Login to MyACC
ACC Members

Not a Member?

The Association of Corporate Counsel (ACC) is the world's largest organization serving the professional and business interests of attorneys who practice in the legal departments of corporations, associations, nonprofits and other private-sector organizations around the globe.

Join ACC

Allie Umoff, Senior Associate, LK

Allie Umoff, Senior Associate, LK

In his report dated 15 October 2021 in the Royal Commission into the Casino Operator and License (the Report), Commissioner Ray Finkelstein QC made a series of comments about the proper role of in-house and external lawyers.  While many of the Report’s specific findings relate to the highly regulated casino industry in which Crown Melbourne operates, the broad themes set out in the Report provide a caution to lawyers advising corporate clients, particularly in-house lawyers providing advice and guidance to their organisation’s management team.

The Commissioner strongly criticised Crown Melbourne for taking a ‘risk based approach to legal and moral obligations’, focusing ‘more on the chance of getting caught (and preparing defensively for that event) than on the need for compliance with the law and adherence to ethical standards and community expectations’ (Report, Ch 18 [46]).

Although much of the Report focuses on the responsibility of various Board members, senior executives and related parties, the Commissioner also found that in-house and external lawyers bore some responsibility for Crown Melbourne’s breaches.  The Report variously describes Crown Melbourne’s internal and external lawyers as being involved in devising the strategies which were implemented to avoid Crown Melbourne’s statutory and regulatory obligations or to minimise the consequences if Crown Melbourne got caught, or as being willing participants in those strategies (see, eg, Report, Ch 13 [17]-[21]; Ch 14 [25]-[34], [40]-[54]).  

The Commissioner suggested that lawyers ‘should have some obligation, perhaps best characterised as a moral obligation, to see that their client obeys the law’ (Report, Ch 18 [56]).  Commissioner Finkelstein further suggested that lawyers should consider asking clients if proposed conduct, even if technically legal, is morally correct and is consistent with the purpose of the relevant law (Report, Ch 18 [57]).

While such a ‘moral obligation’ is not explicitly referred to in any individual rule in the Australian Solicitors’ Conduct Rules, it is supported by a number of those rules.  For example, solicitors have a duty to be honest and courteous in all dealings in the course of legal practice (r 4.1.2); to avoid any compromise to their integrity and professional independence (r 4.1.4); and to not engage in any conduct which is likely to prejudice or diminish the public confidence in the administration of justice or bring the profession into disrepute (r 5).

The duty to act in the best interests of a client (r 4.1.1) would, at least in some circumstances, also require raising with the client any potential significant legal, ethical, or moral issues with a client’s desired course of action.  While it may not always be in the client’s immediate, short term interest to consider such issues, it may well be in its longer term interest.  This may be especially true for a company which operates in a regulated industry—such as the gaming, financial services, or natural resources sectors—where ‘good standing’ is a prerequisite to maintaining its license.  Such matters may also be significant for a publicly listed or high profile company, as shareholders, members of the community, and other stakeholders increasingly expect companies to act in a socially responsible manner.  

The importance of acting lawfully, particularly for companies in a regulated sphere, was demonstrated by the recent decision of the Full Court of the Federal Court in Cassimatis v ASIC [2020] FCAFC 52.  In that case, the Court held that, in discharging their statutory duties to the company, directors need to take into consideration the foreseeable risks of harm to the interests (financial or non-financial) of the company, the magnitude of that harm, and the potential benefits to the company resulting from any particular course of action.  Such harm may include legal consequences for the company as a result of acting in breach of its regulatory or statutory obligations, such as exposure to fines or loss of license.  In such circumstances, directors may be acting in breach of their duties by causing the company to take, or failing to prevent the company from taking, the relevant action.  

Further, so-called ‘soft law’ obligations (eg, in respect of listed companies, ASX Corporate Governance Principles and Recommendations, Principle 3) may also be relevant when considering what are the client’s ‘best interests’.  The layering of statutory, regulatory, and common law obligations can complicate this analysis, and there may be instances where hard law considerations take priority over any soft law obligations or targets.  However, in providing a fulsome analysis of a particular course of action, the potential applicability of any relevant soft law obligations should be considered.  

Part of the lawyer’s role is to counsel their client, bringing independent judgment to bear, and being more than a mere functionary who carries out, or facilitates the carrying out of, the client’s instructions.  This can include offering a frank and thorough assessment of a client’s proposed course of action, and identifying potential risks or issues.  When advising on complex legal and commercial matters, in order to best serve the client, it is usually (if not always) important for lawyers to take a step back from the immediate issue or project confronting their client, and consider the wider landscape and potential longer term risks and rewards.  


This site uses cookies to store information on your computer. Some are essential to make our site work properly; others help us improve the user experience.

By using the site, you consent to the placement of these cookies. For more information, read our cookies policy and our privacy policy.