Guide for Solicitors Employed in the Corporate and Public Sectors

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1 Guide for Solicitors Employed in the Corporate and Public Sectors

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3 CONTENTS 1 FOREWORD 2 CHAPTER 1 Introduction 5 CHAPTER 2 Your role 10 CHAPTER 3 Outsourcing 15 CHAPTER 4 Professional practice issues 19 CHAPTER 5 Professional regulation issues 22 CHAPTER 6 Professional indemnity insurance 25 CHAPTER 7 Support available to the solicitors profession The information contained in this booklet is intended as a guide only and cannot be a substitute for professional advice. No responsibility is accepted for any errors or omissions howsoever arising.

4 Guide for Solicitors Employed in the Corporate and Public Sectors Foreword FOREWORD I would like to thank the In-house and Public Sector Committee for the work that has gone into this fourth edition of the Guide for Solicitors Employed in the Corporate and Public Sectors. The committee aims to represent the views and promote the interests of in-house solicitors, that is, those who work as solicitors outside of private practice in the public and private sectors. The committee was formed by the Law Society in recognition of the different perspective of in-house solicitors operating in a diversity of roles. The committee strives to promote collegiality and the forming of connections between in-house solicitors and to build upon and strengthen their relationship with the Law Society. It assists with the organisation of seminars tailored to in-house solicitors. The committee liaises with the Corporate and Public Lawyers Association (CPLA), with a number of its members also being members of the CPLA, and represents the Law Society at European Company Lawyers Association (ECLA) board meetings. It seeks to effectively communicate with in-house solicitors, through correspondence, periodic articles in the Gazette and the ezine, and through the committee s section on the Law Society website, The role of the in-house solicitor continues to develop and evolve, with an ever-widening range of organisations requiring the specialist legal skills that an in-house solicitor can offer. The number of Law Society members working in-house currently stands at 1,477, representing approximately 16% of the total Law Society membership. The in-house solicitor may have a multiplicity of roles in an organisation, depending on the circumstances for example, legal advisor, business support, and company secretarial. In recognising that, the guide makes reference to the practical issues that may confront in-house solicitors in fulfilling their duties, for example, instructing external legal advisers, professional practice issues that may be encountered, professional regulation issues (including practising certificates and professional indemnity insurance), as well as support services available to the solicitors profession. This guide will provide both prospective and existing in-house solicitors with key information. If there is a matter of interest or concern to you that you would like to raise with the committee, please contact the committee s secretary, Louise Campbell, Law Society of Ireland, Blackhall Place, Dublin 7; tel: or [email protected]. Donald Binchy, President, May

5 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 1 CHAPTER 1 Introduction Diversity of roles The role of the in-house solicitor working outside private practice continues to develop and evolve over time. An ever-widening range of organisations including public and semi-state bodies, commercial enterprises, credit and financial institutions, credit unions, regulators and consultancy firms all have need of the specialist legal skills that an in-house solicitor can offer to the organisation. In each case, in legal terms, in-house solicitors will have one client, their employer, based on their contract of employment, but they will also have many emanations of that client, drawn from the various departments operating within that organisation. In all cases, the independence of the in-house solicitor is of critical importance in dealing with the inevitable conflicts of interest that will arise as part of the day-to-day professional life within each organisation. The in-house solicitor can be seen as being part of an organisation s corporate governance infrastructure, which best practice demands in the modern business world. In order to be effective, the in-house solicitor needs to be able to wear multiple hats at any given time, depending on the circumstances as set out in the following graph. Board member Negotiator Devil s advocate Officer of the court Legal advisor Independent voice Interface with external counsel Role of the in-house solicitor Manager Organisation s conscience Diplomat Internal watchdog Business support Business protector Educator 2

6 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 1 Due to the multi-faceted nature of the in-house solicitor s role, which will be described in more detail in Chapter 2, the legal content of the day-to-day job will, by its nature at certain times, be less than that of solicitors working in private practice. At the time of writing, the number of Law Society members working inhouse stands at 1,477, representing approximately 16% of the total Law Society membership. The following text provides examples of some of the diverse roles that in-house solicitors can play within their individual organisations in the corporate and public sectors. The solicitor in a law/legal department Many large organisations in the corporate sector (such as a bank or other financial institution) or in the public sector (such as the Chief State Solicitor s Office and some local authorities) have dedicated legal departments to handle all legal business and to take charge of managing legal risk in-house. Depending on the size of the organisation, there will be a number of in-house solicitors or other legally qualified personnel employed for this purpose under the supervision of a head of legal. The job titles of these in-house solicitors may vary and include, for instance, in-house lawyer, legal counsel, company solicitor, law agent, legal adviser, general counsel, and so on. A legal services department of this nature will be usually run along similar lines to a firm of solicitors in private practice, with individual areas of responsibility being allocated to individual team members (solicitors and legal executives) depending on their background and experience. In the larger public-sector organisations, responsibilities will usually follow a traditional model of litigation, conveyancing, and commercial divisions. However, in the larger financial and credit institutions, the majority of the legal department s work will be of a multi-jurisdictional nature involving, for example, registration of trademarks, regulatory work, setting up of branch or representative offices, or conclusion of sales and distribution agreements with local entities in certain international locations. Hence, there will be an ongoing need to liaise with affiliate companies located in individual jurisdictions and, where necessary, to instruct local independent legal counsel. Outsourcing and cost control will be discussed in greater detail in Chapter 3. However, not all organisations will have the necessary critical mass to justify the establishment of a multistaffed in-house legal department. In some cases, it is not uncommon for the legal department to be made up of just one person. In this practice format, the in-house solicitor will be the first port of call for all legal matters affecting the organisation, and reliance will be placed on outsourcing to external legal counsel/law firms for certain assignments, due to size and time constraints. Legal compliance officer Organisations will often employ a solicitor as a legal compliance officer for its business and projects. Corporate bodies, whether in the public or private sector, may only operate within the framework of enabling legislation, charter, or memorandum and articles of association as the case may be. Therefore, a system may be put in place to monitor and advise on whether proposed projects and actions by the organisation are possible within a particular framework and whether they comply with applicable legislation. Company secretary As part of his/her job description, the in-house solicitor may also be expected to perform the duties of a company secretary for his/her employer. In this regard, the solicitor s duties may be wide-ranging and include preparation and filing of Companies Registration Office forms, management of board meetings, and preparation of draft minutes within a target timeframe. However, more typically in larger organisations, this role is performed by a qualified or trainee specialist company secretary, depending on the (legal) budget available. The solicitor working in a regulatory role It is now becoming increasingly common for regulators, including those in the public sector such as the Central Bank, the Department of Jobs, Enterprise and Innovation or the Commission for Communications Regulation (ComReg) to employ an in-house solicitor for advice on purely regulatory matters. There is a general recognition that the professional skills of in-house solicitors are of similar value to those of other professionals, such as accountants, in the regulatory context. Regulatory work typically calls for interpretation 3

7 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 1 of legislation as well as case law. It also provides an opportunity to contribute towards identifying and developing policy issues. This clearly offers in-house solicitors working in this area the opportunity to specialise and gain experience that will make them attractive to future employers in the marketplace. The solicitor as consultant to the organisation s customers/clients The solicitor as a consultant to an organisation s own clients is another particular role. Where an organisation provides professional services to clients in areas such as taxation, financial planning or pensions, the solicitor may be employed to deliver these services to the employer s clients in the capacity of a specialist consultant or adviser. Fees will be recovered by the employer in respect of the services provided. The consultant s services will typically involve a combination of technical and legal expertise. The consultant does not establish a solicitor/client relationship with the organisation s client. Where transactions in which the consultant is involved require the input of a solicitor acting on behalf of the customer (for example, conveyancing or litigation), the consultant will advise the client to retain a firm of solicitors. To avoid confusion, it is recommended that the word solicitor is not part of the job title of the person providing such services, so that there is no possibility that the organisation s clients would believe that the solicitor consultant was acting as their solicitor. Solicitors in non-legal roles A further category of solicitors in organisations will be concerned primarily with non-legal functions in that organisation, such as management, marketing or administration. This grouping includes those who are initially recruited as legal professionals and subsequently move upwards or sideways within organisations. It also encompasses solicitors who are employed in the first place in a non-legal capacity, often because of the excellent transferable skills they acquired and developed during their legal training, in the course of their employment, and in ongoing CPD. Where a solicitor is employed in a non-legal role, it is suggested that the solicitor ensures that his/her employer understands that, when legal issues arise, such issues should be referred to an outside legal advisor or some other person who has been employed in-house in a legal capacity, as the case may be. It may be of assistance, in the context of clear demarcation of roles, that the employer be informed that legal professional privilege would not apply to any advices given by a nonpractising solicitor who is employed in a non-legal role. Further, John Elliot, Registrar of Solicitors and Director of Regulation, issued a practice note in the January/ February 2012 Gazette entitled Prohibition on practising as solicitor without a practising certificate: solicitors cannot be legal executives or paralegals, which stated: Section 56(1) of the Solicitors (Amendment) Act 1994 provides that no solicitor shall practice as a solicitor unless a practising certificate in respect of him or her is in force. Section 56(2) of the Solicitors (Amendment) Act 1994 provides that a solicitor shall be deemed to practice as a solicitor if he or she engages in the provision of legal services, whether as a sole practitioner or as a partner in a solicitor s practice, or as an employee of any solicitor or any other person or body, or as a solicitor in the full-time service of the State. The prohibition in section 56(1) does not apply to a solicitor in the full-time service of the State or to a solicitor who is employed to provide conveyancing services for a non-solicitor employer. Legal services are services of a legal or financial nature provided by a solicitor arising from that solicitor s practice as a solicitor... It is professional misconduct and a criminal offence for a solicitor who does not hold a practising certificate to act as a solicitor. Any queries relating to practising certificate requirements should be addressed to the Law Society executive responsible for practising certificates, Sorcha Hayes, at or [email protected]. Solicitor as company director An invitation to join the board of a client company may arise in the course of a solicitor s career, and this step should be considered carefully, having regard to the professional and statutory duties owed, as a solicitor, to the company and the obligations arising under company law. 1 1 See Chapter 2 for further information on this topic. 4

