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If you're visiting Freshfields Bruckhaus Deringer's London office, don't expect to see anyone carrying a Styrofoam coffee cup. Mugs are now the order of the day. Ask for a taxi to your next appointment and the hybrid car will pull up outside -- fueled, partly, by recycled cooking oil from the firm's in-house restaurant. Welcome to the socially responsible U.K. law firm.
In January, Freshfields became the first global firm to release a corporate social responsibility report, independently audited by The Corporate Citizenship Company, a CSR consulting firm. CSR brings together a business' environmental policy; its treatment of employees; its pro bono and volunteer work; and its actions toward suppliers and clients. The Freshfields report, available online at www.freshfields.com/csr/, attempts to provide a summary -- both good and bad -- of the firm's full impact on society.
Four of the five Magic Circle firms have publicly announced a commitment to CSR. On Linklaters's Web site, senior partner David Cheyne introduces the firm's CSR program with the comment: "Our clients call it corporate responsibility, I just call it good business." The firm plans to publish its own CSR report next year. Allen & Overy's annual report for 2007 devotes a whole section to the firm's corporate responsibility policy. Clifford Chance is also busy outlining its CSR commitment, with a full report expected later this year. (On the Continent, Spanish megafirm Garrigues published its own CSR report last year.) U.S. firms, by contrast, have been slow to adopt CSR as such. While many tout strong pro bono and diversity efforts -- and occasionally, environmental programs -- in general they have not tried to group such initiatives under the broad umbrella of an explicit CSR policy.
The U.K. law firms say they're responding to client demand. "You're not going to win work if you're a responsible business, but you might lose it [if you're not]," says Linklaters partner Alan Walls, head of the firm's CSR committee. "Clients expect suppliers to demonstrate the same values that they're now demonstrating." And CSR can be great public relations. "It wouldn't surprise me if 99 percent of firms pursued a CSR policy for cynical reasons such as PR," says Paul Watchman, an environmental partner and CSR expert at the London office of Dewey & LeBoeuf. "But you start by getting someone in church, and then you hope that something sinks in."
Still, embracing CSR creates some potential pitfalls for firms. There's always the possibility that a firm's publicly stated principles might conflict with some aspects of its practice -- such as the clients that it chooses to represent.
As a concept, corporate social responsibility -- or simply "corporate responsibility," as some companies call it -- has existed since the 1970s. It gained traction in the natural resources sector, in particular, when companies such as BP plc and Royal Dutch Shell plc began detailing their attempts to mitigate the environmental impact of oil extraction. The U.K. government, which is cheerleading CSR at British companies, defines it as "how business takes account of its economic, social, and environmental impacts in the way it operates -- maximizing the benefits and minimizing the downsides." Of the FTSE 100, the U.K.'s 100 largest public companies, 81 now publish a CSR report, according to CorporateRegister.com, a directory of CSR programs.
For most law firms, pro bono and community work remains at the heart of their CSR policies. Although U.K. firms handle less pro bono work than their U.S. counterparts -- an average of 30 pro bono hours per lawyer is considered good at U.K. firms, while Am Law 200 lawyers put in a mean of 54 hours each -- many London-based firms have long records of pro bono and community involvement. "Thirty years ago, we were doing things such as our pro bono and community work that are now included under the CSR banner," says Freshfields senior partner Guy Morton. "But back then there wasn't the same pressure from clients or the public. It just didn't receive the same profile."
In Freshfields's case, its CSR report also has its roots in the growing number of clients seeking advice on the legal aspects of their CSR policies. In 2005, for instance, the firm, working pro bono, authored a report for the United Nations on the CSR obligations of major financial institutions investing in large infrastructure projects. In 2006 Freshfields published its first CSR report. "It fitted with our brand generally," partnership secretary Crispin Hain-Cole says. "It's part of the firm we want to be." The first report focused solely on the London office, where data on issues such as diversity and carbon emissions was easily available. Expanding its efforts, Freshfields appointed a head of CSR and committed to publishing a firmwide, global report.
"CSR started as a bit of an [Anglo-American] creation, but we've found great enthusiasm across the firm," Morton says. The 2008 report includes details like the fact that, in fiscal year 2006-07, Freshfields produced almost 20,000 metric tons of carbon-dioxide equivalent, including 8,316 metric tons from business travel. (Garrigues reports producing nearly 5,000 metric tons of carbon dioxide -- 1,410 from business travel -- in 2006.) "The report underlines our commitment to being a socially and environmentally responsible business and an excellent employer, and to having a positive impact on the communities in which we work," Freshfields states.
But the CSR policies of the U.K.'s major firms raise some questions. When, for example, does a firm's CSR policy start to play a part in determining which clients it will represent? "There is certainly a change in the landscape," asserts Clifford Chance's London pro bono partner Michael Smyth. "Associates will tell you that they want to work in a firm where the client selection policies conform to their view of the world." So far, as Smyth admits, no one has found a perfect formula for determining which clients measure up -- and which don't. Clifford Chance does turn away clients on ethical and reputational grounds, he adds, although he declined to name any.
In 2003 Freshfields found itself on the "Dirty List" compiled by human rights nonprofit The Burma Campaign, after the firm represented Malaysian oil company PETRONAS on the acquisition of various assets in Myanmar. The Dirty List names and shames companies seen to be directly or indirectly aiding the military junta in Myanmar. Freshfields was removed from the list in 2004.
Would the firm act for PETRONAS on the same work again? Morton declined to speak about a specific client. However, he insists that "the world has changed a bit since then," adding that the firm is now very conscious of public perception in taking on a very high-profile assignment. Potentially problematic clients would be assessed on a case-by-case basis, taking into account CSR as well as a client's reputation and compliance with the law, he says.
So do CSR considerations always trump a firm's primary business of representing paying clients? Morton says no. "When you look at our relationships with clients, we're their lawyers first, and our job is to provide top-level legal services and not let anything compromise that," he says. "It's not realistic to say, if you're serious about CSR, you have to put all that in the background."
Linklaters's Walls is fully aware of some of the trickier questions facing firms making clear commitments to CSR. "Is a tax practice ethically sound?" he asks, pointing out that firms routinely advise clients on how to pay less in taxes. "Where do you draw the line?" he asks. After the mugs, cooking oil, and hybrid cars, the legal profession is getting down to some of the harder issues.
