Business ethics and the modern GC: How to navigate public scrutiny

Should in-house lawyers do the legal thing or the ethical thing? – there can be a subtle difference. Lawyers from UK companies tell how they balance business ethics, high public expectations and legal exactitude in this roundtable held by The Lawyer and Bryan Cave Leighton Paisner.

Lisa Mayhew, BCLP: You all work in very different businesses in multiple jurisdictions, so there are varying legislative, social and cultural issues. To what extent is the ‘right thing to do’ guiding your thinking as well as what is right legally?

Dana Grey, Pension Protection Fund: Part of the discussion has always got to be ‘can we legally do this?’ The answer might be yes, legally we can but is it the right thing for us to do? Is it the right thing for our stakeholders? Is it the right thing for us optically as a player in this market? A good in-house lawyer and compliance and ethics adviser always has the letter of the law and the spirit of the law in their mind.

Kavita Singh, MRC Global: For us, it’s the constant balancing of opportunity with regulation, and we have to be creative to show we are adding value.

Andrew Elliott, PGIM Real Estate: To do that, increasingly you have to demonstrate that you are more than just a lawyer. If we find ourselves on the front page of the FT because we made a bad decision that may not be legally wrong people won’t care about that nuance. What they care about is that it was a bad thing to have done.

Ingrid Cope, Coca-Cola: Consumers don’t distinguish between business mistakes and ethical mistakes – they don’t put them in that bracket. I work extremely closely with our public affairs team and everyone else in the business because we’re all stewards of the brand and that is how I would define my role.

Mark Maurice-Jones, Nestlé: And particularly with social media – news moves on quickly and if you’re just sticking to the law you’re in trouble. At Nestlé people talk about reputation and that is paramount. I don’t necessarily see myself as the upholder of doing the right thing – for me it’s about driving the culture throughout the organisation.

Andrew Elliott, PGIM Real Estate: You need to feel you are confident on your own so just because the CEO says it’s a good idea, if you have doubts you should be able to raise those doubts and not feel in any way constrained about that, because they may not have even thought about those issues.

Polly Russell-Stower, Ultimate Finance: This is a good opportunity for general counsel to step forward as leaders because you are the conduit or mediator between the managers and the other members of the team who have wonderful ideas.

David Hirschfield, Galliard Homes: For us it’s about building a reputation internally and externally to consumers who are going to be buying our properties. One deal, one smear, could ruin it in a second.

Catrin Griffiths, The Lawyer: What’s been evident over the past three months in particular, with the Harvey Weinstein case, is that there is a shift completely, in public mood and public perception, about what is acceptable behaviour as a human being but also in the workplace. To what extent can you anticipate that shift and factor in changes that are happening socially and politically?

Dana Grey, Pension Protection Fund: You have to have your finger on the pulse of changing attitudes. What might have been acceptable business practice a few years ago may not be now. For example, the activities exposed in the Paradise Papers were not illegal but optically and reputationally they can damage the business. You have to have an eye on what the changing attitudes are.

Ingrid Cope, Coca-Cola: I’d say that’s a key thing we bring to the table – our capacity for future-proofing the business. What they’re asking for is our analysis of their plans and strategy; that’s a forward-looking role, we’re not looking back at what we have done.

David Bateson, Canon: I don’t think you can take responsibility as the general counsel alone. Make it clear it’s everybody’s responsibility – not just the leadership team but the entire organisation. The point is that you’ve got to follow the law but also address questions such as – if what you’re going to do came out in public would it embarrass you or make you feel uncomfortable in front of your friends and family? These are useful questions to ask.

Lisa Mayhew, BCLP: In the post-Weinstein world, what’s been amazing is the way it’s gone viral in terms of how prepared people are to call out wrong behaviours.

Mark Maurice-Jones, Nestlé: The word ‘compliance’ is in itself negative and we avoid using it at Nestlé´. If you ask someone how they would feel if they came into the office and were recognised as a person of integrity that does the right thing, most would say they aspire to that. If you tell people that they’re just going to be punished, it creates a culture of fear.

David Bateson, Canon: I like Richard Thaler’s ‘nudge’ theory – that you focus on positive behaviour. Most people are willing to do that if it’s set up properly.

David Hirschfield, Galliard Homes: We’ve tried to instil a ‘noble aim’ culture because if you have that and are open and honest with employees, they feel they can be open and honest with senior management who are asking them questions.

Matthew Dobson, Swiss Re: You’ve got to pick your battles and you’re not always going to win. I think I have a moral compass but I’m a little bit shy of sharing that immediately, so I always try and give the legal argument first. Sometimes you need ethics to guide you because you might have two pieces of regulation and not be able to comply with both. These are hard judgement calls. You won’t always please all the people and all the regulators, and you’ll sometimes get the wrong decision. What’s important is to be able to show you laid out the reasons for the decision. The court of public opinion is harsh and judgemental, but showing you had some process will help keep people out of jail.

Kavita Singh, MRC Global: Practically speaking, you may have to work harder in certain jurisdictions on ‘speak out’ campaigns, where culturally there is a little more radio silence.

Clare Bates, Convatec Group: We operate in more than 100 countries and the differences in culture between those countries are challenging. Asking people to speak up can be hard. We have whistleblowing procedures in place but stopping them being abused can be tough. We take every instance that is reported seriously and investigate it, and it could turn out to be an HR issue. You can’t not investigate because it could be something serious.

Lisa Mayhew, BCLP: Is there a line when considering whether to investigate?

Clare Bates, Convatec Group: We’re in healthcare and highly regulated. It will hit the front pages if we don’t do it right. People care passionately about healthcare and there is a suspicion that healthcare companies are out to get them. Now we’re in the FTSE 100 the interest in what we do is on a different scale so we put more analysis into what we say and what the reaction will be – of the press and of healthcare groups. More scrutiny now goes into the things we say.

Soren Lundsberg-Nielsen, G4S: There is a whole other category of decision-making, where the business deliberately does something that could have consequences. An example would be a pharmaceutical company making decisions around animal testing – you can either say ‘we don’t do it’ or ‘we do it, complying with all the regulations around it, because we can see the
benefit to the population’. But you know it could blow up into a reputational issue at any minute. That’s why you take a decision; you believe you can defend it but you also know there’s a risk.

Andrew Elliott, PGIM Real Estate: It might seem that the risk-free approach would be to do nothing, but that will never get you anywhere.

Susan Crichton, TSB Bank: At TSB compliance sits within risk while legal is separate, which isn’t the law necessarily. We’re a bit of a test case for this because we were split off from Lloyds to satisfy state aid requirements and the management team made a whole series of decisions about transparency. When I go to management meetings I’m not the one who says ‘would you sell that to your grandmother?’ The whole team will now say ‘we can’t do that’. This is driven by the fact that we’ve done away with sales targets.

Crisis can create clarity of thinking – they knew what they didn’t want to be.

We now have a group where 50 of our employees come to the management team and are asked difficult questions such as ‘is the performance management system working?’, ‘do you feel pressured in the branches to sell and what do you think about this?’ and ‘what’s your view on the grading structure and the unions?’.

This is one of the few places where I don’t feel I have to fly the flag.

Catrin Griffiths, The Lawyer: When you have incentives that encourage particular behaviours, to what extent can you modify and push back against that?

David Hirschfield, Galliard Homes: We have employees who are remunerated on how well they do – sales teams are commission-oriented, for example. We acknowledge that you need to incentivise people and money is one way.