August 30, 2018 ILN

Ethical Issues for Lawyers under the United Nations Guiding Principles on Business and Human Rights

By Steven M. Richman

We are all human rights lawyers now. Such concerns are no longer the sole province of public interest lawyers or those who otherwise specialize in human rights issues. Commercial lawyers representing private companies must be attentive to human rights issues and to the desire of companies to step up their corporate social responsibility efforts.

Further, corporate social responsibility (CSR) is no longer simply aspirational. Companies are looking at “how to get it done.” Whether motivated by a responsibility to do social good, the lure of profit, demands for accountability by stakeholders, or a desire to avoid boycotts and public relations disasters, companies across multiple sectors are joining the broader movement to integrate and comply with international norms and practices throughout their operations and supply chains. In some cases, statutory disclosures and reporting are required. As such, companies are rolling out initiatives to be more socially, economically, and environmentally responsible and are honing in on investors’ and consumers’ perceptions of whether the company is making the world a better place.

Among the frameworks guiding companies is the United Nations Guiding Principles on Business and Human Rights (UNGP), adopted in June 2011 to help companies avoid negative societal impacts and human rights violations. They are designed to assist corporate leaders when setting internal and external policies, strategies, and activities, including managing their supply chains.

While the UNGP themselves may be considered “soft law” and do not have mandatory strictures, certain other laws do, particularly with regard to reporting activities and in specific industries. Increasingly, we are seeing the codification of what was once merely suggestive within domestic laws and regulations and regional instruments. This codification takes many forms, most commonly as reporting and public disclosure requirements. Some laws target specific human right violations, such as child labor, human trafficking, and forced labor. Moreover, international institutions might require compliance as a condition for financial assistance. We also see where businesses are requiring compliance with human rights principles within their supply chains, meaning that the otherwise aspirational ideas become enforceable contract provisions.

Responsive to this growing focus on human rights and CSR, various international law firms have established practice groups or departments devoted to or specializing in corporate social responsibility issues. These generally tend to be structured within the international trade practice or the business department, or as a separate multidisciplinary practice group. The models vary, as do the products and services. Core services generally are related to reporting compliance, due diligence, and global investigations, but they also can include a range of emergent services, such as strategic analysis and business advice.

The growing area of human rights and corporate social responsibility provides new opportunities for lawyers in international law and with cross-border practices. Yet, as this article discusses, attorneys need to be mindful of and carefully understand the ethical considerations related to legal advice versus business advice.

What Are the UN Guiding Principles on Business and Human Rights?

The United Nations Guiding Principles on Business and Rights were endorsed by the United Nations Human Rights Council in June 2011. See U.N. Office of the High Commissioner of Human Rights [OHCHR], Guiding Principles on Business and Human Rights HR/PUB/11/04 (2011).

Their purpose is to identify standards and principles to be applied by business community in relation to human rights considerations. The UNGP contains thirty-one principles, plus commentary, to implement the three fundamental pillars of the United Nations Protect, Respect, and Remedy Framework. See Report of the Special Representative of the Secretary-General on the Issue of Human Rights and Transnational Corporations and Other Business Enterprises, John Ruggie, U.N. Doc. A/HRC/17/31 (Mar. 21, 2011).

Protect

Under the Protect pillar, which generally addresses the obligations of states, the principles begin with the foundational and proceed to more specifics. The foundational principles (noted here by parenthetical reference) assert that states (1) must protect against human rights abuses within their territory or jurisdiction by third parties, including businesses, and (2) set out clear expectations as to such. Further, operational principles mandate that states should (3) enforce relevant laws and policies that respect human rights, provide guidance, and seek business feedback as to compliance; (4) take additional steps regarding state-owned businesses to ensure compliance; (5) exercise adequate oversight; and (6) set examples through the state’s commercial transactions. Regarding supporting business respect for human rights in conflict-affected areas, states should (7) engage with businesses early on to help businesses identify, prevent and mitigate human rights issue, provide adequate assistance, deny public support to abusive companies, and ensure efficient enforcement.

