This article appears in Issue 03 of The Beautiful Truth magazine. Buy your copy here.

A corporate finance lawyer is employed at a global law firm. She’s working on a deal for a client that will lead to some unsavoury job losses. She doesn’t think too much of it at the time – she has a job to do and clients to please.

At a party she greets a man: they introduce themselves and where they work. Very quickly she realises that she’s come face to face with someone who was about to lose his job on account of her work – and was blissfully unaware of it. The lawyer wasn’t the executioner, but she was their advisor.

This is a true story, one that was uncovered by Steven Vaughan (Professor of Law and Professional Ethics at University College London) and Emma Oakley (Assistant Professor of Law at Birmingham Law School) in their paper: ‘“Gorilla Exceptions” and the Ethically Apathetic Corporate Lawyer’. They invited 57 corporate finance lawyers from London based global law firms to speak about what it means to be neutral in their role, and how they feel about their impact on society.

Vaughan and Oakley define neutrality here as: “It is not for the lawyer to be the judge of their client.” In practice, this means (as one lawyer interviewed explains): “The advice that we are asked to provide is advice which all businesses are entitled to ask for.”

Professional services firms, including accountants and management consultants, are beginning to explore this tricky terrain – meanwhile navigating the ever-evolving expectations of shareholders, stakeholders and the public.

Although the example above is just one small case of a lawyer realising the ramifications of her role, it speaks to a much larger discussion of professional services firms’ impact on wider society. They aren’t only responsible for who gets fired; they move the needle on societal change – from potentially provoking a US opioid crisis to fuelling environmental degradation.

With the backdrop of neutrality so deeply embedded into professional services firms, what then does it mean to act – or not act – in the best interests of society?

What is ‘neutrality’?

You’re walking down a street and you notice that the person in front of you has dropped their wallet. They haven’t noticed and keep walking. You continue on your journey, you walk past the wallet and you don’t alert the person; after all, it’s none of your business. Many would argue that this inaction is unethical – and most would feel guilt – but at the same time, it is a neutral act.

There are many ways that ‘neutrality’ has been framed in professional services firms, where the notion of acting – or not acting – is thrown into question.

In their book The Social Organization of Work, sociologists Randy Hodson and Teresa A Sullivan define a profession as being characterised by “(1) abstract, specialised knowledge, (2) autonomy, (3) authority over clients and subordinate occupational groups, and (4) a certain degree of altruism.” We see here the haziness that so often governs the idea of professional services firms’ impact: what exactly does “a certain degree of altruism” mean?

“Ten years ago the only show in town was shareholder primacy,” says Jeffrey Twentyman, Head of Sustainability and Chair of Responsible Business at law firm Slaughter & May, explaining the shifting dials of neutrality in law firms.

“There used to be this notion that professional services firms are neutral and independent actors – therefore absolved of responsibility,” he continues. “However, the world around us has grown and is therefore imposing responsibility on us – people no longer buy the idea that businesses such as mine are neutral.”

Vaughan mirrors this: he argues that neutrality has been baked into law firms through the axiom, “everyone deserves legal advice” – a phrase he claims is often fed to young lawyers by partners. It stems from the ‘standard conception’ of legal ethics, which exists to resolve the moral dilemmas that lawyers face.

He describes this as following the tenets of:

• Neutrality (it is not for the lawyer to be the judge of their client)
• Partisanship (the lawyer can or may do all that they can to achieve the client’s objectives)
• Non-accountability (the lawyer is not responsible for the client’s decision

While the phrase “everyone deserves legal advice” has its place in the pursuit of a fair and just legal system for criminal cases, it also means that any legal proceedings that lawyers deal with have a scapegoat or, as Vaughan puts it, a way to evade the “sleepless nights.”

Similarly for accountants, their obligation is simply to answer what clients ask in a neutral fashion. Nevertheless, the Institute of Chartered Accountants in England and Wales (ICAEW) emphasises that accountants’ advice must align with the public benefit – though the institute also concedes this to be an “abstract notion.”

Vaughan summarises this dilemma within the legal system in his piece ‘Existential Ethics: Thinking Hard About Lawyer Responsibility for Clients’ Environmental Harms’, where he emphasises that lawyers must also ensure they are acting in the public interest. He argues that the public’s best interests are undermined when lawyers continue to advise clients on environment-harming activities.

These two concepts then – ‘public interest’ and ‘standard conception’ – seem to exist at odds with each other. Indeed, Professor at Esade Business and Law School César Arjona describes lawyers as having to “serve two masters that may have demands.”

The role of ethics in consulting is much more loosely defined. Although the field has existed throughout history – from Aristotle to Machiavelli – it’s only in the last century that we’ve seen a formalisation of the role. Nor is management consulting a regulated profession; unlike accounting or law, each firm can rely on its own in-house ethical code of conduct.

Take McKinsey: founded by a lawyer and with values, it could be argued, akin to a law firm. McKinsey puts “client interests ahead of the firm’s” and “observes high ethical standards.” But “observe” here is nebulous; once you’ve observed an ethical concern, what then must you do?

