Suzanne Le Mire

Independence and Independent Company Directors

One of the standard regulatory reactions to troubling events in the corporate world—such as the collapse of one of Australias largest insurers, HIH, the Enron failure in the US, and the Polly Peck accounting scandal in the UK—has been regulation that mandates formally independent directors, and plenty of them. Yet some of the most recent initiatives paint a more mixed picture than usual. For example, in Australia the most recent changes to the ASX Corporate Governance Principles are focused on diversity. In the UK, the Walker Review suggested that expertise was the answer. This paper argues that there is a growing recognition that a reliance on formal independence, as it has been conceived in corporate governance regulation, is unsatisfactory. This paper deconstructs the concept of independence and uses these different understandings of independence to evaluate how the regulation of independent directors has evolved in recent years.

Testing Times: In-House Counsel and Independence

While lawyers’ independence initially developed as a way of protecting lawyers and their clients from the power of the state, it is now also associated with the protection of the public interest from lawyers who are too close to their clients. In this context independence is seen as a way of ensuring that lawyers act ethically, that is, with regard to their overriding duty to the court and the administration of justice rather than according to sectional, personal or economic interests. It has been noted in various contexts that lawyers who work closely with powerful clients may be less able to withstand client pressure and uphold their obligations to the administration of justice. In-house lawyers are seen as particularly vulnerable on this front due to their position within the client’s organisational structure. On the other hand some have argued that the position of in-house lawyers gives them greater potential to exercise independent judgment and influence the ethical behaviour of their organisation. This paper examines independence generally. It argues that it is multi-faceted with the essential aspect being the capacity for independent judgment or independence of mind. This is supported by status, power and structural protections. The courts have looked at the independence in-house counsel in the context of claims of client legal privilege (also known as legal professional privilege). They have developed a number of tests to determine whether particular in-house lawyers are sufficiently independent to attract privilege. The paper considers the way the courts have interpreted independence. The judicial tests reveal a number of different approaches to independence with limited connection to the core concepts.Independence has long been seen as a key to ethical lawyering. It is associated with improving the quality of legal work,1 and promoting advice that aligns the client’s interests with the ‘set of general social norms’.2 It is seen as so important that it ‘defines the lawyer as a professional’.3 Yet lawyers’ independence also presents some difficulties. Despite the exhortations in its favour over many years, the term remains vague and under-developed.4 Without a clear concept of what is being sought, it is difficult to ascertain what value can be given to it, and what techniques of regulation can be used to encourage it. The process becomes a fairly unproductive one of examining lawyers for traits of independence and failing to find any.5 This has led more than one commentator to doubt the value of independence as a way of considering legal practice.6 Legal Ethics, Volume 14, Part 1

A company ID: corporate governance

The independent director is hailed as a tool to monitor and improve corporate management and decision making. This role is premised on the belief that directors who are independent of a corporation can be faithful guardians of its interests. However, powerful group influences can sully this, write Kath Hall and Suzanne Le Mire.

Lawyers as Whistleblowers: The Need for a Gatekeeper of Justice Whistleblowing Obligation/Exception

1 University of Adelaide and University of Melbourne, respectively. We are grateful to Anita Mackay for her very helpful research assistance in this project. A more detailed exposition of this argument can be found in a forthcoming article: Christine Parker, Suzanne Le Mire and Anita Mackay, ‘Lawyers, Confidentiality and Whistleblowing: Lessons from the McCabe Tobacco Litigation’ (2017) 40(3) Melbourne University Law Review 999. 2 Dale used the term ‘miscarriage of justice’ and stated that he was motivated by the belief that ‘there may have been a fraud committed on the Supreme Court of Victoria and that a full investigation was required’: quoted in William Birnbauer, ‘Lawyer Revealed as Smoking Source’, The Age (online), 28 January 2007. In later litigation, it was argued that his whistleblowing fell into the ‘fraud on justice’ exception to lawyer–client privilege: British American Tobacco Australia Services Limited v Slater & Gordon Ltd and Roxanne Joy Cowell [2009] VSC 619 [158]. 3 McCabe took action against British American Tobacco for personal injury arising from her smoking of cigarettes manufactured and sold by that company and its predecessors. The facts are described in a case Dale brought against Clayton Utz; see Christopher Anthony Dale v Clayton Utz (No 2) [2013] VSC 54, [101]. Lawyers as Whistleblowers: The Need for a Gatekeeper of Justice Whistleblowing Obligation/Exception

A temporary ‘fix’ for a permanent problem: the appointment of auxiliary judges in South Australia

