New SRA Guidance: Solicitor's Regulation Authority empowers in-house solicitors

The Solicitors Regulation Authority (SRA) has issued various updated and new guidance notes following its review of the in-house legal sector.

The overall objective is to emphasise to in-house solicitors the importance of their professional obligations, giving practical advice on key areas of challenge within their roles.

With this in mind, the guidance notes provide useful direction on difficult issues such as what to do if wrongdoing is suspected, and on legal privilege. In addition, two of the notes are aimed at employers and the Board to help in-house solicitors highlight where their professional obligations take priority over a duty to their organisation.

These SRA guidance notes are essential reading for in-house solicitors. In this briefing, we summarise the primary message of each new or revised set of guidance - concentrating on the new note on privilege for in-house counsel first, as this is a key focal point. While the guidance does not contain any new regulatory standards or requirements, the SRA will consider compliance with this guidance when exercising its regulatory functions.

1. New: guidance on legal professional privilege when working in-house

   New guidance is provided on legal professional privilege (privilege) for in-house solicitors, which addresses its unique complexities for in-house solicitors. In particular, this covers the need for in-house solicitors to:

   • identify the client for each instruction;
   • understand what communications attract privilege, particularly when working in an in-house role and any given communications combine both legal and non-legal elements; and
   • understand when privilege can be lost or in fact never existed.

   What does the privilege guidance note contain?

   The note is intended as a starting point to address specific questions relevant to in-house solicitors. It gives a top-level summary, covering: the purpose of legal professional privilege; the relationship between confidentiality and privilege; the two types of privilege; the iniquity exception; waiving and losing privilege; care when labelling; privilege where there are (internal or external) investigations; and reporting wrongdoing and making disclosures when privilege comes into play.

   What does the note say about legal advice privilege?

   The note particularly, and understandably, focusses on legal advice privilege (LAP) which attaches to confidential communications between a client and solicitor, made for the dominant (main) purpose of giving or receiving legal advice. It:

   • Acknowledges that given the various hats in-house solicitors might wear, and the way in which communications move around in business and within client organisations (for instance, multi-addressee emails), identifying LAP can be complex.
   • Highlights that it will be fact-specific whether the dominant purpose of the document or communication is the giving or receiving of legal advice.
   • Sets out six crucial points about dominant purpose drawn from case law.
   • Explains 'client group' in an in-house context - here, LAP is limited to communications between the client group (not the client - who is different) and the solicitor - and gives pointers to consider when identifying the client group, and for defining the client group when receiving advice from external lawyers.

   What does it say about waiving and losing privilege?

   The note advises in-house counsel:

   • To remind colleagues that referring to extracts or summaries of legal advice in emails, minutes of meetings or other forms of communication might mean inadvertently waiving privilege.
   • There should be strict controls around sharing privileged material - particularly in large organisations. Storage and security needs to be considered. Careful and separate consideration must be given to attachments to emails.
   • In corporate groups, sharing of privileged material beyond the client can be an issue, or when material is shared with third parties. Common interest waiver or limited waiver can be used in corporate groups or on a corporate transaction. It will boil down to carefully identifying and documenting the common interest, then sharing relevant documents.
   • When considering privilege, issues should be looked at carefully at the time rather than retrospectively, and file notes should be made that document intention at the time.
   • To resist any pressure from the client to use the label of privilege to avoid disclosing documents or communications.

   What does the guidance say about privilege and investigations?

   Privilege issues may be particularly relevant where the client is the subject of an internal or external investigation. It will be fact-specific whether LAP applies where in-house solicitors are instructed to conduct an internal investigation. It will also be fact-specific as to whether documents created during an internal investigation will be protected by litigation privilege - particularly where prepared for the dominant purpose of adversarial litigation. Creating or maintaining LAP in parallel external investigations conducted by law enforcement agencies and/or regulators may also need to be navigated.

   What does it advise about whistleblowing and privilege?

   The new guidance clarifies that protections may not extend to privileged material pursuant to section 43B(4) of the Employment Rights Act and so in-house solicitors must tread carefully when balancing reporting obligations with privilege considerations. Generally, internal whistleblowing will not breach privilege but guidance and policy documents should be reviewed.