8 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 2 Chapter 2 YOUR ROLE Applying for a position in the public and corporate sector If you are considering applying for a position in the public or corporate sector, it is advisable to obtain as much information as possible about the employer, the role, the job requirements, and the terms and conditions of employment. The following checklists may be helpful in assessing the position and, although generally phrased in the context of the corporate sector, they are equally applicable to roles in the semi-state bodies and in part to the general public sector. The employer What is the exact identity of the employer? Is it one company, several companies, or a group of associated companies? Is the employer part of a multinational group, foreign or domestic? If it is the former, what are its reasons for establishing its operation in Ireland (for instance, grants, tax breaks, standard of education and/or the potential pool of available employees) and what are its short/medium/long-term plans for its Irish operation? What is the company s trading record in Ireland and worldwide? Is a copy of the last annual report available? If the employer is a multinational organisation, are its budget and business plan dictated by head office or are they devised by local management? Is the employer s operation greenfield or established? If greenfield, will you be expected to become involved in establishing the office (for example, buying office supplies and furniture, hiring staff, and marketing)? Does the employer already have a legal department or will you be required to establish one? Why has the employer decided to set up a legal department? What is the management structure in the Irish operation and worldwide? Does the employer have legal departments in other countries? Job requirements Does the employer have a detailed job description of your role? Does this indicate awareness on the employer s part of the level of experience required? Will you be acting purely as a legal adviser or will you be expected to play a greater role in management and commercial decision making? Where the organisation operates within a defined hierarchical structure, will you have management or equivalent status? Do you have the necessary qualifications and experience for the job? What areas of the law will you be expected to advise on? With what parts of the business will you be working and how frequently (for example, board of directors, finance function, management, sales, and so on)? What will your relationship with them be for example, accountability, reporting lines, level of independence? To whom will you be reporting on a daily basis? If not reporting directly to management, will there be lines of communication to the board or the MD or CEO of the organisation? What level of interaction will you have with other lawyers (either within your local or regional/global organisation or externally)? Will you be allowed to brief or seek advice from outside law firms and will you be able to choose the law firms? Will the job entail travelling for business or to conferences? Will you be responsible for managing legal and non-legal staff? Will you receive any training when you start and during your employment? Terms and conditions of employment Will the employer pay for your practising certificate and professional indemnity insurance, if required? Will the employer give you an indemnity and waiver of liability in respect of professional negligence, if you do not have insurance? Will the employer fund or partly fund health insurance, disability insurance, pensions and any other relevant expenses? Can you obtain a copy of the explanatory booklets for the relevant schemes? 5

9 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 2 Will you be entitled to participate in profit sharing/bonus schemes or take share options? If so, how will the entitlements be calculated? Will you get a company car with mileage and travelling allowance or expenses? Will you have your own office or be expected to sit in an open plan office? If you are sitting in open plan, will you have access to a conference room or office to deal with confidential matters? Will you have secretarial support or will you be expected to do all your own typing and filing and to answer your phone? Will you have a legal assistant or any form of backup? How often will you get pay reviews and will these reviews be linked to a specific category or level of employee within the organisation? What are the career/promotion opportunities offered by your employer? Are these confined to the legal department or will they encompass other areas within the organisation? What are the probationary and notice periods? Will you have a budget for purchasing legal books, texts and other materials? Will your employer pay for you to attend conferences or seminars and otherwise afford you the opportunity and time to participate in professional associations and compulsory CPD training? Will your files be accessible to other employees or will there be a need for restricted access for confidentiality or other reasons? Will your work involve taking instructions for legal or other purposes from fellow employees or will all instructions come from management? Will you be expected to deal with your employer s clients directly and, if so, in what capacity (for example, legal, sales, marketing)? If the organisation is a semi-state body, there may be independence requirements imposed by statute, and this will impact on the expected interaction with government departments and other State bodies and will curtail the interaction, if any, with the Office of the Attorney General. Whether movement within and between State bodies, either permanently or on a secondment basis, is contemplated should be raised. The question of pay in the public sector should also be considered in respect of the relevant financial emergency measures legislation. These checklists should help you to evaluate the position and whether you are interested in pursuing it. They are not exhaustive and other queries may also be appropriate. Applying for a position in the public sector Public sector recruitment of solicitors, including the civil service, local authorities, Health Service Executive, An Garda Síochána and other public bodies, is provided by the Public Appointments Service established under the Public Service Management (Recruitment and Appointments) Act It advertises vacancies, both temporary and permanent, in the national daily papers and also on its website, Applications can be submitted directly to the service by completing the official application form on their website. The service also allows any person interested in a legal position to register for notification of any future vacancies. Roles in semi-state organisations that are not co-ordinated through the public appointments service are advertised on those organisations websites and in national daily papers. The Law Society website may also be used for posting vacancies in State positions. Recruitment is by competitive interview. Generally speaking, the interview will be concerned with such matters as the qualifications, training, experience, capacity, competencies and general suitability of the candidate. At the same time, this allows the applicant to make an assessment of the job and the organisation. Some of the points in the checklists set out above may be helpful in evaluating any position. Office structures within the civil and public services and in semi-state bodies are usually already well established. Reporting lines, together with other office procedures, will be advised to the successful candidate on request, prior to taking up the position. Getting started defining your role Solicitors who work in the public and corporate sector owe the same duties to their client(s) as solicitors in private practice. These duties include: To use utmost skill and care in acting on behalf of a client, 6

10 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 2 To follow (observe) the rules of professional conduct, As an officer of the court, to carry out the duties involved, including: to be cognisant of your overriding duty to the court to ensure in the public interest that the proper and efficient administration of justice is achieved, to assist the court in the administration of justice, not to deceive or knowingly or recklessly mislead the court, To carry out work with due care, skill and diligence. 1 The in-house solicitor may be more likely to give business advice than a solicitor in private practice. The in-house solicitor s dual role as legal and business adviser may bring up issues of whether certain communications may be either wholly or partly covered by legal professional privilege. There is a separate section on legal professional privilege in this guide (page 18), and the in-house solicitor should be aware that the issue of whether legal professional privilege can be claimed by an in-house solicitor for legal work is the subject of much discussion as a result of a 2007 ruling in the European Court of Justice. 2 What is your role? The following questions should emphasise to the in-house solicitor the importance of defining your role: Are you the guardian of how your employer behaves? Are you your employer s conscience? If you are not working within a legal department or team, is it appropriate that one person be placed in this position and is it appropriate that the duty of integrity and honesty is the responsibility of one person only? Do you have the authority and resources to carry out your role, whether alone or as part of a legal department? Is it assumed that you will take on this role? What are the priority (high) risks where you work and what are the low risks? Are time and money being allocated to them accordingly? Do you have enough authority to convey your opinions and instructions and get top-level support to address them? Is your time being consumed each day by the urgent problems and issues that arise, to the detriment of potentially more important and tactical work? Is there a tension or conflict between your role of protecting the organisation from compliance or criminal risk and your role of supporting the business aims of your organisation? In-house solicitors must act in the best interests of their client that is, their employer. While doing this, it is important that there is no confusion about that role. If it has not already been done, the in-house solicitor needs to define the role and address any grey areas where there is no clear division or clarity. This might appear irrelevant and trite to others within the organisation but, without clarity, there are likely to be more difficulties and exposure to risk is higher. It may be an opportunity for the organisation to focus on risk management and compliance. It needs to be clear to all that the client is the company, rather than the individual directors, officers or employees, even though the in-house solicitor may have many internal clients. If there is ever any doubt about this, it should be highlighted immediately to avoid any misunderstanding that you are advising anyone in their personal capacity. Additional considerations when the role is new and not clearly defined Those applying for a newly created position should be aware that the role might not be clearly defined. In such circumstances, it may be necessary to clarify and define the role, functions and responsibilities with the relevant body/entity, including reporting lines, management position within the organisation, and resources available to you. All of these issues may have a bearing on whether you accept the position in the first instance. 1 The Law Society of Ireland, A Guide to Professional Conduct of Solicitors in Ireland. 2 Joined Cases T-125/03, T-253/03, Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v Commission (Court of First Instance, September 2007). 7

