The Regulation of In-House Counsel: Opening the Pandora’s Box of Professional Independence

The number of lawyers who practice law in-house has significantly increased over the last thirty years in North America. While in this part of the world, in-house counsel are regulated in the same manner as outside counsel by their professional bars, the recent decision by the European Court of Justice (Grand Chamber) Akzo Nobel Chemicals Ltd et al. v. European Communities, reminds us that other parts of the world treat in-house counsel very differently. This paper analyses the justifications for a similar treatment of in-house counsel and outside counsel by the legal profession. While a detailed contextual analysis of in-house counsel’s functions reveals a likelihood of greater vulnerability in their ability to balance them with various ethical and professional duties, it also shows that outside counsel face similar ethical dilemmas that may vary in degree or in nature. The similar regulation of in-house and outside counsel is consistent with a poor articulation by the legal profession of the scope of the duty of professional independence from the client. And yet such duty exists. As it can conflict with paramount professional obligations, including the duty of loyalty to the client, its scope is controversial. Leaving the duty of professional independence from the client largely undefined is harmful to in-house and also outside counsel, their clients, the legal profession and the public interest. In-house counsel are in a privileged position to provide legal services in accordance with fundamental values of the legal profession. As such, their contribution needs to be better recognized and promoted. Generally, regulatory reform is necessary to nurture in-house counsel’s ability to provide legal services as integral members of the bar, while minimizing the risks that the privileged proximity to their clients present. Such reform will inevitably benefit outside counsel who face comparable issues. A clearer articulation of the meaning and scope of the duty of professional independence from the client, together with tangible mechanisms to actualize it, will provide greater support to in-house and outside counsel to better understand and integrate their various ethical and professional duties within their role. It will also benefit all interested parties.