Paul Watchman

Episode 23  26 July 2021

Big Law and the big greenwash

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Big Law and the big greenwashPaul Watchman
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Paul Watchman

Special Legal Adviser at UNEP Principles of Sustainable Development Net Zero Insurance Underwriters Alliance

Leading Legal Authority on ESG

Paul Watchman is a leading figure and recognised legal authority in areas connected with ESG (environmental, social and governance). Through a long association with the UN, he closely scrutinises law firms and their developing ESG practices.

We talk about the widespread greenwashing by Big Law, how large law firms really see their ESG practices as recruitment tools and promote it in glossy material and through webinars and their websites, but in large part fail to walk the walk on diversity, wellbeing, sustainability and transparency.

Bio

Show notes

Links

Transcript

Comments

Bio:

Paul Watchman is a recognised legal authority in areas connected with ESG. He is formerly a partner of magic circle firm Freshfields.

He was named by Ethical Corporation with Hank Paulson, former United States Secretary of the Treasury, as one of the six most influential global figures in the development of sustainable finance and has been awarded the Thomson Reuters Environmental, Social and Governance (ESG) Leadership Award for Outstanding Contribution to the Development of ESG (Environment Social and Governance) in 2010.

He is a leading figure in the development of policy, business and financial practice, national and international legal norms and voluntary codes and standards and a recognised authority and thought leader in areas such as business and human rights, sustainable finance, corporate responsibility, and climate change law.

 

He has a long association with the United Nations and the Principles of Responsible Investment.  He has acted as Legal Counsel and Special Advisor to the United Nations Environment Programme Financial Initiative (UNEPFI) on a number of projects. This includes being the principal author of a report on fiduciary duties which was an influential report credited with revolutionising market practice on the legality of integrating ESG considerations into the investment decision-making by pension funds and other investment houses.

 

Show notes:

  • [2:05] Paul shares his background as a lawyer in Glasgow acting for the homeless and victims of domestic violence, before he turned to academia and eventually became a Partner at Magic Circle law firm Freshfields.

  • [5:45] Paul says the levels of greenwashing he has found in scrutinising Big Law firms is substantial, having reviewed the ESG practices claimed by 55 international law firms.

  • [7:06] As a Big Law insider of many decades, Paul is well-equipped to judge what large law firms are promoting about their ESG credentials and what is actually true.  What he found was exaggeration of the scale and depth of ESG practices.

  • [9:58] ESG specialism takes a commitment to learning, plus practical experience. The true number of ESG legal specialists is significantly smaller than what is claimed collectively by law firms. Genuine specialists would be known by the long-time practitioners in the area.

  • [12:11] Paul expands on law firms using their ESG practices as a recruitment tool while their own records on diversity and wellbeing are dismal.

  • [15:11] According to Paul, one of the biggest drivers of unhealthy culture in large law firms is the billable hour model which reduces lawyers to resources and puts young lawyers under tremendous pressure.

  • [16:40] The billable hour model also mitigates against the specialism needed for ESG lawyers to develop, due to the investment in learning required which short-termism does not allow for.

  • [19:39] Paul identifies specialist niche legal practices as one of the reasons for optimism in the development of authentic ESG legal practices. Niche practices can also choose clients who are aligned with their own values, which Big Law is not prepared to do.

  • [23:43] Another point of pressure ought to come from general counsels and in-house legal counsels holding law firms accountable for diversity and inclusion in their workforce, including by demanding audits.

  • [27:34] In Paul's direct experience, large law firms are extremely reluctant to provide statistics on gender diversity at the top of the tree in their structures, which is equity partnership.

  • [30:03] We discuss how the real problem with Big Law and the ESG greenwash and hypocrisy is a fundamental lack of transparency.

  • [35:31] I ask Paul for advice to young up-and-coming ESG lawyers and his extremely insightful message is to be courageous, be focussed, be imaginative and be mindful of how ESG is  changing structures and public expectations, such as applying public law standards to multinational corporations. 

Links:

 

Chasing the Dragon: The Rise of the ESG Law Firm, a coming report by The Blended Capital Group's ESG Law Advisory Team. led by Paul, exploring ESG developments across the global legal community. 