11 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 2 Internal reporting lines To whom does the in-house solicitor report? Will there be a separate legal department, and who retains control over the sole legal advisor or legal department? To whom should the in-house solicitor report concerns? The reporting line may influence the in-house solicitor s authority and influence. Some senior in-house solicitors report to the directors (but this would be impractical on a day-to-day basis), some report directly to the CEO, and some may report to a specific director or manager of the company, while others may report to a regional or global legal director. Even though, on an average day, the in-house solicitor may report to various directors and managers about different projects, it is important to have a formal structure in place so that there is clarity about who the in-house solicitor s line manager is. If the senior in-house solicitor retains control over the legal department, this may assist in control and allocation of legal resources and development of overall legal plans and strategies for the organisation, although this can be achieved working in parallel with embedded legal advisors who are not working separately from the organisation. The larger the number of legal advisors, the less likely it is that the senior in-house solicitor will be familiar with each matter. However, it would be advisable to have a formal line of reporting to the senior solicitor to ensure he/she is aware of potentially strategic and significant matters. In addition to having this structured flow of information, lines of authority should be very clear. In-house solicitors should be advised to report any concerns to the senior in-house solicitor. If the concern is about the senior in-house solicitor and the matter cannot be resolved, then the solicitor should review and consider whether the senior in-house solicitor s manager may be the appropriate person to discuss the matter with. Board membership or access? Whether the in-house solicitor will become a board member depends on the organisation and the role. Membership would provide a higher profile for the areas for which the solicitor is responsible and more opportunity for the solicitor to put forward opinions and listen to counter and business arguments. Some would argue that there may be a risk of conflict of interest with ethical and professional obligations if the solicitor is on the board, but this is something that the senior solicitor will need to be aware of and address. Some commentators advise that, if there is no board membership, then board access is important, where needed, to carry out the solicitor s role to act in the best interests of the organisation. 3 Company secretary? If the in-house solicitor is also company secretary, it would be important to clarify and address any conflicts that may exist as a result of being both the company secretary and the legal adviser. If the in-house solicitor is not the company secretary, there could be an overlap of roles or misunderstandings about who should be performing certain tasks. Once again, the key is to clarify and agree the respective roles. External reporting lines Is it always possible for the in-house solicitor to instruct external counsel or solicitors on every matter that goes to external legal advisors, or could other employees also be allowed to instruct? Privilege is an issue that needs to be considered here could it possibly be lost because non-legal employees are involved in the communications? 4 3 The question of whether general counsel should be made a member of the board was briefly discussed in the Merc Partners general counsel survey, The Evolving Role of Corporate Counsel in Ireland, which was circulated in 2008 (Merc Partners, Clonskeagh, Dublin). In the survey, 39% of participants felt that the general counsel should be a member of the board, while 61% were against board membership. For more information, please refer to the survey, copies of which are available in the Law Society Library. 4 Note that privilege is dealt with elsewhere in this booklet (page 18), and the Akzo Nobel case is definitive and has generated much discussion about the issue of legal professional privilege and the in-house lawyer. If you are qualified in another jurisdiction, you can better maintain privilege by either becoming admitted in Ireland or retaining your membership of your prior professional body. 8

12 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 2 In addition, does the in-house solicitor have enough resources and time to instruct? A policy should be developed and agreed upon by the directors. If a practice already exists in the organisation, it would be helpful to evaluate it and revise it, if appropriate and agreed, to ensure that privilege, in as far as it exists and is possible, is maintained. Competitive procurement of external legal services is likely to be scrutinised or to be an absolute requirement if you are acting for a public body. Knowledge of the requirements and compliance with these should be ensured, as discussed in the following chapter, which addresses outsourcing in detail. Whistle-blowing In-house solicitors should familiarise themselves with relevant legislation, such as anti-money-laundering, financial services, and public authority legislation, together with any other laws that would be relevant to the organisation. It would be advisable to try to address any problems immediately, with the help of the directors and managers. It may also be necessary to put appropriate processes in place to facilitate legitimate disclosure by employees or possible wrongdoing within the organisation. Training and development Keeping up-to-date with legal developments is a challenge for in-house solicitors, but it is an important requirement, both in terms of their duty to the organisation and in terms of being aware of what other employees need to be kept apprised of. The in-house solicitor is in a good position to evaluate any training needed to ensure that the employees in the organisation are kept up-to-date on relevant legal requirements and responsibilities. Time and resources will generally be issues that need to be taken into consideration in rolling-out training sessions, and it is recommended that the in-house solicitor prioritise training requirements and discuss them with the line manager whose staff are to be trained. The compliance officer and directors should also be involved in discussions regarding training and prioritising. 9

13 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 3 CHAPTER 3 OUTSOURCING Organisations both large and small, and whether in the public sector or private sector may frequently seek to obtain external legal advice and to instruct external legal advisers to obtain such legal services, even though they employ their own in-house solicitors. The key person in managing that outsourcing of legal services for the organisation should be the in-house solicitor, who has the pivotal role to play in assessing when it is best to outsource legal work for the organisation, taking into account: The organisation s corporate structure and ethos, Its place in the market and business strategy/objectives or its corporate purpose, and The legal risk-management strategy that will have been developed by the in-house solicitor (or his/her legal department) following an analysis of the legal risks of the organisation by the in-house solicitor. When to outsource legal work and obtain external legal services should therefore preferably always be managed by in-house solicitors in organisations that have employed in-house legal expertise, as they are the people best placed to make such decisions. While discussions in this chapter apply to outsourcing to both solicitors and to counsel, different considerations may apply to counsel in certain contexts, and companies may have specific arrangements in this regard. Such considerations may be relevant when determining whether to brief counsel in any particular case. This may be for specialist advice, litigation, or be transaction-specific (for example arbitration), and organisations may have specific arrangements in place. It is recommended that any briefing of counsel should be done by the senior in-house solicitor. Why outsource to an external legal adviser? There are a number of reasons why organisations seek to obtain external legal advice, including: To obtain expert or specialist legal advice in a particular area (not within the core practice of the inhouse legal department) or because of the size, nature and complexity of the transaction involved for example, corporate finance, environmental, competition, technology matters, and so on, The capacity of the in-house legal department to take on extra work, The need to obtain local expert advice if the matter relates to the law of another jurisdiction, and For certain specific specialist or restricted activities, such as court appearances, arbitrations, and so on. However, outsourcing legal work does not and should not mean that the in-house solicitor is no longer responsible or involved, and the relationship between the organisation and the external legal advisers should be managed by the in-house solicitor, who is best placed to do so, so that access to external legal advisers is in line with the legal risk strategy for that organisation. In addition, an in-house solicitor often has a multiplicity of roles (outlined in Chapter 1 of this guide), which an external legal adviser does not have. For example, the in-house solicitor may have an internal strategic role that is not limited to dealing with pure matters of law or drafting documentation/attending court, and so on, but may also be part of the corporate governance structure or management of the organisation. A strategic approach to outsourcing recognises that in-house solicitors have key roles in governance and legal risk-management issues, cost management, and budgetary control of the legal spend, which they are best placed to do. Managing the relationship with external legal advisers The management of external legal resources should always be done by the in-house solicitor or legal department, for the reasons set out above. Instructions to an external legal adviser should always come, in the first instance, from the in-house solicitor, and while the particular instructions on a particular project or transaction will come from the appropriate business personnel within the organisation, these should be monitored by the in-house solicitor, who should be kept briefed by his/her internal business colleagues and also by the external legal adviser. The in-house solicitor should remain the principal contact for the external legal advisers at all times, and the external legal advisers should report into the in-house solicitor/ legal department. The in-house solicitor should be kept informed at all times by the external legal adviser of all legal advices and services being delivered to the organisation in respect of instructions received. There are a number of reasons for this: The in-house solicitor is best positioned to formulate and issue the organisation s instructions to 10

