Germany: More Than Charity – The New Awareness of Corporate Social Responsibility in Law Firms
Lawyers are “independent organs of the administration of justice”. Law firms in which lawyers are organised therefore make a central contribution to the rule of law. They assume social responsibility. By virtue of their profession, lawyers adhere to the strict professional standards of the German Federal Lawyers’ Act (BRAO), which go far beyond corporate codes of responsibility. Traditionally, some law firms are involved in charitable, benevolent and social activities. Art sponsorship or fundraising for charities and pro bono activities are particularly popular. In the past, many law firms in Germany have freely interpreted all this as Corporate Social Responsibility (CSR).
Traditional versus professional definition
In addition to everyday work in the service of the administration of justice and the contribution to the rule of law, there is naturally nothing wrong in itself with voluntary promotion of the arts, charity and pro bono activities. However, for “real” CSR, as defined in the UN Global Compact Principles and taken up in numerous professional standards (e.g. ISO 26000), this commitment is at best of secondary importance. This is because CSR is a further-reaching, comprehensive concept for more sustainability in a company’s business activities. It is the acceptance of responsibility for the undesirable negative consequences of one’s own economic actions. Broadly defined, this sustainability encompasses the four levels of environment, labour relations, business ethics and sustainable procurement in many facets. At all four thematic levels, CSR must be practised in a process of continuous improvement by means of policies, measures, transparent reporting and external auditing. This applies to law firms just as it does to other companies.
Markets and trends
Beyond the professional definition of CSR, the expectations of markets and clients of law firms with regard to CSR have changed significantly. The calls for more sustainable business practices were significantly influenced by the global economic and financial crisis of 2008 as well as disasters in emerging and developing countries, where Western companies did not want to take any legal responsibility for the negative consequences of their actions. In addition, CSR was a central element of the German EU Council Presidency in 2020. The planned Supply Chain Act is a push to enshrine a corresponding responsibility in law. It responds to social pressure and aims to make voluntary commitments legally binding. For reputational reasons, many companies have already become active in promoting CSR through their market position, irrespective of legal requirements. Increasingly more investors recognise CSR issues as worthwhile or in some cases risk-minimising investment criteria (see Environmental, Social, and Governance (ESG) Criteria for Socially Responsible Investing Governance) and “combine the pleasant with the useful”. These developments have also had an impact on law firms.
Specific new requirements
Law firms need to respond to these social and market developments at various points. Companies are increasingly checking their supply chains for compliance with CSR standards. Law firms “supply” legal services and are therefore part of this chain. For example, in supplier audits, tangible evidence of compliance with CSR standards is increasingly required, for example in the form of audit certificates, ISO certifications and the achievement of certain audit targets defined by the client. From a CSR perspective, the company’s own legal advisor should not represent a legal or reputational risk. In the context of tenders, it is becoming clear that CSR has become a component of the corporate philosophy for more and more companies and the external legal advisor must also adapt accordingly. This can be observed analogously in legal advice on ESG projects. Traditional “CSR” efforts, which used to be considered positive in an offer, are now increasingly taken for granted and hardly generate any enthusiasm. Lip service and green washing or blue washing are quickly detected by professionals, such as CSR managers in companies.
The pressure from within
The call for sustainability in business life which is being heard by law firms in Germany is not just coming from the external markets. It is also coming from the offices themselves. Law firm employees are not exempt from social trends. Sustainability is important to them. They are increasingly looking at how their employer contributes to CSR. For employer branding reasons, too, law firms must now take into account that employees identify more strongly with a CSR-conscious employer. Job applicants are increasingly interested in who is involved in CSR and how: Which employer involves employees in cross-divisional sustainability initiatives? Which law firm is trying to improve its carbon footprint in a structured way? Who actually promotes and is committed to pro bono legal advice? And who integrates CSR principles into their legal advice? In times when monetary remuneration is no longer the only argument for an employer, such questions can “tip the scales” for applicants when choosing a law firm.
Conclusion
In view of the developments mentioned above, it is not surprising that CSR has gained and is still gaining importance in the world of law firms. We assume that the understanding of CSR in law firms will change even more widely and sustainably in forthcoming years. At Taylor Wessing, we have recognised the importance of CSR and want to take more responsibility for the undesirable negative consequences of our commercial activity. In doing so, we will focus first on the CSR level of environment before moving on to the three other levels. In 2020, we published our first environmental policy, which sets out our environmental objectives. In 2021 – and then on a regular basis – we will also publish an environmental report that quantifies our environmental footprint and makes transparent our measures to save energy, reduce CO2 (e.g. air travel) and reduce waste (especially paper). With this, we want to further improve our environmental balance sheet and commit ourselves to more CSR-related activity in the future.