HANDY

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... FOR IN-HOUSE COUNSEL

Law Society of New South Wales Corporate Lawyers Committee

AIM
In-house lawyers are subject to the same ethical rules as
private practitioners.
However, in-house lawyers face challenges that do not
apply to private practitioners.
The Corporate Lawyers Committee of the Law Society of
New South Wales has prepared this document to assist
in-house lawyers in dealing with these challenges.
This document should be read in conjunction with the
Legal Profession Act 2004 (NSW) and the Legal Profession
Regulations 2005.
This document is not part of the Revised Professional
Conduct and Practice Rules 1995 (Solicitors Rules)
under the Legal Profession Act 2004. The contents are
not binding on the practice of in-house lawyers and are
provided to be instructive only. Under some headings,
the relevant Solicitors Rule has been included in square
brackets for easy cross reference.

Acknowledgment
The Law Society of New South Wales Corporate Lawyers Committee wishes to
acknowledge Councillor Coralie Kenny for initiating the production of this document
and to thank its 2011 committee members for their valuable and practical input.

Disclaimer
This document has been produced solely for use by in-house lawyers to provide
general assistance in relation to some aspects of in-house practice. It is not
exhaustive of issues which in-house lawyers may encounter, nor does it constitute
legal advice. It is a general guide only and practitioners must take care to fully
consider the circumstances and laws applicable to their circumstances. While every
care has been taken in the production of this document, no legal responsibility or
liability is accepted, warranted or implied by the authors or The Law Society of New
South Wales and any liability is hereby expressly disclaimed.
Ethics Unit
If you need more information about your professional and ethical obligations,
you can contact the Ethics Unit.
T: (02) 9926 0114
F: (02) 9221 5804
E: ethics@lawsociety.com.au
2012 . The Law Society of New South Wales
Except as permitted under the Copyright Act 1968 (Cth), no part of this publication
may be reproduced without the specific written permission of The Law Society of
New South Wales.

HANDY HINTS FOR IN-HOUSE COUNSEL

1: The same professional
obligations apply
As a lawyer who practises in-house in New
South Wales (often referred to as a corporate
lawyer), you have the same professional
and ethical obligations as any other legal
practitioner in New South Wales.
First and foremost, you are an officer of
the court.
Further, you must comply with the Legal
Profession Act 2004 (NSW) and the Legal
Profession Regulations 2005. You must also
comply with the Solicitors Rules and you
should be familiar with the legislation that
governs the conduct and obligations of your
profession. [Rule 4]

2: Your client
As an in-house lawyer, you are employed by
your client, which is generally a corporation,
and you owe your professional obligations as
a lawyer to your client.
You do not owe your professional obligations
to the persons who manage your client,
whether the Chief Executive Officer or
Managing Director, individuals in senior
management positions, or directors of the
Board of your client.

3: Your priorities
Your ethical obligation priorities are the
same as for any other lawyer. Your first
priority obligation is as an officer of the
court, like any other lawyer. Like any other
lawyer, your next priority obligation is to act
in the interests of your client.
These obligations may at times appear to
conflict with the obligations imposed on
you as an employee, although, as with an inhouse lawyer, employees have obligations to
their employer. If, for example, an individual
in a senior management position is seeking
legal advice to support an agenda that is not
in the interests of the employer company,
then as an in-house lawyer your obligation is
to the company, not to the senior executive.
It is prudent when establishing the terms of
your employment as an in-house lawyer to
ensure your employment contract clearly
recognises these obligation priorities.

4: What are in-house lawyers

there for
As an in-house lawyer you are there to help
your client achieve its business objectives
whilst being aware of opportunities
and constraints within its relevant legal
environment.
Your role in your clients organisation is
therefore primarily to recognise and provide
pro-active input into the management of legal
risks. You also have an opportunity to ensure
your client complies with the law and has in
place good corporate governance practices.
The in-house lawyer is often thought of as the
organisations conscience or its protector.
Although the Board and senior management
of your client also have legal obligations to
do the right thing, it is often the role of
in-house lawyers to constantly and vigilantly
assist those persons to determine what the
right thing is.
It may be, however, that your organisation
predominantly maintains an in-house legal
function for other reasons, for example to
save on external legal spend.
Whatever the reason, your professional
obligations remain the same.