14 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 3 the external legal adviser (in line with the legal risk-management and legal risk strategy for that organisation) as, ultimately, the in-house solicitor must be satisfied that the legal outcome is satisfactory from the organisation s perspective and will, no doubt, have responsibilities in that regard. It ensures consistency of legal advice throughout the organisation and ensures there is no duplication of the same legal advice, for example, being delivered to different sections of the organisation, thereby wasting resources. An important role of the in-house solicitor is monitoring the instructions given to the external legal adviser to ensure the instructions are adequate and consistent. This, in turn, will enable the in-house solicitor to identify appropriate use of legal resources and the legal spend and ensure that all relevant issues for legal advice are raised. It ensures the legal budget and legal costs/fees of external legal advisers are managed by the person best placed to do so, that is, the in-house solicitor, so that legal fees are not incurred needlessly as a result of either unclear instructions or time spent on non-core or irrelevant issues. Net issues can be identified by the in-house solicitor at an early stage and presented as such in the instructions. The in-house solicitor s monitoring of the client instructions to the external legal advisers is fundamental to obtaining the most appropriate, relevant and cost-effective delivery of external legal services to the organisation. The in-house solicitor may have a management or reporting role within the organisation in terms of reporting to senior management or the board on the legal function (both internal and external), management of legal resources and the legal budget, and/or the legal risk strategy for the organisation or for any particular project. Therefore, the in-house solicitor needs to be fully informed at all times when outsourcing occurs as to why, at what cost, and for what purpose. Ideally, in-house solicitors should be involved at all times during the outsourcing process, and no important legal action or decision should be taken without their involvement. In practice, this means that external legal advisers should report to in-house solicitors and deal with requests from them for final legal opinions or sign off and specifically address any concerns of in-house solicitors in such advices. In-house solicitors may be required to attend regular meetings of the client personnel of the organisation with external legal advisers or contract counterparties, or to participate in conference calls, review agreements, attend court, arbitration or regulatory hearings, and provide input and oversight on various matters. How to choose external legal advisers The choice of selecting the most appropriate external legal adviser for an organisation and when to outsource legal services should ideally be made by the in-house solicitor for the reasons mentioned above. The responsibility for the control and management of this function should rest with the in-house solicitor. There are various ways of selecting external legal advisers, which vary depending on the size of the organisation, its needs to outsource (that is, whether for legal expertise, a specific transaction, or capacity/overflow or otherwise), its legal budget, and whether the organisation is within the public sector or the private sector. Many organisations establish panels of external law firms, which are then available to take instructions when the need arises. However, if specialist legal advice in a particular area is required, a panel may not be appropriate and it may be that, particularly in the public sector, some form of tender or mini-tender competition is held to select such a specialist. Organisations may have a formal or informal selection process, depending on whether they are subject to procurement laws, their internal corporate governance procedures, and whether they are in the public or private sector. In setting up a panel of external legal advisers, selection criteria will need to be set (see further below on selection criteria) for determining selection to the panel (taking into account any relevant procurement laws, which is particularly important in the public sector, and/or procurement policies of the organisation). If a panel is established from those deemed capable of meeting the selection criteria, this could be for a limited period, such as a fixed number of years. This enables the organisation to plan its legal resources in conjunction with the in-house solicitor for the short-term and medium-term. An opportunity then arises on the expiry of such a period to review the needs of the organisation for such a panel and for any new tendering process. A formal contract or some form of legal services agreement or letter of appointment that sets out the terms governing how the external legal adviser will provide legal services to the organisation is advisable, 11

15 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 3 and should deal with such matters as instructions, key personnel, resources, conflicts of interest, professional indemnity insurance, liabilities, reporting, fee structure, intellectual property rights, confidentiality, termination, ongoing reviews, and so on. In terms of resources, depending on the need of the organisation for legal services or in relation to any particular area of legal services, there may be merit in limiting the number of law firms on the panel. External legal advisers appointed to a panel may develop a good understanding of the ethos and culture of the organisation and an understanding of the complementary roles of the in-house solicitor and their role as external legal adviser, offer good service and value for money (depending on how the fees/cost structure is set up under the panel), and be committed to the organisation as an important client. Selection criteria for choosing external legal advisers will depend on the objective that is, whether the exercise is for the purpose of obtaining specialist legal expert in a particular area of expertise, establishing a panel, selecting local legal advisers based in other jurisdictions for obtaining local legal expertise, or for litigation/court proceedings. Traditionally, selection criteria, in general terms, would cover such areas as relevant expertise in a specialist area or areas of law, experience, and cost effectiveness or value for money. Such criteria would also include promptness in delivery of the legal services (this could be a critical factor, for example, in certain matters such as litigation or market-related corporate transactions), availability of key personnel, identity of key personnel or lead partner(s), resources available to deliver the service, and back-up legal staff. In addition, when selecting external legal advisers, another key factor to be considered is the proposed fee structure/costs of external legal advisers and how this fits in with the overall approach to legal costs/ fees in the organisation, and/or the nature of the particular matters for which external legal services are being sought (for example, litigation, corporate finance, and so on). The in-house solicitor will have a key contribution to make to the organisation in how fees might be structured. There may be some flexibility required. For example, a fixed or flat fee may be appropriate for some types of legal work outsourced, whereas discounted hourly rates or a capped fee may be appropriate for other types of legal work. There are varying degrees of control that can be exercised by the organisation in terms of cost, depending on the fee structure agreed (and different fee structures may be agreed for different types of work), which would be relevant for the in-house solicitor in monitoring the legal budget or spend. This is dealt with further below. If a panel of law firms is not considered necessary or practical, conducting a mini-tender for specific projects can allow organisations to choose from a large number of law firms with expertise in that particular area and may lead to reduced fees for the organisation. Finally, allocation of legal work from an organisation to any particular external legal adviser on a panel is best reserved to the legal department or in-house solicitor in the organisation, as the person(s) best placed to decide on such an allocation, for the reasons referred to above. Managing conflicts of interest When outsourcing legal work to external law firms, there may be a danger that particular law firms will have a conflict of interest because they also act for certain clients who have dealings with the organisation. Even where a panel of external legal advisers has been established, a conflict check should always be requested to be carried out by the firm prior to any specific instructions being given on any particular project. In addition, the general rules of professional practice governing solicitors qualified to practise in Ireland and holding current practising certificates, as set down by the Law Society of Ireland, will apply to such persons. With regard to those lawyers in other jurisdictions (where local expert advice for a matter involving another jurisdiction is required), while they may be governed by similar professional conduct requirements, the letter of appointment or contract with the external legal adviser should contain provisions about conflicts of interest. The general rule is that, where a conflict of interest exists between the interests of a solicitor and those of his client, the solicitor must not act for the client. If the conflict arises during the course of a transaction, the solicitor must cease to act for that client. If a conflict of interest arises between two clients in a matter in which the law firm is acting, the firm must cease to act for either client in that matter, except in exceptional circumstances. Similarly, as a general principle, a law firm should not act for both vendor and 12