The ground-breaking 2005 report, A Legal Framework for the Integration of Environmental, Social and Governance Issues into Institutional Investment, produced by Freshfields for the UN EP Finance Initiative   

Jeff Twentyman, Corporate Partner at Slaughter & May

Georgia Dawson, Senior Partner at Freshfields

Aedamar Comiskey, Senior Partner at Linklaters

Charlie Jacobs, immediate past Senior Partner at Linklaters & now co-head of investment banking at JP Morgan

Oscar 

John Ruggie, Berthold Beitz Research Professor in Human Rights and International Affairs at Harvard University, leading human rights expert and author of the UN Guiding Principles on Business and Human Rights

John Sherman III, General Counsel and Senior Advisor of Shift

The UN Guiding Principles on Business and Human Rights

Alan Jope, CEO of Unilever

Ben McQuhae, founder of Ben McQuhae & Co,  a specialist sustainability legal practice

Vanessa Havard-Williams, Global Head of Environment & Climate Change, Linklaters

Lawyers for Net Zero, a coalition of in-house counsels delivering climate action

Erin Lyon, V-P of Sustainability Consulting at ELEVATE

ERM, environmental consulting firm, issues media release on KKR acquiring a majority stake in it in May 2021,

Law.com's 2020 equity partner survey

A Guardian news report on Mishcon de Reya's proposed IPO.

Slaughter & May's part-time work programmes .

GE 2015 press article on its Ecomagination programme, a strategy to solve looming environmental and sustainability challenges in ways that make economic sense.

US EPA information on the Hudson river clean-up.

The Australian Parliament's inquiry into Rio Tinto's destruction of sacred rock shelters at Juukan Gorge. 

Sharma by her litigation representative Sister Marie Brigid Arthur v Minister for the Environment [2021] FCA 560, the landmark Australian Federal Court judgment finding the Federal Environment Minister owes a duty of care to children.

The Royal Dutch Shell case, Milieudefensie et al. v. Royal Dutch Shell plc.

An Independent news report of modern slavery investigation into UK fashion manufacturer Boohoo.

A Guardian news report on the Australian Fair Work Commission's finding of unfair dismissal against a Deliveroo driver.

 

 
 
 
Paul Watchman Image Quote IG.jpg
 

Transcript: 

Geraldine  0:12  
Hello, everyone and welcome to the New Earth lawyer podcast. My name is Geraldine Johns-Putra. I'm a lawyer based in Melbourne, Australia. Today we have a guest from the UK. His name is Paul Watchman. He's a lawyer, formerly a Partner of the Magic Circle firm Freshfields. Paul is a leading figure in the development of policy, business and financial practice, national and international legal norms, codes and standards, and a recognised authority and thought leader in areas such as business and human rights, sustainable finance, corporate responsibility and climate change law. He also has a long association with the United Nations and the UN Principles of Responsible Investment. He has acted as a Legal Counsel and Special Advisor to the UN Environment Programme Financial Initiative. He's led groundbreaking reports on ESG, environmental, social and governance considerations, and is basically a towering figure in the area of law that's known as ESG. So Paul, it is an absolute pleasure to have you on today. Thank you for joining us. 

 

Paul  1:28  
Thank you. 

 

Geraldine  1:29  
Now... 

 

Paul  1:30  
What would you like me to talk about?

 

Geraldine  1:33  
Where should we start?  Well, one of the areas that I really want to get into, and we were talking about this before I started recording, is the work that you're doing around reviewing law firms in their own ESG practices. And one of the interests I have on this show is how lawyers are changing the world through the practice of law. So what are you seeing in terms of the law firms that you're keeping track of, how are they doing on that score?

 

Paul  2:05  
Well, I think let's roll back a bit. About 2016, I would say there was hardly any law firms in this space whatsoever. And since about 2018, there has been a rush over the cliff face by lawyers acting like lemmings and thinking that oh, we must get into ESG, but forgetting that before you can do this sort of thing, you've got to develop a skill, you've got to have some training. The idea of working for a Magic Circle firm and being a human rights lawyer is quite radical, unless you're defending tobacco companies. So the problem is having people who have got the right skillset to look at things. I mean, I was quite lucky because I started off in the mid 1970s doing work on homelessness and particularly battered women in Glasgow, the East End of Glasgow, and we opened up the first ever legal advice clinic there. And we were torched, I think that's a technical term, I don't know if you have it in Australia, it is sort of like a wildfire. but someone sets fire to your offices. And I became an academic and then went through various transitions, but always on this sort of business and human rights or the environmental side and climate change has been one of the areas and financial sustainability that I've been very interested in. 