Handy hints for in-house counsel

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5: Your obligation to maintain

client confidentiality
As with any lawyer, and any employee,
you should maintain confidentiality of
information given to you by your client
both during and after your employment,
unless there is an overriding legal obligation
to disclose such information, or a legal
compulsion to do so.
As with other professional obligations,
your professional obligation to maintain
confidentiality is owed to your client. You
do not owe your professional obligation of
maintaining confidentiality to the persons
who manage your client, whether the Chief
Executive Officer or Managing Director,
individuals in senior management positions,
or directors of the Board of your client.
Such confidentiality will be maintained
within your client as persons who are
employed by, or work for, your client are
all your client for the purposes of
maintaining confidentiality.

Handy hints for in-house counsel

Given the nature of in-house practice

and your position as a confidant of
the business, it is also prudent to apply
professional judgment when determining
what information (if any) should be
disclosed by you, and to whom, by taking into
consideration:
(a) the nature and content of the
information; and
(b) the manner in which it was disclosed
to you.
In addition, you should consider whether
your obligation to maintain confidentiality
also extends to the manner in which you
conduct your in-house practice such as:
1. your work environment;
2. document management practices; and
3. meetings and conversations.
Should you be requested to provide
confidential information to a third party, as
with any other legal client, you would need
to obtain your clients permission or be
compelled by law to do so. [Rules 2 and 3]

6: The advice which you provide

You should provide legal advice
independently, honestly, competently and
fairly, even where it incurs the displeasure
of the persons who manage your client.
Remember that your client is the corporation
and it is for the interests of your client that
you provide your legal advice, without fear
or favour.
In your role as an in-house lawyer, you may
find you provide commercial advice as
well as legal advice to your client. Where
commercial advice (as opposed to legal
advice) is provided, you must be mindful
not to blur the two so as not to jeopardise
any claim your client may have for legal
professional privilege over legal advice.

7: Your clients ability to claim

legal professional privilege
Your client is able to claim legal professional
privilege over legal advice provided by
you as an in-house lawyer so long as the
circumstances surrounding the providing of
that advice meet the requirements for
such privilege.
Aside from meeting the requirements for
legal professional privilege as to the purpose
for which the legal advice is given, there is a
requirement that the in-house lawyer must
be independent. [Rules 10 and 19]
Extensive academic information and case
law is available on the ability of clients of
in-house lawyers to be able to claim legal
professional privilege for legal advice from
in-house lawyers.

8: Holding a current
practising certificate
In order to be able to provide certain legal
services, you must hold a current practising
certificate.
Holding a current practising certificate
supports your independence as an in-house
lawyer. This may assist in meeting one of
the requirements of your client to be able to
claim legal professional privilege over legal
advice you provide to it.
In addition, by holding a current practising
certificate as an in-house lawyer you can
administer oaths if required. Subject to
holding an unrestricted practising certificate
and completing a Practice Management
Course you can also be the solicitor on the
record in court proceedings and claim costs
in court proceedings.
Whilst these functions may not be required in
your role as an in-house lawyer, it is generally
preferable to hold a practising certificate
as you are providing legal advice to your
client organisation and are therefore holding
yourself out as a person entitled to practise
as a lawyer. Additionally, to practise in a
federal court or a court exercising federal
jurisdiction in New South Wales, you will
also need to be registered on the High Court
Register of Practitioners.
In-house counsel usually hold an
unrestricted corporate and NLE (nonlawyer entity) certificate or a restricted
corporate and NLE certificate. A corporate
and NLE certificate holder in New South
Wales is not required to take out the
approved professional indemnity insurance
cover in New South Wales.