16 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 3 purchaser in a transfer of property for value at arm s length, except in exceptional circumstances. 1 While it is primarily the external law firm s responsibility to ensure that no conflict of interest exists when representing an organisation, the organisation s in-house solicitor should be mindful of the rules governing conflicts of interest and should take steps to ensure that firms undertake checks to ensure that no such conflicts exist. In addition to the ones mentioned above, prudent steps include requesting external law firms to outline any actual or potential conflicts of interest before they are instructed to act for an organisation, and ensuring that any actual or potential conflicts of interest that arise during such representation are immediately brought to the attention of the in-house solicitor. Fees and billing The law requires that clients are made fully aware of the charges that they will have to pay for the provision of any legal services provided by their solicitors. The information must be given in writing. Included in the definition of charges are fees, outlays, disbursements and expenses. 2 When a solicitor is retained by the client to do certain work in his professional capacity, the law implies a term into the contract between them that the remuneration of the solicitor will be fair and reasonable. The law requires the Law Society to investigate complaints of excessive charging. Where a complaint is upheld, the Society may direct a refund of all or a portion of the fee, if the fee has been paid, or a waiver of all or a portion of the fee, if the fee has not been paid. 3 As of the time of writing, the Government is proposing to establish an independent regulator for the legal profession that, when established, may impose additional requirements relevant to this issue. While these rules also apply to the provision of legal services to organisations by external law firms, most organisations will negotiate legal fees with external law firms prior to instructing them, whether on a panel or otherwise, and these issues will usually be dealt with in a letter of appointment or contract (see under the heading How to choose external legal advisers ). There are various fee structures that can be used, or a combination of them, or certain types of fee structures for certain types of cases or legal work for example, fees based on hourly rates, a flat or fixed fee, capped fees, performance-based fees, blended rates, or discounted fees. External law firms are often willing to display flexibility with respect to rates, including but not limited to discounted rates (assuming certain volumes of work), reduced fees for unsuccessful matters or transactions, fixed fees for certain types of work, and special rates for solicitors to go on secondment to the organisation. An in-house solicitor s familiarity with the going rates for the services of external law firms is therefore important in ensuring that the organisation gets value for money. Of course, different types of fee structures give rise to different considerations from an in-house solicitor s perspective in terms of risk of cost overruns (for example, hourly rates), expertise or specialist work. In addition, it is recommended that fee estimates be obtained for all legal work outsourced, which would be based on the fee structures agreed in any contract or letter of appointment, and that such fee estimates cover the work up to completion and post-completion matters. Such estimates should give a breakdown in terms of partner/resources/hours anticipated, and the in-house solicitor should be able to comment on these and agree them as appropriate. Such fee estimates could be internally important for an organisation in relation to any budget being set aside for legal services on any particular matter or transaction. Ongoing fees furnished on any particular matter should be monitored by the in-house solicitor against any fee estimate given. Agreement will usually be reached as to when fee notes should be furnished for example, monthly, quarterly, at the end of the transaction or particular stages, and so on. 1 See A Guide to Professional Conduct of Solicitors in Ireland (2nd edition, 2002), pp15-17, for more information on this subject. See also SI 366 of 2010 and the Law Society s approved documentation and guidelines for commercial mortgage lending, which may be viewed, as of the time of writing, on the Conveyancing Committee s section of the Law Society s website. 2 Charges to clients section 68 of the Solicitors (Amendment) Act See also A Guide to Professional Conduct of Solicitors in Ireland (2nd edition, 2002), pp7, Power of Society to impose sanctions for charging excessive fees section 9 of the Solicitors (Amendment) Act See also A Guide to Professional Conduct of Solicitors in Ireland (2nd edition, 2002), pp

17 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 3 To ensure that there are no surprises when bills are issued by an external law firm, in-house solicitors should ensure that they review the bill prior to it being paid, to ensure that the services described and hours worked are accurate. A prudent step in this regard would be to instruct the external law firm to issue bills initially in draft format, and against fee estimates furnished, thereby ensuring that any issues are picked up and resolved before the final bill is actually issued. Law firms may also be instructed to inform the organisation or in-house solicitor on a regular basis regarding the level of fees being incurred but that have not yet been billed, again very relevant against fee estimates. Although bill formats vary by law firm, in-house solicitors may request the law firm to issue detailed bills, including descriptions of work performed by each fee earner broken down by hour, and the total hours billed by each fee earner. Final bills should only be issued once the in-house solicitor is satisfied with the content of the draft bill. Ensuring a satisfactory service/quality control General monitoring of the external law firm by the in-house solicitor should also be undertaken to ensure that the organisation is getting a satisfactory service. There are two aspects to ensuring a satisfactory service in terms of obtaining external legal services: The monitoring of the performance of the services or transaction management, including the professional resources used, and The monitoring of the relationship between the organisation and the external legal adviser, or relationship management. Any agreement or letter of appointment will usually reserve the right to the organisation to have its inhouse solicitor carry out reviews of the performance of the legal services by the external legal advisers. The organisation will typically be looking for expertise and good response times and, where larger firms are instructed, prompt access to a senior partner or lead partner or a client-relationship partner of the external law firm when necessary. As the in-house lawyer will himself be expected to provide relevant advice and input to his/her organisation, it will be of particular importance that the legal advice given is practical and readily applicable to the particular situation, rather than theoretical or equivocal. If a legal panel is in place, an annual review of each of the external law firms performance should be conducted to identify any issues. Similarly, a review of the external law firm s performance should ideally be conducted after each major transaction or matter. Such a review should take into account the fees being charged by the law firm in question to ensure that the in-house solicitor s organisation is getting value for money as well as a satisfactory service. 14

18 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 4 CHAPTER 4 PROFESSIONAL PRACTICE ISSUES Solicitors acting in private practice and in-house share the same professional conduct obligations, including the maintenance of professional independence, conflict of interest problems, and confidentiality. All solicitors admitted to the roll must observe the highest professional standards and adhere strictly to their duties as officers of the court, as required by the Solicitors Acts 1954 to Moreover, it should be emphasised that the concept of misconduct in the Solicitors Acts applies equally to solicitors working in-house as it does to private practitioners. Misconduct, as defined in the Solicitors Acts, in summary comprises: The contravention of a provision of the Solicitors Acts or any order or regulation made thereunder, and Conduct tending to bring the solicitors profession into disrepute. Organisations that employ solicitors will do so because of the specialist professional knowledge, experience, objectivity, judgement and professionalism that they will bring to those organisations. The solicitors will be required to apply that knowledge, experience, objectivity and judgement in many diverse situations in the best interests of their client/employer, with due care and skill, while carrying out their instructions with due diligence. In general, in the modern business world, clients have an increasing expectation with regard to the skills, expertise and training of solicitors, whether in-house or in private practice. When an in-house solicitor observes the highest professional standards, it is to the ultimate benefit of the client/employer. Role of solicitor in the organisation: professional independence In corporate situations, in-house solicitors have only one client, who is also their employer. It is therefore particularly important, when practising in-house, to learn and understand as soon as possible the business and/or service provided by a client/employer and the regulatory, business and economic, social and political contexts and environment in which such business and/or service is provided. As an employee, the solicitor owes a duty of loyalty to the client/employer. In-house solicitors, particularly in the public sector, may also have a statutory or contractual duty of confidentiality to a client/employer, in addition to the general duty of confidentiality to their client/employer. In-house solicitors will (not unreasonably) be expected to share the objectives of their employers, while at the same time maintaining an objective and professional attitude and judgement. As a consequence of the proximity of the relationship that exists with the client, solicitors working in-house may be asked for business/service advice. Any such requests may be regarded as a legitimate concern of the client. It is important for in-house solicitors and their employers to agree on the authority vested in them as in-house solicitors. Should a situation arise where a client/employer instructs a solicitor to act in a way that, in the opinion of the in-house solicitor, could amount to unprofessional conduct on the solicitor s part, and/or which may even be illegal, the solicitor must ultimately advise that those instructions cannot be acted upon. It is recommended that the solicitor, in that instance, should analyse the source and nature of the instructions received very carefully and objectively, undertake all necessary legal and other research, and consider all available options before tendering the appropriate advice. In most cases, the availability of other legal options should be utilised and the employer/client should be persuaded to act accordingly. In particularly difficult situations, the matter might be resolved by seeking a second opinion from another lawyer. In such situations, the solicitor s professional judgement, objectivity, training and independence will be tested to the limit, and knowledge of the employer/client s business and its legal, regulatory and business environment, and obligations thereunder, will be particularly important in seeking a resolution. Every solicitor, whether in-house or in private practice, will be faced with difficult professional issues from time to time. This is inevitable, given the solicitor s role. Difficult situations surrounding the exercise of professional independence are, however, very much the exception rather than the rule. In-house solicitors, particularly at a senior level, are generally valued for their judgement and objective contribution to the making of informed and legally correct decisions by their client/employer. Solicitors and other professionals working in-house are often required to have, or are identified as having, a role in the governance of the legal entity that employs them, and senior in-house solicitors in particular may be well placed in their client s organisation to help with governance and regulatory issues. With the awareness of the need for the application of good governance and regulatory principles and practice, it is 15