   What does it say about making disclosures in relation to privilege?

   The guidance recognises the tightrope an in-house solicitor may need to tread when considering whether to share information or whether to report wrongdoing and therefore disclose information which may be privileged. Advice includes explaining the nature of privileged material to the client at the outset, along with situations where an obligation to report may arise; where privilege may be overridden, and when seeking independent advice may be appropriate.

   Pressure to withhold information

   The SRA reiterates that the trust and confidence the public has in the legal profession is damaged in situations where in-house solicitors may be pressured by the client to wrongly suppress the disclosure of information, and where privilege is wrongly asserted solely on the basis that lawyers are merely copied into the correspondence. The guidance sets out steps for handling such situations and the advice is clearly re-stated: in-house solicitors must resist being pressured or persuaded to act contrary to their regulatory obligations.

2. Identifying the client when working in-house

   Updated guidance is shared on the importance of identifying the client:

   A fundamental responsibility of in-house solicitors is to clearly identify the client - typically the employer - to ensure compliance with SRA Principle 7 (the obligation to act in the best interests of the client). The guidance acknowledges that this task can be difficult in organisations with complex structures. Key points include:

   • Clarity in instructions: check the contract of employment to identify the employer, and this may identify to whom advice is to be provided. Note the requirement to act in the best interests of the organisation as a whole. This means, in conjunction with the governing body, having regard to the organisation's performance, strategic objectives and risk management as a whole. Ultimately, if the interest of the governing body is not aligned with the organisation's interests, then a solicitor will need to act towards the organisation's interests.
   • Confidentiality: a solicitor is generally required to disclose information within their knowledge that is material to the client. That means a solicitor might not be able to treat conversations with employees or colleagues as confidential - they may have to disclose them internally.
   • Conflicts of interest: in-house solicitors are subject to professional obligations to avoid conflicts of interest - for example, where a solicitor is asked to act for a parent and subsidiary, they will need to consider the risk of a conflict arising. They will need to consider if the parent and subsidiary have aligned interest? Will there be a lot of negotiation? Will the relationship change? Can the information relating to each of them be kept separate and confidential? If it looks like there could be an issue with any of these points, it may not be appropriate for the in-house solicitor to act for both parties.
   • Internal policies: develop and maintain robust policies to effectively monitor and record risk.
   • Personal advice: the guidance also touches on providing advice to colleagues on personal matters, emphasising boundaries and ensuring that there is no conflict of interest. The guidance acknowledges that it can be possible to provide personal advice. It encourages in-house solicitors to:
     • Check their employment terms and internal policies first to see whether they are allowed to advise colleagues.
     • Think through the professional obligations (e.g. confidentiality, conflict and privilege).It gives the example of how advising a colleague on an employment contract might place a solicitor in conflict with their employer.
     • Consider if there is any applicable professional indemnity insurance cover and whether that extends to advising colleagues on personal matters.

3. Reporting concerns about wrongdoing

   Updated guidance is given on how to deal with reporting concerns about wrongdoing:

   The guidance acknowledges that an in-house solicitor's core obligation is to act in the best interests of their client. However, it also flags that solicitors have wider public interest duties to uphold the rule of law, act with independence, honesty and integrity, and maintain public trust.

   These wider public interest duties will, where they conflict with the client's interests, override the obligations to the client and the organisation. This means there can be circumstances where a solicitor is obliged to do something that is not in the best interests of their client.

   This does not mean that an in-house solicitor has an obligation to go public or go to an external regulator on the first suggestion of an issue.

   First, the guidance flags that not all conduct requires any form of internal or external reporting. A client choosing not to take an in-house solicitor's advice is not in itself an issue - it could be that the position is not certain and/or the organisation has taken a proper decision to accept some legal risk. However, the guidance identifies that the in-house solicitor is expected to report issues involving exploitation of legal loopholes to defeat legislation, potential or actual breaches of regulatory requirements or of the law, or a risk that requires action or reporting to an external body.

   Where an in-house solicitor has a concern about certain actions or proposed actions, they must raise their concerns. They must not remain silent or downplay an issue, even if they feel under pressure to do so.