The differences between the two corporate

certificates are:
RESTRICTED The holder is entitled to engage
in supervised legal practice as a solicitor in
the course of employment by a corporation
(other than an incorporated legal practice)
or a non-lawyer entity. This is known as
supervised legal practice.
UNRESTRICTED The holder is entitled to
engage in legal practice as a solicitor in
the course of employment by a corporation
(other than an incorporated legal practice)
or a non-lawyer entity. In a corporation,
this would enable a solicitor to provide
supervision to other solicitors at the
corporation. To attain an unrestricted
practising certificate, a period of supervised
legal practice must be completed in
accordance with the Supervised Legal
Practice Guidelines.
See the following link for more information
http://www.lawsociety.com.au/
ForSolictors/practisinglawinnsw/
formsdirectory/index.htm
If you wish to provide legal services to clients
or third parties, in addition to your in-house
role, you need to hold a private practice
certificate with the approved professional
indemnity insurance cover in New South
Wales in place.

Handy hints for in-house counsel

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9: Reporting lines

10: Managing external lawyers

It is preferable that the senior in-house

lawyer of an organisation report either to
the Board or to the Chief Executive Officer
or Managing Director. This is important in
that the protection of legal professional
privilege can be lost by your client if its legal
advisors are not considered to be sufficiently
independent.
If, however, the senior in-house lawyer does
not report either to the Board or to the Chief
Executive Officer or Managing Director,
your professional obligations as a lawyer
do not change, albeit your client may not
be able to claim legal professional privilege
over legal advice you provide to it. In such
circumstances the challenge is then to
ensure that the person to whom the senior
in-house lawyer reports appreciates and
respects the nature of your professional
obligations as a lawyer and supports those
obligations, as should the Chief Executive
Officer or Managing Director, the Board and
others in senior management positions.
Ultimately it is in the interest of your
client to receive the best legal advice, and
independence along with respect for legal
professional obligations help to create the
right environment for such advice to be
delivered. Interference in the process of
giving legal advice can lead to poorer advice
being obtained, and advice made to satisfy
the demands of other managers in the
organisation may ultimately run against the
interests of the client.

It is preferable that the in-house legal

function manages the engagement of
external lawyers.
In addition to its sound technical legal
knowledge, the in-house legal function
should have a good understanding of its
clients business affairs and activities, and is
therefore the most appropriate intermediary
between your client and external lawyers.
Engagement of external lawyers by nonlawyers adds to the challenge of illustrating
to your client the value of the in-house legal
function. The in-house legal function is
better placed than non-lawyers not only to
determine whether, and if so what, legal
work should go out to external lawyers but
also to ensure that the instructions provided
to the external lawyers are clear and on
point, and that the advice provided by the
external lawyers is focussed, provides value
for the client and is not overcharged.
Demonstrating the value of an in-house
legal function may primarily be based on
the better understanding of the business
and its requirements that the in-house
legal function will have when compared
with external lawyers. There is also further
discussion of this challenge in Hints 12 and 13.
Deciding on the appropriate external lawyers
can also be a challenge. There are a number
of factors that should be taken into account
for example, reputation, industry expertise,
cost effectiveness, prior knowledge of the
business, flexible billing arrangements
and personnel. There are also a number
of different ways that the engagement of
external lawyers can be structured, including
selecting a panel of firms, choosing one full

Handy hints for in-house counsel

service firm or engaging several firms at the

same time with each being engaged in their
area of expertise. Both the choice of external
lawyers and the structure of the engagement
should be determined by what is the best
fit for both your client and the in-house legal
function.