19 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 4 considered that this aspect of an in-house solicitor s work (particularly in the corporate area) will continue to increase. Outsourcing With reference to the outsourcing of legal work by the client/employer, two practical suggestions are made: It is recommended that the employer/client should have a policy in place, in consultation with the senior in-house solicitor, with reference to who, when and how legal work is outsourced, and Lawyers to whom work is outsourced should be required, as part of their retainer, to report all concerns/ issues regarding corporate governance issues (regarding the functions, powers and duties of the organisation and the proper implementation and application of these in accordance with the law) to the senior in-house solicitor. In the case of the public sector, attention should be given as to whether there are any tendering requirements under the procurement rules. 1 Who should manage the in-house legal department? It is highly desirable that the work of an in-house legal department is controlled by the most senior solicitor working in that department. In practice, the staffing, objectives, plans, strategies and budgets of the in-house legal department will be required to be consistent with those of the client/employer. The senior solicitor will be best placed to formulate his/her legal department s role within such an operational framework. Similarly, the senior solicitor/head of the legal department will be best placed to assess and decide on important issues such as recruitment, budgeting, the performance of the staff of the legal department, and the establishment of an appropriate incentive scheme within whatever framework the client has in place. 2 Reporting lines within the client organisation In this particular context, it is of the utmost importance to reiterate that in-house solicitors must establish and understand who (and what) the client is, how the client s organisation operates, and the legislative and regulatory environment that applies to it. This information will be invaluable when providing legal advice to fellow employees. Conflicts may inevitably arise between the aspirations/instructions of another employee (of the client) and the in-house solicitor s duty to the employer/client. For that, and other reasons already outlined, knowledge of the reporting protocols that the practising solicitor is required to observe are critical. If, on the one hand, reporting arrangements are too limited, it makes the exercise of the in-house solicitor s function very difficult. On the other hand, if the reporting arrangements are unclear, it may be difficult and/ or time consuming, particularly in critical or urgent situations, to establish to whom legal advice should be tendered. In the context of a private sector corporation, for example, all activities of that corporation and of its in-house employees are activities emanating, and/or are delegated from, a board of directors or other statutory, legal or nominated (source of legal) authority. When difficulties arise, it is important that the senior or sole in-house solicitor has effective lines of communication, if not direct access, to the most senior available person (potentially, this should be the chief executive/chairman, as the case may be). It is recommended that this is an issue that ought to be covered in the terms of employment of the in-house solicitor and should be considered for inclusion in the mission statement of the legal department (subject to the approval of the client board). 3 Dealing with the public Many in-house solicitors come into contact with members of the public as a regular part of their role. Laypeople may not automatically perceive that the in-house solicitors with whom they are dealing must act in the interests of their employer/client only. If there is any possibility that the situation is one where a perception of a conflict of interest may arise, then it is recommended, as good practice, that such solicitors 1 For further information, please also see Chapter 3, Outsourcing. 2 For further information, please also see Chapter 2, Your role. 3 For further information, please also see Chapter 2, Your Role. 16

20 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 4 should do the following: Ascertain whether the member of the public is legally represented, If the member of the public is legally represented, then all dealings should be directed via that person s solicitor, If the member of the public is not legally represented, it should be explained to that person that the solicitor is precluded from acting on the person s behalf and that it is in their best interests to seek independent legal advice (and, in a given situation, it may be necessary to confirm that in writing). Solicitors undertakings The giving and receipt of solicitors undertakings is part and parcel of a client service in private practice. For a detailed statement of the Law Society s guidance with reference to undertakings, please refer to the Guide to Professional Conduct of Solicitors in Ireland (2nd edition, 2002), at section 6.5. See also the practice note issued by the Society s Complaints and Client Relations Committee in the March 2011 Gazette ( Notice to all practising solicitors undertakings, also available on the members area of the Society s website ( The professional obligations in relation to undertakings are no different for a solicitor working in-house to the position of colleagues in private practice. In-house solicitors are therefore responsible for their own undertakings and for those of the staff who report to them. It is recommended that the in-house solicitor s professional personal duty to comply with undertakings should be explained, as often as necessary, to the client/employer. It is also recommended that in-house solicitors should not give a professional undertaking unless they have express authority from the client to do so. Furthermore, an in-house solicitor should not give an undertaking to do something in any area of the client/organisation s business/service that is outside that solicitor s control or delegation. As an employee, the functions delegated to an in-house solicitor will be limited (and should be clarified), and therefore undertakings should be correspondingly limited to those delegated functions. For example, if the performance of some function is reserved to another employee or category of employees of the client/employer, then that matter should not be the subject of an undertaking given by the in-house solicitor, because it is outside that solicitor s control. If it is uncertain that a function is or will remain in the control of the in-house solicitor, sufficient and specific delegation of that function should be sought before that undertaking is given, so that the undertaking is capable of being honoured. If the in-house solicitor s authority to give professional undertakings as solicitor on behalf of the client/ employer is not clearly defined, it is recommended that such authority should be specifically delegated. When an in-house solicitor is asked to give an undertaking on behalf of the client/employer, and it is clear that the intention is only to have an agreement or understanding with a third party, it should be clear on the face of that undertaking that such undertaking is given only as an agent on behalf of the client/employer, that it is in the nature of an agreement or understanding, and that it is not a professional (that is, solicitor s) undertaking or capable of being misunderstood in that regard. It is considered that any ambiguity in the text would most likely be construed in favour of the interpretation placed upon it by the recipient of such an undertaking. A situation could arise where the in-house solicitor is instructed to seek an undertaking from a solicitor colleague, which that colleague should not give. If the other solicitor should not give such an undertaking, then the in-house solicitor should not request it. Solicitors employed by publicly quoted companies Solicitors working in-house in the legal departments of publicly quoted companies, or with a publicly quoted parent, should be aware that they may have a particular role in areas such as corporate governance and compliance of such public companies, and they should take specialist advice on such obligations where necessary. Among the possible areas of involvement are: To provide the information and analysis necessary for directors to discharge their oversight and/or public filing and disclosure responsibilities, particularly where they relate to legal compliance matters, A responsibility for ensuring the implementation of an effective legal compliance system with the oversight of the board of directors, 17

21 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 4 To ensure that all reporting relationships between internal and outside lawyers are established at the outset, with a direct line of communication with the general counsel through which external lawyers are to inform the general counsel of material, potential or ongoing breaches of the law or breaches of the legal duty to the corporation. Opinions legal and otherwise written or oral There is no professional duty on an in-house solicitor (acting as a solicitor) to advise on the employer/ client s business affairs. Similarly, there appears to be no general professional duty imposed on an in-house solicitor (acting as a solicitor) to advise the client on the wisdom of transactions that is, other than on the relevant law. Nonetheless, a request for legal advice by the client/employer to an in-house solicitor will in many cases involve an assessment of and judgement upon the client s business/service, and therefore, from time to time, advice tendered may potentially contain elements of business as well as legal advice. When imparting legal advice, it is important to consider the context and purpose of the request when deciding to offer written or oral advice. When written advice is sought or deemed necessary, the greatest possible care needs to be taken with the relevant research and conclusions. A document containing legal advice should be identified as legally privileged. Solicitor/client privilege Solicitor/client privilege has been the subject of some debate in the European Court of Justice in recent years. It is essential that an in-house solicitor should fully apprise himself of the position in relation to the law of privilege in the various jurisdictions where the company/organisation operates. In the European context, the European Court of Justice held in the case of Akzo Nobel Chemicals Ltd v European Commission (Case C -550/07P) that legal professional privilege does not extend to communications of the in-house lawyer in relation to the enforcement of EU competition law. The Irish courts do not draw any distinction in respect of the general application of legal professional privilege to legal advice received from in-house counsel. In any event, it is prudent for the solicitor to obtain external legal advice where an EU competition law matter arises. On a general note, solicitors working in-house should be aware of the risks that arise in relation to privilege and the discovery process in litigation, and the importance of having an efficient document-management system throughout the organisation. Litigation When proceedings are issued by an in-house solicitor, it should be made clear to the party receiving the proceedings and to that person s solicitor that the proceedings have emanated from a practising solicitor acting in the capacity of solicitor to the plaintiff. When proceedings are being issued by an in-house solicitor on behalf of their employer, the solicitor should go on record either in the solicitor s own personal name, the name of the senior solicitor in the organisation, or, if the individual practises under a business name, then under the business name. The solicitor should not go on record solely in the name of their employer. Professional names and notepaper An in-house solicitor in the corporate sector may practise in the solicitor s own name, in the name of the employer, or under a business name. If the solicitor practises in the solicitor s own name, it is recommended that a clear indication is given on the face of the notepaper that the letter has emanated from the legal department of the client organisation. If the solicitor practises in the employer s name, a clear indication should be given on the face of the notepaper that the letter emanated from the solicitor s practice within the employer s organisation. 4 4 SI no 178 of 1996 regulates the use of professional notepaper. Clause 6(iii) provides as follows: Where the practice comprises a solicitor in salaried employment acting for his non-solicitor employer, the professional notepaper shall state the name of the solicitor and may list the names of other solicitors who assist that solicitor. 18

