Is CSR a double-edged sword for law firms?

This week, our head of HR (with the CEO closely in tow) asked me what I could do to improve our rankings in the upcoming corporate responsibility (CR) tables. We did okay last year, especially against our peers, but apparently we want to do better.

Not a problem, I thought, I can certainly see the recruitment angle, as people – particularly well-paid ones (which you tend to find quite a few of in professional services) – often have a strong inclination to want to give back to society.

I also understand its role as a metric in a business development and marketing context – especially in an industry where competitors do so little to help purchasers distinguish one adviser from another.

For some time now, both public sector and non-profit organisations have asked for CR (or CSR in old money) information – mostly policies but, more recently, money and equivalent value (such as hours) invested by suppliers in supporting the community.

Being higher up in a table than a competitor is usually no bad thing. Increasingly, though, I have seen this creep into tenders from private sector businesses – particularly those in industries subject to public/press scrutiny over the way they generate profits and use creative tax strategies.

Luckily, I knew where we did well last time and the areas we could improve on, but it got me thinking about the role of ethics in law firms.

Many law firms have made quite a virtue of their corporate responsibility. A quick internet search this morning found firms saying that CR or CSR “is at the heart of our business”, “is essential to the way that we operate” and “supports and underlies our vision and values”. Very strong and definitive statements indeed.

In some cases, firms have even gone as far as to set up teams to manage and report on their CR programmes, as well as using specialist consultants to get the most from the time and money they invest (yes it is a commercial investment – just ask any shareholder/partner). For sure, CR is no longer the benevolent cottage industry that it once was.

However, being ethical at a practical level isn’t always as straightforward as it first seems – particularly for professional services firms. As far as nuts and bolts are concerned, taking a responsible stance on recycling, printers, lights and so on is a simple and easy thing to do and, in most cases, usually makes commercial sense.

Supporting charities and good causes is also generally acknowledged to be a good thing, especially when you look at some of the profits that are made in the industry. But, what about their clients – you know, the ones that pay the professionals’ fees and observe the way they run and conduct their businesses?

The truth is that, money laundering and some basic financial and compliance checks aside, there are few firms that consider the economic, social or political impact in doing due diligence when deciding to take on a particular client.

Indeed, if you look at many client lists, it would appear that ‘ethical criteria’ (think about the impact in third world and developing countries especially) are rarely used as part of client vetting. In most cases, commerciality rules – and that is as it should be. After all, everyone is entitled to use the best advisers and to have the best representation.

I guess that the big test for law firms on all of this will come when purchasing teams and in-house counsel start asking for more information in tenders. They have for some time asked law firms for their CR policies, as well as estimates of time and money spent on CR activities.

In the past few months, we have on several occasions been asked for details of our clients and their CR practices. In some of these, we have not been allowed to use the ‘client confidentiality’ get out and they have insisted on us providing the required information.

From recent conversations with a purchasing manager, this it is a practice that looks set to become more common. As we all well know, it is firmly a buyers’ market, which means that professional services firms will increasingly find themselves having to give purchasing teams what they want – or miss out on opportunities.

As far as marketing and bids teams are concerned, the reality is that this type of disclosure will become another tendering hoop to jump through. For most, this will not be a problem.

However, for those firms that make broad and sweeping statements about the importance of CR to their organisations, there is more of a dilemma. They will certainly have a tough job convincing potential clients that they ‘live and breathe CR’ whilst also working with and representing businesses whose ethics and practices are more questionable. I for one wouldn’t want to be the marketing director that has to explain to my CEO why we are asked to tender less frequently or why our win rates are flagging.

Maybe the answer is for professional services firms to be clearer about how they differ from competitors in a meaningfully way. Now there’s a thought.