11: Dealing with regulators

It is preferable that the in-house legal
function is the primary contact point for
dealing with your clients regulators, other
than for standard interaction which might
ordinarily be undertaken by the in-house
compliance function.
As an in-house lawyer you will have a
considerably better understanding than
either the in-house compliance function
or any external lawyers of your clients
regulatory obligations, the authoritative
constraints of the relevant regulator, any
obligations of confidentiality that your client
may owe its customers and any opportunities
that your client may wish to avail itself of to
claim legal professional privilege. Of course,
the instructing of external lawyers to assist
in a regulatory exercise should always be
considered as a prudent option.

12: Illustrate value

14: As lines blur

For example:
- it is common for a non-lawyer to think
As an in-house lawyer it is important that you As an in-house lawyer the opportunity to be
it is acceptable for a person signing
seek to illustrate to the persons who manage involved in commercial decisions of your
a document as a witness not to have
your client, whether the Chief Executive
client often provides a welcome opportunity
been present to see the person whose
Officer or Managing Director, individuals in
to provide valued input from a legal
signature they are witnessing sign the
senior management positions, or directors
perspective into the business operations
document. To a non-lawyer, it is seen
of the Board, the benefits to the business of or strategic decision making processes of
as being inefficient to have the witness
maintaining and engaging with in-house legal. your client.
present, or, worse still, as obstructionist
If possible, maintain records of
The challenge for you is to ensure you are able
to have the document re-signed if the
circumstances that may have turned out
to conduct your legal practice in accordance
in-house lawyer refuses to accept its
differently if the correct legal position
with your professional obligations, whilst
validity;
had been recognised and your practical
potentially taking on the legal obligations of
commercial legal advice had been
an officer of the client under the provisions - non-lawyers who have not been
educated in the obligations of a trustee
appropriately considered.
of the Corporations Act 2001.
may not know that a trustee must at
Also keep records of what type of legal work In addition, your client could find it loses
all times act in the best interests of its
the in-house legal function undertakes and
the opportunity to claim legal professional
beneficiaries, or that a trustee cannot
compare the value of that to what it would
privilege over advice you provide that is
profit from its office unless authorised
have cost if the same work had been done by objectively considered to be commercial
to do so;
an external law firm.
advice, rather than legal advice.
- non-lawyers will often not appreciate
There are of course many other ways to
The involvement of a lawyer in-house at
that admitting liability to another party,
illustrate value: accessibility, pro-activity,
senior management or Board level provides
even if the facts are such that your client
commerciality, user-friendliness, internal
your client with many benefits, particularly
may not be liable, is not in the interests
feedback.
with regard to ethics and risk management.
of the client and may invalidate any
However, if you find yourself in this position it
potential insurance claim;
may be prudent to have a separate in-house
13: Understand your clients
- with limited knowledge and
objectives, report against them legal function reporting into you so that
understanding of the law, some business
and speak the clients language lawyers in that function can meet the tests
people may believe that if an advice that
required to enable your client to maintain
As a member of a team that assists the
they have drafted is sent from a lawyers
its opportunities to claim legal professional
executives of your client to achieve
email address, it is privileged and
privilege. [Rule 10]
their business objectives in line with the
provides protection from discovery.
organisations strategies, the in-house legal
As
an
in-house lawyer one of your roles
15: Finally: be confident in
function needs to understand what those
should be to educate non-lawyers as to what
whats right
organisational strategies and business
is right. Have confidence in yourself as a
objectives are. To engage effectively with the One of the biggest challenges in the practice
lawyer and remember that the support and
executives of your client, whether providing of an in-house lawyer is dealing with nonresources provided by the Law Society of
legal advice, or articulating concerns about lawyers. A common problem is a non-lawyer
New South Wales are available to you.
legal risks, it is useful to try to speak to them telling you how he/she thinks things should
be done. It is of paramount importance to
in their language. When reporting on the
advise as to the legal position and the best
achievements of in-house legal, it may also
be useful to align your report to demonstrate interests of the client at the same time as
maintaining legal and ethical independence
how in-house legal has supported
as an officer of the court and a lawyer.
the business objectives and thereby
demonstrate the value add of in-house legal.
Handy hints for in-house counsel 5