22 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 5 CHAPTER 5 PROFESSIONAL REGULATION ISSUES This chapter is addressed to solicitors who are or will be practising solicitors. In most countries, the profession is now regulated by statute. This is because the solicitor operates in a situation of trust. The regulation of the profession should be viewed in the context of the protection of the public. The Solicitors Acts 1954 to 2011 provide the principal legislative framework within which solicitors are regulated. Practising certificates Section 46 of the Solicitors Act 1954 requires the Registrar of Solicitors to issue practising certificates certifying that the solicitors named therein are entitled to practise as solicitors. Section 54 of the Solicitors Act 1954, as substituted by section 62 of the Solicitors (Amendment) Act 1994, states that a solicitor who has the necessary qualifications, among other things, that a practising certificate in respect of that solicitor is in force, may act as a solicitor. Section 55 of the Solicitors Act 1954 states that an unqualified person shall not act as a solicitor. In other words, the law requires that practising solicitors hold practising certificates. Some solicitors employed in the corporate and public services sectors are practising solicitors, and other solicitors are not. All employers, quite legitimately, seek to keep overheads to a minimum. If the solicitor is not practising, there is no necessity for such an employer to pay for a practising certificate. Employers will sometimes question the necessity for an employee taking out a practising certificate. Principally, a practising certificate should be taken out by a practising solicitor to comply with the relevant legislation. The holding of a practising certificate results in advantages both for the solicitor and the employer. Third parties dealing with the solicitor may do so more confidently than otherwise. The solicitor can brief counsel. The solicitor can, as a practising solicitor, call on the Law Society, the solicitor s professional body, for guidance. The employer would be entitled to make a claim on the compensation fund in the event of misappropriation of moneys by the solicitor. Section 56 of the Solicitors (Amendment) Act 1994 provides as follows: 1) No solicitor shall practise as a solicitor unless a practising certificate in respect of him is in force. 2) Without prejudice to section 29(5) of the Solicitors Act 1954, as substituted by section 44 of the Solicitors (Amendment) Act 1994, a solicitor shall be deemed to practise as a solicitor if he engages in the provision of legal services whether as a sole practitioner or as a partner in a solicitor s practice or as an employee of any solicitor or of any other person or body, or as a solicitor in the full-time service of the State within the meaning of section 54(3) of the Solicitors Act 1954, as substituted by section 62 of the Solicitors (Amendment) Act ) Subsection (1) of this section shall not apply to: a) a solicitor in the full-time service of the State within the meaning of section 54(3) of the Solicitors Act 1954, as substituted by section 62 of the Solicitors (Amendment) Act 1994, or b) a solicitor whose name is on the roll and who does not stand suspended from practice and who is employed full-time in the State to provide conveyancing services for his employer, provided that such employer is not a solicitor. 4) In paragraph (b) of subsection (3) of this section, conveyancing services means services in connection with the preparation of transfers, conveyances, contracts, leases or other assurances in connection with the disposition or acquisition of estates or interests in land. When is a practising certificate needed? Each situation must be examined to decide whether a practising certificate is needed in the particular circumstances. General exhaustive rules are not possible, as circumstances often vary. It is recognised that there may be both practising and non-practising solicitors in an organisation. The solicitor in a legal department providing routine legal services, commonly provided by solicitors, is a practising solicitor. The legal compliance officer who is employed to monitor and advise on whether proposed projects and actions are legally possible is usually a practising solicitor. 19

23 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 5 The solicitor in a non-legal role is not a practising solicitor. The Practice Regulation Section of the Regulation Department of the Law Society will provide guidance in these matters. The Regulation of Practice Committee monitors compliance with the legislation in respect of practising certificates and has the formal statutory powers of regulation delegated to it. Applications in respect of practising certificates should be directed to the Practice Regulation Section of the Regulation Department. Categories of work The following examples may be useful when considering whether it is necessary to apply for a practising certificate. A solicitor to whom items 1, 2, 3, 4 or 5 refer is required to hold a practising certificate, while those to whom items 6, 7 or 8 refer would not be required to apply for a practising certificate. 1) The provision of routine legal services. By this is meant the services commonly provided by solicitors. These would include advisory services, representing a client in court, at tribunals, or the provision of conveyancing services, provided the necessary professional indemnity insurance is in place. 2) Legal advice. Corporate bodies may only operate within the framework of enabling legislation, charter, or memorandum and articles of association. A solicitor may be employed to monitor and advise on whether proposed projects and actions are possible within that framework. 3) The execution of forms as a solicitor. There are many forms to be filed with Government and other agencies, which are acceptable only if signed by a solicitor. The Companies Office Form 47 is one example. If not executed by an officer of the company, the form will only be accepted if executed by a solicitor. This should be distinguished from the situation where a solicitor witnesses a form as a solicitor, and this is acceptable, not because of the solicitor s expertise, but because of the solicitor s professional standing. 4) Commercial work. The solicitor may be involved in drafting and negotiating contracts with third parties on behalf of his employer. 5) Position as advertised. When the employee was recruited for the position held, was it a requirement for the employee to be a solicitor? 6) Management. The solicitor may be a member of the management team and participate in the making of decisions on behalf of the organisation. 7) Research. The solicitor may be a researcher in an academic institution or in another organisation where his research is used in the formation of policy. 8) Non-legal role. The employee may have qualified as a solicitor but may be employed in a capacity where his work is completely unrelated to law. Fee sharing In addition to the general regulatory machinery, the Solicitors Acts provide that fee sharing is not permitted. Section 71 of the Solicitors (Amendment) Act 1994 provides for the making of regulations to permit fee sharing. Section 59(1) of the Solicitors Act 1954 prevents unqualified persons within the meaning of the Solicitors Acts being facilitated to act as solicitors. It would be illegal for an employer, or unqualified employee, to act as a solicitor, even though a solicitor is employed within the organisation. The objective of this section is to ensure that a solicitor s advice is independent. The solicitor has training in legal matters and is subject to the regulatory machinery of legislation. If fees are shared with an unqualified person, there is no independence from that person, who may have no training in legal matters, no training in standards of professional conduct, and who may not be subject to regulatory machinery. Sections 3 and 4 of statutory instrument 343 of 1988, so far as relevant to solicitors in the corporate and public services sector, provide as follows: 3 (1) A solicitor shall not agree to share his professional fees with any person, not being either a solicitor or a duly qualified legal agent in another country... (3) Notwithstanding the provisions of paragraph 1 of this regulation, a solicitor who is employed full-time in consideration of a salary to provide services exclusively for an employer who is not a solicitor, may agree with such employer to set off all or part of any professional fees received by 20

24 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 5 that solicitor from third parties arising from the provision of such services, against (and only to the extent thereof) (a) the salary paid or to be payable by such employer to that solicitor, and (b) the reasonable expenses (including secretarial, stationery, telephone and other similar overhead expenses) incurred by such employer in connection with the employment of such solicitor. 4 (1) A solicitor shall not accept an appointment by or act as solicitor for any person on the basis that he will be remunerated by a fixed payment irrespective of the extent of the services provided or to be provided by him as solicitor for such person, unless that solicitor shall be the holder of a wholetime appointment under a contract which provides that he shall act as solicitor for such person exclusively within the State, or a defined area within the State, in the provision of services or a defined category of services. (2) The provisions of paragraph 1 of this regulation shall not apply to a solicitor to the extent that he holds an appointment as a State solicitor. Internal supervision A solicitor must properly supervise any unqualified staff for whom that solicitor is responsible. The solicitor is responsible for all acts of the staff when they are carrying out work of a legal nature. A solicitor s failure to exercise proper supervision of the office or place of business may affect the renewal of a practising certificate under the provisions of section 49(1)(d) of the Solicitors Acts 1954, as amended by section 61 of the Solicitors (Amendment) Act Although the solicitor s staff in an organisation may also be answerable to other superiors in the organisation, the duty of supervision is not in any way diluted for the solicitor in relation to legal work being carried out for the employer/client. Token solicitor Another effect of section 59 of the Solicitors Act 1954 is that a solicitor should not agree to operate in a situation where the role of the solicitor is merely a token one. Furthermore, a solicitor should not allow his or her name and status to be used by third parties, to enable such third parties to conduct a legal practice or provide legal services. 21