In early April 2016 it came to public notice that the South Australian state government had sought to appoint three District Court judges to the superior Supreme Court on an auxiliary or temporary basis. This kind of appointment is not unusual within the Australian court system as cash-strapped state governments seek to add judicial officers to the ranks, without committing to the expense of a permanent judicial appointment. According to a statement made by the local Attorney General, ‘They are necessary from time to time to hear cases that may require specific legal expertise, or in cases where local judicial officers have a conflict of interest’. More broadly, however, they are being used to address caseload demands cheaply. In this case, however, the appointments did not play out as the government had hoped. One of the three District Court judges, Judge Barry Beazley, declined to take up the appointment. While he made no public statement as to his motivation, one media source suggested that his refusal was, according to ‘insiders’, as ‘he believes temporary judges won’t help the backlog and that the government should adequately resource the courts’. His reported decision was applauded by the local legal profession, with the Law Society President, David Caruso, stating he had ‘distinguished himself’. In Australia, judicial appointment is the gift of the executive and is not without episodes of considerable controversy. Most recently, the appointment of a Chief Magistrate to the position of Chief Justice of the Supreme Court of Queensland led to an unsightly judicial spat played out in newspapers across the nation, and ultimately to the resignation of the judicial officer in question. Despite a degree of concern about methods of appointment and a persistent lag in the appointment of a diverse judiciary,

Addressing bullying in the Australian legal profession

In Australia a concern has been building about bullying in the legal profession. This has not arisen in isolation. It reflects broader community disquiet that has led to an amendment to the Fair Work Act 2009 (Cth) to define workplace bullying and provide bullied workers with an avenue for seeking orders to prevent bullying behaviours. In the legal profession, some extra impetus for reflection and action has been generated by a number of events in the public domain that suggest there is a concerning level of bullying being modelled at the higher echelons of the profession and pervasive in legal practice. This suggests that the ‘way lawyers work’ may be ‘a significant explanatory factor in lawyers’ experiences of bullying’. Several public statements by eminent judges pointing to a judicial culture provided a significant catalyst for reflection on bullying. On his retirement from Australia’s highest court in 2013, former Justice Dyson Heydon wrote of ‘stronger judicial personalities [who] tend push the weaker into submission’. He also referred to tactics where a judge might interrupt counsel ‘brutally and continuously’ and then ensure these advocates are further ‘deflated by contemptuous grunts and skeptical snorts and incredulous eyerolling’. Another retired High Court judge, Michael Kirby, expressed further concerns in the same year, noting that even the ‘High Court of Australia has not been exempt from unpleasant behaviour and attempted bullying’. Practical examples of problematic judicial conduct were also exposed when the conduct of a magistrate was examined before the New South Wales Parliament in proceedings for her removal. Media reports that the Deputy Director of Prosecutions in NSW warned prosecutors that bullying was a disciplinary matter were cited as evidence the profession was taking bullying seriously. Around the same time several reports exposed broader problems experienced by members of the profession. The Law Council of Australia commissioned a report to

A Spotlight on Judicial Regulation in Australia

(2014). A Spotlight on Judicial Regulation in Australia. Legal Ethics: Vol. 17, No. 2, pp. 299-312.

Developing a More Complete Understanding of the Independence of Corporate Directors

One of the standard regulatory reactions to troubling events in the corporate world -- such as the collapse of one of Australia’s largest insurers, HIH, the Enron failure in the US, and the Polly Peck accounting scandal in the UK -- has been regulation that mandates formally independent directors and plenty of them. Yet some of the most recent initiatives paint a more mixed picture than usual. For example, in Australia the most recent changes to the ASX Corporate Governance Principles are focused on diversity. In the UK, the Walker Review suggested that expertise was the answer. This paper argues that there is a growing recognition that a reliance on formal independence, as it has been conceived in corporate governance regulation, is unsatisfactory. This paper deconstructs the concept of independence and uses these different understandings of independence to evaluate how the regulation of independent directors has evolved in recent years.

From Scandal to Scrutiny: Ethical Possibilities in Large Law Firms

In the past few years a number of events have undermined the reputation of lawyers involved in large law firm practice. As Enron melted down in 2001, the role of its lawyers came under scrutiny amidst claims that they had sanctified deals that had hidden liabilities from the market.1 In 2002, document destruction advised by several large law firms led an Australian Supreme Court judge to strike out the defence of a tobacco company involved in litigation against a terminally ill smoker.2 The activities of large law firm lawyers who supported the tobacco industry came in for particularly strident criticism by a US judge: