Many large law firms have ESG practices that advise clients in a complex and growing area of law. But how do law firms deal with their own ESG measurements? More specifically, what comprises the "S" when they weigh up whether they are ESG-compliant?
The "S" means different things to different people. The following broad and diverse "S" categories can be distilled from the ESG criteria used by various reporting frameworks and rating agencies: workforce, engagement and training; customers; community and society; data and IT security; and human rights. Law firms, as corporations, must adopt their industry-specific ESG measurements.
While pro bono has long been a part of law firm practice, it may be viewed as a partial mechanism to fulfil the "S" requirement when law firms come under ESG scrutiny. Some commentators hold the view that, depending on what legal work a firm does within its pro bono programmes, these activities can address not only the "S" but all three ESG prongs. For example, Allison Laubach of the Lex Mundi Pro Bono Foundation has said that this can be achieved by the pro bono hours being devoted to supporting social entrepreneurs, thereby allowing attorneys throughout the firm to engage in ESG initiatives.1
In the South African context, pro bono is primarily concerned providing legal services to indigent and vulnerable individuals, groups and communities. For purposes of fulfilling the "S", then, it is insufficient, as legal firms’ "S" obligation reaches far beyond assisting indigent third parties. When weighing up whether a law firm is ESG-compliant in relation to the "S", a much broader assessment is needed, looking at how the law firm engages with both its internal and external stakeholders.
Using pro bono to tick the "S" box can have the long-term impact of losing or diminishing the integrity of pro bono legal services, ignoring integrity and forgetting that “giving back” is an integral part of practising law. If the motivation behind having a pro bono practice is to comply with ESG metrics, the integrity has been lost and the practice is no longer really “pro bono”, but a tool for compliance with a larger legal order. This approach would erode the core principles behind pro bono legal work.
The primary difference between "S and pro bono legal services is that "S" has a far broader remit than pro bono legal work. "S" can be achieved in the manner in which a firm works with and advises fee-paying clients and engages with its internal and external stakeholders. Pro bono legal services are aimed at people and communities who do not have financial and other means to access the firm's services to access justice.
Pro bono efforts require law firms to take on more responsibility within our field of expertise: access to justice. Pro bono efforts may be part of, but should not be the sole metric to determine, compliance with ESG, and more specifically the "S" requirement.
What are the pitfalls of conflating a law firm's pro bono outputs with its "S" requirements?
A law firm's pro bono output is a requirement which commonly seeks to assist outside indigent persons. A law firm's "S" requirements go far beyond that and extend to staff, surrounding communities, persons affected by operations, suppliers, regulators, and governmental structures. A pro bono practice does not cater to these extended persons, so conflating pro bono legal work with the "S" would mean that a law firm would not be giving the "S" in ESG its necessary breadth.
If a law firm fails to comply with its "S" related requirements, it may face the risk of litigation or sanction for such non-compliance. It seems unlikely that a record of pro bono work would absolve a law firm from such liability. To conflate a law firm's pro bono output would be erroneous and limiting to the concept of the "S" in ESG.
Is there a danger that access to justice pro bono legal work can disappear?
We do not believe this is a risk. In South Africa, the law governing legal professionals is being amended to clearly stipulate the number of hours that each legal practitioner must devote to pro bono legal work. This legal requirement alone ensures that pro bono work will never disappear. The "S" in ESG is not solely concerned with access to justice but also focuses on ways that a company relates to its societal stakeholders. A law firm can provide pro bono legal assistance to a stakeholder in a company on issues related to the "S" in ESG, but it seems unlikely that a law firm can claim compliance with its "S"-related ESG requirements simply by providing such pro bono legal services to third parties.
An interesting phenomenon which has become more pronounced is the funding, by institutional financiers, of big ticket/large scale litigation. This makes access to justice more accessible to communities who would previously have had limited or no resources to pursue large scale litigation. Although the models of, and basis for, such funding is often controversial, it does provide a mechanism in addition to pro bono provision of legal services to open the door to access to justice. Does that entitle the institutional financiers to claim “S” points for it? We do not believe so. For the financiers, motivation in this instance is not social responsibility, but the potential for profit.
1 - Could Pro Bono be the Golden Ticket to Fulfilling ESG Goals?, Allison Laubach, Lex Mundi Pro Bono Foundation, 23 August 2021, https://www.law.com/international-edition/2021/08/23/could-pro-bono-be-the-golden-ticket-to-fulfilling-esg-goals