25 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 6 CHAPTER 6 Professional indemnity insurance It is important for solicitors practising outside private practice to understand how professional indemnity insurance matters affect them. The professional indemnity insurance regulations provide that a practising certificate may be refused to a solicitor unless the firm in which they practise provides evidence of professional indemnity insurance to the Law Society or is exempted. The current professional indemnity insurance regulations are contained in statutory instrument 409 of Solicitors employed in the full-time service of the State Solicitors employed in the full-time service of the State are exempt from the requirement to have professional indemnity insurance cover in place. Therefore, the compulsory professional indemnity insurance provisions do not affect them. Professional indemnity insurance for the corporate and public sector solicitor Regulation 3 of SI 409 of 2011 provides exemptions for most practising solicitors employed in the corporate sector, as follows: Regulation 3(a) shall not apply to or in respect of any solicitor or registered lawyer who provides legal services only as part of an employment within the State to provide legal services to and for his or her employer, provided that: i) The solicitor s or registered lawyer s employer is not also a solicitor or a registered lawyer, and ii) The solicitor or registered lawyer confirms to the Society in a manner acceptable to it that, for the duration of a relevant indemnity period, the solicitor or registered lawyer has not and will not engage in the provision of legal services to or for any person other than his or her employer, and iii) The solicitor or registered lawyer shall notify the Society immediately in writing if the exemption from regulation 3(a) under regulation 3(f) shall cease to apply in respect of the solicitor or registered lawyer. Personal liability Although the solicitor benefits from an exemption in respect of compulsory professional indemnity insurance, it is still important for corporate solicitors to ensure that there are, in fact, adequate arrangements in place to protect that solicitor s own personal liability. There are two aspects to this: employer s indemnities and employer s waiver. Employer s indemnities At common law, an employer is vicariously liable for the acts of his employees. Therefore, even if the matter is not addressed specifically in a contract of employment, the employer has a legal duty to provide indemnity for the employee. The solicitor should seek confirmation from the employer, preferably in writing, that the employer agrees to indemnify the solicitor against all losses arising as a result of claims by third parties incurred by the solicitor as a consequence of the provision by the solicitor of the services provided in the course of the employment. Some employers will insure against this risk, and others will carry the risk themselves without insurance. Some employers find that available policies include such a large excess provision that it is not worthwhile insuring. The insurance policy will usually cover all acts, errors and omissions of employees. A typical insurance policy will cover all employees, and not just solicitors. An employer should also indemnify the solicitor against other loss or damage arising as a result of the employment. All indemnities should be required to remain in force even after the employee has left the particular employment. A precedent Deed of Indemnity is included on page 24. Employer s waiver The employer should also confirm, again preferably in writing, that the organisation itself waives any action that it may have against the solicitor arising out of the provision of legal services by the solicitor in the course of the solicitor s employment, other than in respect of any fraudulent act committed by the 22

26 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 6 solicitor. A precedent Deed of Indemnity is included on page 24. Run-off cover The employer s indemnity and waiver should provide continuing protection for the solicitor, as claims may be made after the solicitor has left and professional indemnity insurance claims are on a claims-made basis rather than on an occurrence basis. In certain circumstances, this might not be sufficient because it relies on the assumption of: The employer continuing in business after the solicitor has left the employment, and The employer s ability to continue to indemnify the solicitor after that solicitor has left the employment. Many of the solicitors employed in the corporate sector are employed by substantial organisations. Many others are not. In the event of liquidation or other closure, the solicitor is in a particularly vulnerable position. Run-off cover provides insurance in respect of work done in the past, to cover claims made in the present, and provides protection for the solicitor when the solicitor leaves employment. It is essential that professional indemnity insurance cover is in place at the time one becomes aware of circumstances likely to give rise to a claim and notification of the claim is made to the insurers. When leaving employment, a solicitor should request that such cover is put in place by the employer. 23

27 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 6 PRECEDENT DEED OF INDEMNITY This DEED OF INDEMNITY is made the day 20 BETWEEN: (1) (EMPLOYER) whose registered office is at (2) (SOLICITOR) of WHEREAS: A. The Solicitor is employed by the Employer (inter alia) to provide certain services for the Employer. B. The Employer desires to indemnity and abandon any claims he may have against the Solicitor as appears below. NOW THIS DEED WITNESSES as follows: 1. In this Deed: the Employer means [Employer] and includes its successors in business and assigns; Holding Company means holding company within the meaning of Section 155 of the Companies Act 1963; the Services means the services provided during the course of the Solicitor s employment with the Employer a) to or in respect of the Employer, any subsidiary or holding company, or any subsidiary of such holding company of the Employer (within the meaning of Section 155 of the Companies Act 1963), or b) to or for the benefit of any other person; the Solicitor means [Solicitor] and includes his/her executors, administrators and assigns; Subsidiary means subsidiary within the meaning of Section 155 of the Companies Act, The Employer hereby irrevocably and unconditionally agrees to indemnify and keep indemnified the Solicitor against all losses, costs, demands, damages, actions, expenses and claims howsoever incurred by the Solicitor as a consequence or arising out of the provision by the Solicitor of the Services, provided that this indemnity shall not be relied upon by the Solicitor in respect of any fraudulent act committed by him. 3. The Employer waives and wholly abandons any action or claim whatsoever that it has or may in the future have against the Solicitor arising out of the provision by the Solicitor of the Services, other than in respect of any fraudulent act committee by him. 4. The benefit of the indemnity and waiver set out in clauses 2 and 3 shall survive the termination of the Solicitor s employment with the Employer and shall not be affected in any way by such termination of employment. IN WITNESS WHEREOF the parties hereto have executed this Deed the day and year first above WRITTEN. PRESENT when the Common Seal of [EMPLOYER] was affixed hereto: SIGNED SEALED AND DELIVERED by the said [SOLICITOR] in the presence of: 24

28 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 7 CHAPTER 7 Support available to the solicitors profession The In-house and Public Sector Committee The Law Society seeks to ensure that the needs of in-house solicitors, that is, those who work outside of private practice in the corporate and public sectors, are reflected in the exercise of the Society s representative, educational and regulatory roles. The In-house and Public Sector Committee was formed by the Law Society to help recognise the different perspectives of in-house solicitors in a diversity of roles. The committee represents the views and promotes the interest of in-house solicitors. Further information regarding the committee can be found on the Law Society s website, The committee assists with the tailoring and organisation of seminars, panel discussions and diplomas aimed at, and of interest to, in-house solicitors. The committee offers the experience and expertise of its members to in-house solicitors and other Law Society committees. The committee liaises with the Corporate and Public Lawyers Association (CPLA), with a number of committee members also being members of the CPLA. The committee liaises with the European Company Lawyers Association (ECLA); it represents the Law Society at ECLA board meetings. The committee seeks to effectively communicate with existing and prospective in-house solicitors, through an up-to-date committee section of the Law Society website, articles from time to time in the Law Society Gazette and ezine, mail shots to in-house solicitors, and other appropriate Law Society media. The committee strives to promote collegiality and the forming of connections between in-house solicitors, and to build upon and strengthen the relationship between the Law Society and its in-house members. The Law Directory and the committee s section of the Society s website contain a list of committee members. If there is any matter of interest or concern to you that you would like to raise with the committee, please feel free to do so by contacting the committee secretary, Louise Campbell, Law Society of Ireland, Blackhall Place, Dublin 7; tel: , [email protected]. Support Services Directory The Society issued a new Support Services Directory as part of the membership/practising certificate renewal process for The directory summarises the support services on offer to the profession, including the contact details of the relevant individual, either within the Society or elsewhere, who co-ordinates each service, under the following sections: Employment and career development, Education and training, Information/guidance services, Personal benefits, Services to help with professional and/or personal issues, Facilities, accommodation and catering. Download the Support Services Directory from the support services section of the members area of the Law Society s website or contact the Society s support services executive, Louise Campbell; tel: , [email protected]. European Company Lawyers Association (ECLA) ECLA is an umbrella organisation of associations and entities representing in-house corporate lawyers in 20 countries across Europe. ECLA represents a pan-european meeting point where discussions and strategies regarding in-house legal practice in Europe are held. It provides members with information, networking opportunities, and benefits for individual members of national associations and entities associated with ECLA. Where the common European interest of in-house corporate lawyers requires, ECLA is active at European courts and in lobbying at EU level. The Law Society of Ireland has been affiliated to ECLA since The main board of ECLA meets 25

29 Guide for Solicitors Employed in the Corporate and Public Sectors Chapter 7 twice yearly. The In-house and Public Sector Committee represents the Law Society at these ECLA board meetings. Further information regarding ECLA can be found on its website, Corporate and Public Lawyers Association (CPLA) The CPLA represents the interests of solicitors and barristers employed in the corporate and public sectors. The association was established in The core objectives of the association are to give a voice to solicitors and barristers who have chosen to follow a career path in the corporate or public sectors, to promote communication and professional development among members, to highlight issues of concern and take steps to resolve them, and provide social and networking opportunities for members. The number of lawyers in Ireland now practising in-house has grown considerably over the past number of years. The areas of activity in which the association s members are engaged include: Banking and financial services, Manufacturing, Telecommunications and IT, Transport and energy, Insurance and pensions, Local authorities, Professional services, Offices of the Attorney General, Director of Public Prosecutions, Chief State Solicitor, Revenue Solicitor and other Government departments and agencies. Annual subscription rates are kept to the minimum required to run the association s events and administration. Group rates are available for organisations with several members. Anyone interested in joining the association can do so by contacting the Corporate and Public Lawyers Association, c/o Office of the Law Agent, 4th Floor, Block 3, Civic Offices, Wood Quay, Dublin 8; DX 1019 Four Courts; terence.o [email protected], tel: or