Eventually I was a partner in Freshfields and we issued the Freshfields report in 2005, in which we said that not only was ESG considerations compatible with discharge of fiduciary duties for pension funds and for corporate entities, but we went on to say that it was required. Because if you look at mining, if you look at fossil fuels, but equally, if you look at banks, they have huge impacts on carbon emissions, huge impacts on human rights and the employees rights, etc. And over the years, I've been working around that in various forums, writing books or articles, etc. But I've been very lucky. I've had a great number of Australian associates, I had an Australian associate with purple hair, but we decided to keep her on and she was instrumental. One of the people who was instrumental. It's often younger people, younger associates, etc. who come to you and say, have you thought about climate change? Or have you thought about how we might approach this whole idea of fiduciary duty as an investment or in terms of the rights of children and child labour in Africa and the chocolate, cocoa plantations, etc. So I have been very fortunate that I've had a very, what would one say? I've had a very varied experience of having really, really great associates. I always surround myself with brighter, more hard working people. And then I can take the credit for their efforts. And I've done that successfully for many, many years. As if you get in contact with Jane some time, she'll probably tell you that. 

 

But so, we are today at a stage which we haven't been before. We have law firms trying to enter the ESG space. We looked at 55 law firms worldwide, including is it Minter Ellison, we looked at them, we looked at Clifford Chance, looked at Paul Weiss we looked, so we looked at the US, we looked at Australia, we looked at Asia, and we looked at far as we could at firms who are promoting themselves on ESG. And guess what we found? Gallons and gallons and gallons of greenwash, we found so much green washing we could refill the Aral Sea. I don't know if you've got an equivalent to that in Australia. But it was the second largest inland sea that was drained completely by the Soviets for cotton manufacture. And so it's now known as Aral puddle.

 

Geraldine  6:45 
So can I ask you how you judged this greenwashing? Because I'm not disputing that you found it. But what was the measure? 

 

Paul  6:49  
Okay, okay. Well, we had to look out for what they were putting out publicly. I mean, I am an insider, I've been in this area for four decades. 

 

Geraldine  7:01  
Yeah. 

 

Paul  7:01  
So I do know the people who walk the walk, so to speak. 

Geraldine  7:05  
Yeah. 

 

Paul  7:06  
And that's worldwide. When we started in this journey. There was about fifty of us worldwide, including bankers and lawyers and various other skillsets. We all knew each other by their first names. Now, when I go to conferences, I'm frequently asked if I'm dead, or why am I still alive or words like that. But I go to conferences, and there's thousands upon thousands of people who all earn a living through ESG. So you ask how we find out about law firms? 

 

Geraldine  7:38  
Yeah.

 

Paul  7:38  
So we look to see what they said publicly. So they have webinars, and then client briefings. And all these good things.

 

Geraldine  7:48  
Beautiful promotional material, new website, material, etc. 

 

Paul  7:51  
Lots of promotional material, right. And then we drill down to the personal profiles, and we drill down to who they claimed were part of the ESG practice. And we frequently found that they claim anything between seventy and four hundred lawyers who were practising ESG, and I phoned out some Senior Partners and said, look, I have good problems naming twenty, and I've been working in this area for decades. You tell me your firm has four hundred ESG lawyers, do you mean you've got four hundred lawyers who have done what? And they say, oh, we've got people who do green bonds. I said, well, tell me about your green bonds. 

 

Geraldine  8:36  
How many have you done? Yeah.