To ensure policy coherence, three principles apply. States should (8) ensure awareness through government agencies, (9) maintain adequate domestic policy space to meet objectives, and (10) when in multilateral institutions, seek to ensure institutional compliance.

Respect

The next set of principles address the second pillar of Respect, and this is addressed to non-state actors. Foundational principles under this pillar mandate that businesses (11) respect human rights; (12) understand what human rights are fundamental; (13) avoid causing or contributing to adverse human rights impacts and seek to prevent or mitigate same; (14) recognize the application of these principles regardless of company size, operational context, ownership, and structure; and (15) establish procedures relevant to those factors to enable implementation. As an operational principle, businesses should (16) issue a statement of policy.

As a principle of human rights due diligence, businesses should (17) carry out due diligence assessments related to current the business’s activities; (18) identify actual and potential risks and engage in meaningful consultations; (19) prevent and mitigate abuses by integrating measures across the components of the business enterprise; (20) verify and track effectiveness; and (21) prepare external communiques. By way of remediation, business should (22) identify their adverse impacts. Businesses also should (23) comply with applicable law and respect, international human rights, and seek ways to honor them; and (24) where necessary, seek prevention and mitigation to prevent irremediable situations.

Remedy

The Remedy pillar is addressed to both state and non-state actor obligations. The main principle requires states to (25) ensure access to a remedy through judicial, administrative, legislative, or other means. Operational principles mandate that states ensure (26) state-based effective and appropriate domestic judicial mechanisms; (27) state-based effective and appropriate non-judicial grievance mechanisms; (28) non-state-based grievance mechanisms; (29) internal business grievance mechanisms; and (30) industry-wide collaborative efforts to enable implementation. Regarding the effectiveness criteria for the Remedy pillar, both state-based and non-state-based non-judicial grievance procedures (31) should have criteria that are legitimate, accessible, predictable, equitable, transparent, rights-compatible, and a source of continuous learning. Operational-level mechanisms should be based on engagement and dialog.

Ethical Considerations for Lawyers

To the extent that legal compliance is part of the pyramid, lawyers can and should be involved in advising clients on ways to incorporate UNGP in their business practices and supply chains. International trade and business lawyers are in particularly unique positions to help clients understand the legal, regulatory, and enforcement environments in which they operate. However, as indicated at the outset, human rights are not the province of one particular set of lawyers. Lawyers also must be mindful of their professional responsibilities and their divergences across jurisdictions.

In the United States, the ABA Model Rules of Professional Conduct are simply that: model rules. Once adopted by a regulatory jurisdiction, they then have applicability. Many of their principles resonate in several jurisdictions and are used here to illustrate a few ethical considerations when providing advice to clients, particularly as to the contours of legal advice versus business advice.

ABA Model Rule 1.1 addresses competence and states that “[a] lawyer shall provide competent representation to a client. Competent representation requires the legal knowledge, skill, thoroughness and preparation reasonably necessary for the representation.” Equally important is the obligation of diligence found in ABA Model Rule 1.3 (“A lawyer shall act with reasonable diligence and promptness in representing a client.”).

ABA Model Rule 1.6 addresses confidentiality of information and prohibits the lawyer from revealing information relating to representation unless to prevent “certain death or substantial bodily harm” or the client from “committing a crime or fraud” reasonably certain to cause another financial injury, or disclosure is impliedly authorized to carry out the representation or is necessary to establish defense, detect conflict, or required by court order. The fundamental principle involved is based on trust and to encourage a full and frank discussion, including embarrassing or legally damaging subjects, to enable the lawyer to effectively represent client and advise against further wrongful conduct. The privilege does not generally apply to business advice, but it does apply to advice for the purposes of obtaining or providing legal assistance. See, e.g., Restatement (Third) of the Law Governing Lawyers § 68 (2000).

