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How well embedded is ethics in your firm culture?

Posted in Culture, Leadership, Strategy, Values

While ethics is – or should be – important in all businesses, it is especially relevant for businesses that are trust-based, such as legal practices. Cynthia Schoeman of Ethics Monitor joins us as a guest today to provide her expert views on this important subject.

Leadership commitment to ethics is a primary factor in establishing an ethical culture in a trust-based organisation like a law firm. Leader behaviours effectively demonstrate to employees, colleagues and clients what will or won’t be tolerated. (Sean Larkan 2012).

The services and advice offered by the legal profession require a high level of client trust both as regards expertise and integrity. This exceeds the level of trust required in many other businesses, for example, in the retail industry where a customer’s interaction may only entail a transactional purchase.

A high level of trust is very advantageous for the success of a legal practice. Among other benefits, it deepens and strengthens relationships and fosters client loyalty. Given this correlation (between trust and success) it should follow that building and maintaining trust is imperative.

There are many ways in which a practice can generate client trust. It builds trust when the practitioner assigned to the matter has the necessary knowledge and experience, and when he/she acts with integrity, in accordance with the law, and in the best interest of the client.

Underpinning these factors, it is crucial to also have an ethical workplace culture to serve as a foundation to guide the business and the behaviours and decisions. While an ethical culture is not an absolute guarantee of high levels of trust, it is a non-negotiable pre-requisite.

Despite the clear importance of ethics and trust, the legal profession does not necessarily enjoy a great reputation globally. A Gallup poll in the US in late 2011 assessed perceptions of honesty and ethics in different professions. Nurses were considered the most honest and ethical, with a score of 84%. Lawyers only scored 19% – even bankers were viewed more favourably with a score of 25%.

Leadership’s commitment to ethics is a primary factor to create an ethical culture. Their behaviour effectively demonstrates to their employees, colleagues and clients what is and isn’t acceptable. Internally this shapes the company’s culture and reinforces or undermines the company’s values.

The goals and strategies the company’s leadership pursue are also relevant. When, for example, they promote profits above all else this can skew culture and affect the interests of clients. In the legal profession this is often manifest in the goal of maximising billable hours (yes, many firms and clients still use them!), which can be an area of particular ethical vulnerability.

Delivering on the targets set for billable hours is generally in employees’ best interests, earning them benefits such as recognition, promotion, salary increases or bonuses. This can easily lead to expanding the scope of work unnecessarily or, worse, to inflating billable hours. Although unethical, it can foster an ‘ends justifies the means’ view and sub-culture.

Leaders therefore need to consider what behaviours their business goals and measures are likely to encourage, and to avoid ill-conceived goals in an effort to avoid unintended consequences. In the case of billable hours, this means that billable hours cannot be the only criterion for evaluating someone’s performance or contribution to the practice.

A high level of transparency is a further factor that adds to an ethical culture. Since transparency is synonymous with openness and honesty and involves sharing all relevant information, it builds and maintains trust. (Note that sharing ‘relevant’ information accommodates the need for client confidentiality.)

Maintaining a high level of ethical awareness in the workplace, and regularly measuring and reporting on the practice’s ethical status all support the preservation of a high-trust, ethical culture.

The commitment which the pursuit of an ethical culture requires is more than met by the rewards. Apart for enjoying clients’ trust, it reduces the risk of ethical failure, fraud or corruption and the associated costs. More importantly, it should also create a source of competitive advantage, which is as relevant for the legal profession as other businesses.

Since many sources of competitive advantage are limited because of the ease and speed with which they can be copied, it places greater value on a unique source of competitive advantage. Workplace ethics offers such a source: it is not easy to copy, cannot be bought or sold, cannot be owned, but rather must be lived every day so that it becomes an inherent part of the culture.

When ethics and trust are so integral to the success of an industry – as is the case for the legal profession – the only question which remains is why they are not acting accordingly and visibly advocating and nurturing an ethical culture.

Cynthia Schoeman, based in South Africa, is managing director of Ethics Monitor, which provides support for the proactive management of workplace ethics. This includes the Ethics Monitor, a web-based ethics survey, which enables organizations to measure, monitor and report on their ethical status. (+27 11 447 7661; Mobile +27 82 821 372 cynthia@ethicsmonitor.co.za)