 

Paul  8:37  
Yeah, yeah, yeah, we've done a lot of tobacco litigation. I said well, that's not really the human rights stuff that we're interested in. And so we went round. So we drilled down and found that a lot of firms had one, two, three or four, maximum, people who had any ESG skills. And I had a long conversation with Jeff Twentyman at Slaughter & May. And his remedy was to send twenty Partners off to Oxford, for a 6 week course on sustainability and law. Now, not only did that cost them about 3 to 5 million in terms of foregoing fee income, but it's a bit like sending someone off for a 6 week life drawing class. When they come by you say can you draw something like that Renaissance artist, that Raphael, could you do something like that? And then they say, oh, we've, I don't know where I've put my paints or my pencils, I meant to bring them back, but I've forgotten what they told me. There's something called chiaroscuro, and it's something to do with charcoal. I need charcoal. But it's a complete con, because you can't learn this area in 6 weeks. 

 

Geraldine  9:51  
Yeah. 

 

Paul  9:52  
And you can't do it unless you have got a real commitment to learning. 

 

Geraldine  9:58  
Yes, 

 

Paul  9:58  
Because when people come to me and say, oh, x in this firm is a human rights lawyer. I sometimes say, well, I know the firm, I have my own views. But can I just suggest. and this happens with the legal directories, and with journalists, can I say, can I suggest I'll give you two names. I'll give you John Ruggie, who, as you know, wrote the UN General Principles of Business and Human Rights. And I'll give you John Sherman III. And John is the head of Shift, which is in charge of implementing them.

 

Geraldine  10:34  
Indeed, in New York.

 

Paul  10:36  
I said, if they've heard of them, I'll be surprised, but I think you should ask them. And they know the people in this area because Ruggie had for what 2011 the principles came out? So it's 10 years this year?  

 

Geraldine  10:52  
Yeah. 

 

Paul  10:52  
But there was about five years beforehand where we were going round the world, because I was part of that process. Not as much as he burned out. He actually wrecked himself doing that, that really, really, I've got tons of respect for John and, but the thing when I say wrecked himself, all I mean, I don't mean, he's gone to ruin, all I mean is it was a huge, huge effort on his part.  

 

Geraldine  11:19  
Yeah.

 

Paul  11:19  
To try and push that through. And he sacrificed his life for about a decade.

 

Geraldine  11:27  
To get that consensus and get that out. 

 

Paul  11:29  
Yeah. So if you're not known by someone like John if you, or one of the Johns, you know, it's very, you do get lots of different types of human rights people, you get people who do the European Convention human rights, etc. You get people who do the international law side. 

 

Geraldine  11:48  
Yep. 

 

Paul  11:49  
And this is not necessarily that, this is real boots on the ground stuff. This is how you deal with companies who are employing people, or maybe children in mines or plantations, or they're interfering with the fishing and farming rights of indigenous tribes, etc.  

 

Geraldine  12:10  
Yeah. 

 

Paul  12:11  
This is really very focused stuff. And I'm afraid if I don't know you, and John and John wouldn't know, you're really not, you shouldn't be really pushing yourself in this space. But that's not to say we don't want young people coming through We desperately want that. And we think that young people developing these skills, it's fantastic. But if you see it from the law firm's point of view, it's a very great recruitment incentive. I mean, Alan Jope, who's the Chief Executive Officer of Unilever says it's the hottest recruitment button that they have. And I think also, you'll find that law firms do this. And they try and recruit, but then they've got problems of retention. Because if you don't walk the walk, and a lot of law firms will tell their clients, you must have greater diversity, you must be more inclusive, you must weed out bullying and sexual harassment, etc. only to be themselves very, very poor in terms of these issues. 

 

Geraldine  13:16  
Yeah. 

 

Paul  13:17  
Law firms are not very diverse. They're not very inclusive. their gender inequality has been going now for well over 100 years. And it's, I mean Freshfields had their first female Senior Partner. I think she's Australian. Georgia Dawson?

 

Geraldine  13:38  
Yeah, Georgia Dawson. Yes. 

 

Paul  13:39  
Yeah. So Georgia's the first one. 

 

Geraldine  13:42  
So we've got law firms who are saying that they're doing all of these things and you've really held their feet to the fire and you've found, mmm not so quick, you haven't really. And then there's a really good point you're making here, which is what right do these firms have to be lecturing the world or their clients or business on ESG - environmental, social, governance - change, when you mentioned the diversity issue, but it's also the wellbeing issue that occurs in law firms? So, purpose led companies, which many of these law firms are claiming they advise, are governed not just by the bottom line but by making sure that they're making a positive impact on their customers and their people.