While not necessarily privileged as a communication, such communications that relate to other than purely legal issues may nonetheless be relevant for the legal advice to be given. In this regard, ABA Model Rule 2.1 is relevant; it expressly notes the role of a lawyer as advisor in order to provide appropriate representation and states: “In representing a client, a lawyer shall exercise independent professional judgment and render candid advice. In rendering advice, a lawyer may refer not only to law but also to other considerations, such as moral, economic, social, and political factors that may be relevant to the client's situation.” A finite body of interpretative authority exists regarding Model Rule 2.1. However, Comment 2 makes this point:

[2] Advice couched in narrow legal terms may be of little value to a client, especially where practical considerations, such as cost or effects on other people, are predominant. Purely technical legal advice, therefore, can sometimes be inadequate. It is proper for a lawyer to refer to relevant moral and ethical considerations in giving advice. Although a lawyer is not a moral advisor as such, moral and ethical considerations impinge upon most legal questions and may decisively influence how the law will be applied.

Similarly, a lawyer need not be passive and may act proactively. Comment 5 makes this clear:

[5] In general, a lawyer is not expected to give advice until asked by the client. However, when a lawyer knows that a client proposes a course of action that is likely to result in substantial adverse legal consequences to the client, the lawyer’s duty to the client under Rule 1.4 may require that the lawyer offer advice if the client's course of action is related to the representation. Similarly, when a matter is likely to involve litigation, it may be necessary under Rule 1.4 to inform the client of forms of dispute resolution that might constitute reasonable alternatives to litigation. A lawyer ordinarily has no duty to initiate investigation of a client’s affairs or to give advice that the client has indicated is unwanted, but a lawyer may initiate advice to a client when doing so appears to be in the client’s interest.

The comment references Rule 1.4, which addresses communications. Among other things, under 1.4(a)(2), a lawyer is obligated to “reasonably consult with the client about the means by which the client's objectives are to be accomplished.” The lawyer, under 1.4(b), also must “explain a matter to the extent reasonably necessary to permit the client to make informed decisions regarding the representation.”

Model Rule 4.1 governs truthfulness in statements to others, precluding false statements of material fact to third persons or failing to disclose a material fact to the third person, when the fact is necessary to avoid assisting a criminal or fraudulent act by the client, subject to the provisions of Rule 1.6. Note also Rule 4.4’s proscription against using means that are substantially for the purpose of embarrassment, delay, or burdening a third person.

A lawyer is not precluded from engaging in certain law reform activities, even if doing so affects a client’s interests. Pursuant to ABA Model Rule 6.4: Law Reform Activities Affecting Client Interests:

[a] lawyer may serve as a director, officer or member of an organization involved in reform of the law or its administration notwithstanding that the reform may affect the interests of a client of the lawyer. When the lawyer knows that the interests of a client may be materially benefitted by a decision in which the lawyer participates, the lawyer shall disclose that fact but need not identify the client.

Nothing in the UNGP is meant to preclude lawyers representing clients who may not be popular or with whom the lawyer may disagree philosophically. The UNGP also do not eliminate the lawyer’s obligations of confidentiality, diligence, and zealous representation. They however, do provide insight into the broader framework in which commercial companies act, which means sensitivity to the broader issues of social responsibility. Practitioners should be familiar with these and consider them in relation to their ongoing activities.

Conclusion

While the UNGP may be nonbinding, there are other hard law requirements that have either resulted from them or complement them. Even beyond that, lawyers have an obligation to act as an advisor and to be aware of economic and reputational repercussions to clients when giving advice related to corporate social responsibility. They become hard law when tied to a company’s publicly stated policies and communications, as well as contractual obligations. Shareholder reaction and potential political acts, such as boycotts, may factor into the legal advice offered as part of the social fabric and new business environment. While lawyers’ professional rules and obligations remain, particularly those regarding scope of representation and privilege, the impact of UNGP cannot be dismissed.

An expanded version of this article will be published in the forthcoming Volume 51:3 of The International Lawyer, the triannual scholarly journal published by the ABA Section of International Law in cooperation with the SMU Dedman School of Law.

Steven M. Richman is a Partner at Clark Hill PLC, where he practices domestic and international commercial law, and is Chair of the ABA Section of International Law 2017─2018.