law firms in Australia requires legal practices to adopt a rudimentary "ethical infrastructure" as a condition of incorporation. The third and final part of this paper critically assesses the potential of Australia's governance framework for "meta-regulating" law firms' ethical infrastructure to address the organisational and business aspects of law practice.
Keywords: legal ethics, legal profession, regulation, law firms
JEL Classification: J44
Suggested Citation: Suggested Citation