   The in-house solicitor should normally raise the issue internally. However, the in-house solicitor will need to consider if it is necessary to report to an external organisation, such as a regulator or a law enforcement agency. In some situations, external reporting may be mandatory, in others the in-house solicitor must carefully balance their obligation to act in their clients best interests and maintain confidentiality against the wider public interest duties.

   The in-house solicitor should inform their employer in advance where they need to raise concerns externally.

   If a solicitor feels their manager is ignoring their concerns, the organisation's reporting procedures should be followed (where appropriate), and escalated as necessary depending on the scenario:

   • Bribery: where there is suspected bribery, the guidance has been updated to emphasise the importance of reporting suspicions internally to the CEO or the governing Board, and potentially externally to the Serious Fraud Office.
   • Anti-money laundering (AML): where there are AML concerns, the guidance recommends escalating issues to the Board of Directors and filing a Suspicious Activity Report with the National Crime Agency.

   A solicitor must not try and suppress exposure of wrongdoing or draft a non-disclosure agreement (NDA) which prevents someone reporting to a law enforcement agency. See the SRA's notice issued in August 2024 on the appropriate use and drafting of NDAs.

   Where a solicitor has a leadership or management role, they have a responsibility to make sure they do not facilitate the wrongdoing of those they manage or lead. They should address any issues that they identify. Also, the SRA will ask the most senior or lead solicitor to account to them as the contact point for regulatory matters regarding solicitors and legal work within an organisation.

   Practical tips:

   • Keep detailed written records of all internal and external reporting actions taken to meet regulatory obligations (such as the nature of concerns, what actions were taken, the outcome and reasons for any decisions); and
   • Consider whether continuing in the role is possible without being complicit in such behaviour if the governing Board continues to act illegally or unethically, despite legal advice.

   The new guidance also highlights obligations to report concerns about toxic workplace cultures, such as repeated sexual harassment allegations. Recommendations include:

   • internal reporting: raise concerns through appropriate internal channels;
   • external reporting: consider external reporting when internal measures fail; and
   • legal protections: consider raising a protected disclosure under the Public Interest Disclosure Act 1998.

   LawCare provides free confidential emotional support and the Solicitors' Assistance Scheme offers free confidential advice to solicitors, on any issues (work or home).

4. Internal investigations

   Updated guidance is provided on where a solicitor is involved in conducting internal investigations:

   This update provides practical guidance to solicitors where they are involved in conducting internal investigations to help understand and manage regulatory risks and issues.

   The guidance acknowledges that there is no one-size-fits-all but sets out practical guidance for conducting an investigation, including:

   • Defining scope: establish clear written terms of reference to parameters and manage risk.
   • Independence: ensure investigators are free from conflicts of interest and maintain confidentiality and independence.
   • Evidence collection: properly obtain evidence, such as emails, messages, calendars and document metadata.
   • External support: consider whether it may be appropriate to appoint an external investigator for reasons of impartiality.

5. New: separate document for governing boards, chief executives and senior officers in organisations employing in-house solicitors

   Similar to the guidance for employers, this new guidance is aimed at helping Boards and CEOs understand the role of the in-house solicitor.

   The new guidance highlights the importance of ethical behaviours compliance and creating systems for raising and addressing concerns.

6. Guidance for employers on a solicitor's professional obligations

Updated guidance for employers on in-house solicitors' professional obligations and how employers can support their in-house solicitors:

This guidance is aimed at employers and HR professionals who manage and supervise legal teams to help them understand the unique role and duties of in-house solicitors. It sets out what in-house solicitors can and can't be expected to do and that the role of a solicitor is, ultimately, to ensure the organisation behaves legally and ethically and to manage risk.

It reiterates how solicitors are there to provide independent and impartial advice, avoid conflicts of interest and act in the best interests of the organisation.

Embedding the new guidance within in-house lawyers' roles

This new SRA guidance serves as a vital resource for in-house solicitors navigating complex professional obligations. By understanding these updates and implementing best practices, in-house solicitors can better protect themselves, their organisations, and the legal profession's reputation.

A copy of the full guidance on legal professional privilege when working in-house is available on the SRA website. To discuss any of the points it raises or any other legal services related matters, please contact David Lowe, Emma Carr, Katharine Graff or Louise Macdonald.

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