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Professional Responsibility of Lawyers under the Guiding Principles

Hard and soft law developments with implications for lawyers as they advise corporate clients on human rights.

April 2012 | | John F. Sherman III

The core responsibility of business under the UN Guiding Principles on Business and Human Rights is to respect human rights, and to adopt policies, processes, and systems that enable them to know and show that they do so. So how should lawyers advise their corporate clients regarding this responsibility? This is not an idle question, in light of the American Bar Association’s endorsement on February 6, 2012 of the UN Guiding Principles, and its acknowledgement that they apply to the professional responsibility of lawyers.

In the report supporting the ABA resolution endorsing the UN Guiding Principles, the ABA Human Rights Committee noted that the Principles pour content into the independent and candid advice that lawyers must provide to corporate clients under ABA Model Rule 2.1; the rule’s commentary notes that “moral and ethical factors impinge on most legal questions and may decisively influence how the law will be applied.” This resonates with professional codes of responsibility in countries like Japan, Europe, and Canada, which acknowledge that lawyers must balance their dual roles as guardians and advocates for the interests their clients, and as gatekeepers for the interests of courts and society.

I address this and related issues in a paper I presented to a recent ABA Human Rights Center conference. In the paper, I explore the implications of the UN Guiding Principles for corporate governance, risk management and professional responsibility from the perspective of the corporate legal advisor.

Much recent attention has been focused on the tort liability of multinational companies under the US Alien Tort Statute for their involvement, usually indirect, in human rights violations outside the US. The US Supreme Court recently heard oral argument in a challenge to that statute’s application to corporations, and has invited rebriefing and reargument on extraterritoriality. However, this focus can sometimes obscure the fact that there are many other avenues for potential corporate legal exposure, which require thoughtful and creative attention by corporate counsel.

Prof. John Ruggie, the author of the UN Guiding Principles and Chair of Shift, has observed that the responsibility of companies to respect human rights does not exist in a law free zone, even though, on their own, core international human rights instruments do not generally impose direct legal obligations on companies. For example, in 2007, the SRSG identified an “expanding web of potential corporate liability for international crimes – imposed through national courts.” Countries forming part of this “emerging web” include the United Kingdom and The Netherlands, where the interaction between domestic law and those countries’ ratification of the Rome Statute of the International Criminal Court leads to the potential for imposition of criminal liability for genocide, crimes against humanity, and war crimes on corporate actors. Moreover, the laws of many countries specifically proscribe business conduct whose impacts on people violates certain internationally recognized human rights through, for example, workplace safety, privacy, product safety and nondiscrimination laws.

In addition, governments are adopting policies and regulations that incentivize or require companies to adopt the necessary internal systems and processes to enable them to respect human rights. For example, Section 1502 of the Dodd-Frank Act requires companies to conduct due diligence on their supply chain for products containing minerals from the Democratic Republic of the Congo, where mining has fueled armed conflict resulting in the deaths of millions. Section 1502 in turn has spawned California legislation regulating state procurement of products containing “conflict minerals” from companies in violation of Section 1502. The California Transparency in Supply Chains Act of 2010 requires large retail and manufacturing companies doing business in California to disclose the efforts they have taken to eliminate slavery and human trafficking from their supply chains.

Outside the US, the European Commission has engaged Shift and the Institute for Business and Human Rights to develop guides on how three sectors – employment and recruitment agencies, information and communications technology (ICT) and oil and gas – can align their business with the UN Guiding Principles, pursuant to a recent Communication on corporate social responsibility setting out the EC’s expectation that European enterprises will meet the corporate responsibility to respect human rights under the UN Guiding Principles. Other key instruments that now incorporate the standard of business respect for human rights embodied in the UN Guiding Principles include the OECD Guidelines for Multinational Enterprises, the revised Performance Standards of the International Finance Corporation, and ISO 26000 (the new international corporate social responsibility guidance standard). 

This global convergence will inevitably find its way, as accepted standards of conduct do, into judicial, legislative, and administrative decisions, and into enforceable private legal instruments – such as transportation carriage arrangements, long term mining investment agreements, merger and acquisition representations and warranties, loan covenants and joint venture agreements, to name a few. Penn State Law Professor Larry Catá Backer has called this expanding and dynamic web of legal obligations a form of “polycentric governance” that corporate lawyers ignore only at their peril. Finally, since human rights risks may cause companies to lose substantial value – through delay, distraction of top management, and reputational impairment, wholly apart from litigation costs and liability - management of human rights requires top-level corporate attention as a matter of prudent corporate governance.

It should therefore come as no surprise that where companies have encountered human rights issues, particularly where legal requirements are unclear, their lawyers are among the first whom a company asks for advice. In recognition of this fact, Guiding Principle 23(b) addresses areas of legal uncertainty by providing that companies should “comply with all applicable laws and respect internationally recognized human rights wherever they operate.” The Guiding Principles also provide that when faced with conflicting requirements, a company should “seek ways to honor the principles of internationally recognized human rights.”

Guiding Principle 23(c) goes on to say that companies should treat the risk of causing or contributing to gross human rights abuses, such as torture, genocide, or murder, as a legal compliance issue wherever they operate. In other words, a company should act on the prudent assumption that it may be held legally liable if it causes or contributes to such abuse even if the applicable law may be unclear. This does not mean that a company’s responsibility for respecting all human rights should be vested in a company’s legal department and made a matter of legal compliance; it simply recognizes that regardless of the strength of a company’s legal defenses in particular jurisdictions, its involvement in gross human rights abuses would be such an egregious calamity that the company’s lawyers should be proactively engaged in preventing it, as they would be engaged in the prevention of any serious corporate crime.

These provisions have profound implications for lawyers who advise companies. The Guiding Principles apply to all businesses, including law firms. They require businesses, including law firms, to respect human rights, both in their own operations and through their business relationships, which includes their relationships with clients. As the ABA has recognized, subject to their professional ethical responsibilities, law firms’ responsibility to respect human rights extends to adverse human rights impacts that are directly linked to the law firm’s services through a client relationship.

Guiding Principle 19 and ABA Model Rule 2.1 should be read in harmony. Both require lawyer’s advice to be more than a determination of the letter of the law; the advice should encompass potential impacts on human rights and the full range of other legal and business consequences that may likely result, and should suggest how to achieve the client’s goals in a way that respects human rights.

Such situations call for creative lawyering. For example, in 2003, BP, the operator of the BTC pipeline in the Caucuses region of central Asia, encountered complaints by NGOs that stabilization clauses in the project’s contracts with host governments would prevent the governments from enacting new legislation to protect human rights. In response, BP negotiated with Amnesty International a unilateral estoppel document, known as the Human Rights Undertaking, which prevented the pipeline from enforcing the clause in such a fashion. Prof. Ruggie, and then the UK National Contact Point (responsible for addressing complaints of violations of the OECD Guidelines for Multinational Enterprises,) cited this as a best practice. Prof. Ruggie built on it in his report on Principles for Responsible Contracting, which guides lawyers and others in negotiating long-term investment contracts that have a high potential to impact human rights.

This is only one example of the way in which lawyers can help their corporate clients respect human rights; there are many others. Ultimately, by honoring their professional responsibilities to clients and to society, lawyers for companies can add the greatest value for both, precisely in those areas of legal uncertainty where their clients’ operations and relationships potentially can harm internationally recognized human rights.

John F. Sherman III

General Counsel, Senior Advisor and Secretary

As Shift’s General Counsel and Senior Advisor, John focuses on the role of the legal profession in the implementation of the Guiding Principles in their role as business advisors.

John F. Sherman III
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