I recently came across an article by Tiana Headley of Bloomberg Law that discussed client pressures on law firms to take public stands on social issues. The same issue was front and center in the excellent book by David Enrich Servants of the Damned. These issues are often controversial and divisive and arouse passions among both law firm partners and clients.
It is becoming more and more common for individuals and businesses to take public stands on various social and political issues. This trend is certainly evident in the legal industry, where clients are beginning to demand that their law firms also take positions on important social issues.
One reason for this shift is that clients are becoming increasingly aware of law firms’ potential influence and power in shaping society. They believe—rightly or wrongly- law firms have the resources, expertise, and connections to significantly impact a wide range of social issues. As a result, clients may call on their law firms to use this influence to promote the change they might desire.
Another possible reason for this trend is consumers’ and stakeholders’ growing expectations of corporate social responsibility. This expectation is, in turn, being applied by clients to their law firms, with clients demanding their law firms as institutions align with their own values and beliefs on social issues.
Granted, there is the opportunity for law firms to positively impact society and thereby build a stronger brand and reputation.
But taking a stance on social issues is tricky for law firms. They must balance their duty to their clients with the values and beliefs of the law firms’ partners—the business owners.
But taking a stance on social issues is tricky for law firms. They must balance their duty to their clients with the values and beliefs of the law firms’ partners—the business owners. Law firms must also consider the potential legal and practical implications of taking a position on a particular issue.
There can also be a real business risk to law firms that take public positions on controversial issues. For example, by taking a stand some clients applaud, law firms risk pissing off other clients who might disagree with those positions. And taking a stand may place the firm at odds with individual positions law firm partners have taken in representing clients.
There is also the potential internal disruption from internal firm disagreements among partners. A group of partners actually left the firm I was with because they disagreed with a decision the firm made with social implications. The disruption and upheaval were immense and took years to get over.
In a real sense, a partner’s compensation can be placed at risk by taking a position if a client decides to seek new counsel as a result of a firm position.
In a real sense, a partner’s compensation can be placed at risk by taking a position if a client decides to seek new counsel as a result of a firm position. At the very least, it could lead to some uncomfortable conversations. And the demanded position may place partners in the firm at odds with their clients and threaten their books of business.
Unlike businesses that are directed by senior management or shareholders, for better or worse, law firms are partnerships. They are by and large consensus-run organizations. There is usually no CEO who can unilaterally make policy. There are no shareholders other than the partners. Law firms are made up of strong-willed individuals–individuals who value their business –and their independence. Don’t for a minute think those partners whose clients might have strong positions won’t fight tooth and nail for their clients and themselves.
When I was a young partner, the firm was run by a managing partner who had an ironclad rule. Each and every partner was free to give to whatever charity they wanted as long as they gave something to some organization. But the firm itself would not give anything to charities. The managing partner believed it was inappropriate for the firm to dictate and decide what to give and to whom. That making that kind of decision interfered with the independence of the partners and could adversely affect their books of business.
When it comes to social issues, it’s hard to draw the line between taking a position because it’s clearly the right thing to do for the firm and taking a position because a substantial client demands it
As you might expect, the firm caught a lot of heat for this position. And as time passed, the across-the-board approach was no longer tenable. As a responsible business, the firm was ultimately forced to make charitable donations to a selected group. But there’s some merit in letting partners decide issues like this for themselves individually.
When it comes to social issues, it’s hard to draw the line between taking a position because it’s clearly the right thing to do for the firm and taking a position because a substantial client demands it. It’s hard to keep everyone—partners and clients—happy because so many of these issues are tinged with passionate disagreement. Law firms might be unable to never take positions on these issues, but they should do so cautiously and try to have some bright lines about what they will and will not do.
Maybe some ironclad rules are a better solution after all.