“We don’t do policy. We do execution,” is reported to be one former McKinsey partner’s aphoristic justification for working for clients that may be considered immoral, in an attempt to “assuage the fears” of the wide-eyed grads who hoped to leave a positive mark on the world.

This all amounts to conflicting academic interpretations. Business theorist and psychologist Edgar Schein said that society should be regarded as “the ultimate client,” trumping literal clients’ and firms’ wishes. Vaughan, meanwhile, observes that nowhere does it say in the Solicitors Regulation Authority’s (SRA’s) Standards and Regulations – nor any other legal regulation for that matter – that clients’ interests come first. In contrast, accounting scholar David Solomons defended the ‘neutralist view’, arguing that “the task of accountants is to provide information as free from bias as possible that will be useful to decision-makers,” the absence of which endangers the profession.

With the idea of ‘public interest’ in flux, can firms act ‘neutrally’ to anyone – and have they ever?

What the world is expecting from professional services firms

Elizabeth Doty, Director of the Corporate Political Responsibility Taskforce at the Erb Institute, University of Michigan, describes the increasing pressure for companies as a whole to weigh in on moral, public or social matters.

Companies are “shell-shocked by the frequency of need and the ballooning requests to engage,” she says. The pressure to engage is apparent within professional services firms too – especially as the impact of their work faces wider scrutiny.

In 2022, delegate consultants from Deloitte Global were met by Pope Francis where he implored that the firm prioritise positive impact alongside profit.

“No profit,” the Pope said, “is in fact legitimate when it falls short of the objective of the integral promotion of the human person, the universal destination of goods, the preferential option for the poor, and, we can add, the care of our common home.”

Climate change is on the pulse point of the neutrality conversation, with activist groups like Extinction Rebellion staging protests outside consultancy and law firm offices against their involvement with clients that engage in environmentally harmful activities. Meanwhile, individuals on the inside are beginning to agitate for change too.

In 2021, more than 1,100 McKinsey employees signed a letter urging that the firm disclose how much carbon its clients emit: “The climate crisis is the defining issue of our generation. Our positive impact in other realms will mean nothing if we do not act as our clients alter the earth irrevocably.”

But this isn’t just an environmental problem. Professional services firms are increasingly expected to take a stance on political matters too.

Since February 2022, many global consulting and law firms that were operating in Russia have decided to scale back or pause investments – including the Big Four. Official statements range from “compliance with our legal and ethical obligations” to the decision being “in line with our purpose.”

Professional services firms might – in this instance – be putting in more legwork than consumer goods industries. A project by the Kyiv School of Economics monitors the actions of a near-comprehensive list of foreign companies as to whether they are continuing to operate in Russia. As of August 2023, 61% of consulting and law firms have left Russia; the rest have decided to continue operations, pause investments or scale back some operations (while maintaining others).

Compare that with consumer goods and clothing: only 44% have left Russia, despite receiving more public backlash due to being consumer facing – the “feckless 400” being one of the more unsavoury quips.

On top of sanctions, reputational risk certainly impacted firms’ decisions to leave. Indeed, in the ICAEW’s code of ethics, accountants must “uphold the reputation of the profession and do nothing to bring it into disrepute.” Law firms must “uphold public trust” as outlined in the SRA’s Principles. And similar wording of ‘reputation’ appears in many consultancies’ codes of ethics. It could be argued that firms had no choice but to take a stand, if only for reputation’s sake.

Basing decisions about when to remain neutral and when to take a stand purely on public interest can send you down a dangerous and unpredictable path. That’s not to mention the precarious balancing act of neutrality, reputation and ethical obligations. How can firms rise above the entangled expectations, to ensure they are being proactive in creating positive change?

Committing to a higher cause

“It must go beyond firms delisting certain clients,” says Sarah Gillard, CEO of A Blueprint For Better Business, a charity that aims to create a better society through better businesses.

“It’s about firms giving clients the opportunity to consider things from a different perspective,” she says. “This means asking the tough questions. Firm to client: all this really means is human to human. To build trust between the two, there needs to be a foundation of wanting the client to genuinely and positively thrive.”

Importantly, Gillard says it’s about looking inwards: “Partners at firms need to think back to when they were 18. What impact did you want to have on the world at that age? And where are you now – and what can you do to close that gap?”

We are seeing the evidence of professional services firms being driven by a higher purpose. For example, the list of management consulting firms that are becoming B Corporation certified is growing. To receive this title, firms must meet high standards of social and environmental performance, public transparency and legal accountability to balance profit and purpose. One of the largest is Baringa, whose vision is to build the world’s most trusted consulting firm.

“Principled decision-making,” as one managing partner at Baringa puts it, is at the heart of the firm: it’s about “doing what’s right for the long haul.” However, the majority of those who are championing this messaging are boutique firms; of the 464 B Corp-certified management consulting firms, 90% hold under 50 employees.

It seems in fact that business and professional services firms are moving in tandem. Sustainability is one of the biggest demands from clients, according to Tamzen Isacsson, CEO of the Management Consultancies Association, in finding pathways to fit their net-zero targets. It’s also why the new head of Boston Consulting Group Christoph Schweizer has said he wants to hire climate activists to work for the consultancy – in a bid to encourage the next generation of consultants who are increasingly wanting to leave a positive impact on the world.