 

Paul  14:32  
Yeah. Well, we do know, and this has been, this has been shown time and time again, that law firms carry with them a very bad reputation for mental stress, and for health. And during the pandemic, if anything, it's gotten much worse with young people, perhaps sharing flats or not having adequate contact with mentors and other people will affirm. I've had a campaign over the last couple of years where I've tried to say stop having billable targets. 

 

Geraldine  15:08  
Oh, yes. That's a big topic. Yeah. 

 

Paul  15:11  
Yeah. I mean, if you can imagine you're going into hospital for an operation, your surgeon is saying, well, I could actually fix your heart just now and do something really quick, but I've got to achieve my billable target for this week, so you'll be on the table for a couple of hours while I fiddle about with things, and then I'll be able to get my bonus at the end of the year, which is based on the number of hours I work, not the number of patients I save. And for a lawyer if I handed some work to my least able Associate, who never had done this before, without any support from me, etc. or one of the more experienced lawyers in the group, because it's very much a group. And so if I did that, it would take them ages to do it, because they'd have to find the legislation, they'd have to find the precedent, they'd have to find the policy, they then they might be able to advise the clients. But that's what we do. We put these young people under tremendous pressures, as if the billables are the measure of the quality as a lawyer. And I do want to see law firms. And I'm hoping that you're going to tell me that Australian law firms have junked billable targets and they have brought in... I mean, for example.

 

Geraldine  16:37  
No it's too hard.

 

Paul  16:40  
How do you learn? How do you become an ESG lawyer? It means that you have to do research, where do you get the time for the research? You have to keep up with what's happening? I mean, like, the other day, I've been advising on the Shell appeal in Holland, and talking to people in the United States about what the issues are, people in Europe, etc. and that's because I know about what the issues are, etc. But I didn't wake up one morning and thought oh, right, okay. I know a great deal about the law relating to climate change, for example, I had to learn that. I wrote a book on climate change and that was in 2008, and believe me, it's an effort to keep up to date. But can you imagine that some of the things I wrote in 2008 have been superseded by a tsunami of case law. Yeah. I mean, you have in Australia, for example, you had the Rio Tinto scandal.

 

Geraldine  17:33  
Correct.

 

Paul  17:33  
Fiasco, however you want to say it.

 

Geraldine  17:35  
And then we had the recent case about the duty of care that the Environmental Minister now has to children. That was just this year. 

 

Paul  17:42  
You see that's really interesting, because that's about intergenerational justice. 

 

Geraldine  17:46  
Yeah. 

 

Paul  17:47  
And that's what the Dutch are also saying in the Shell appeal. It's about what's going to happen now, i.e. Holland is going to go underwater, and that's not a great thing. But we're also looking at a time horizon, we're looking at not just what's going to happen this year or next year, but what's going to happen to the next generation, who are going to have to get webbed feet and learn how to swim very strongly. And I think that's really important that we're seeing the judiciary change. And I think one of the Supreme Court judges in England, maybe Lord Sales, was out in Australia recently arguing that there needed during the pandemic to be an extra E in ESG, because of employee rights.    

 

Geraldine  18:32  
Yeah. 

 

Paul  18:33  
And we've had that with Boohoo and Deliveroo in the UK. And I'm sure you've got lots of, well, you certainly have Aboriginal discrimination in Australia, there's not many Senior Partners yet who are Aboriginal. 

 

Geraldine  18:46  
Well not even many lawyers in large law firms who are Aboriginal. So. 

 

Paul  18:52  
Of course. 

 

Geraldine  18:52  
You have trouble even finding one or two per law firm.

 

Paul  18:56  
And when did people realise they weren't there? I mean, they've known this for decades, you know. 

 

Geraldine  19:01  
Yes correct.

 

Paul  19:02  
And it is totally unacceptable. 

 

Geraldine  19:05  
So I'm going to ask you a question about optimism then. You, we started out by talking about just how many law firms are getting in on the ESG bandwagon or jumping on to it. And we want to encourage responsible practices, both in law firms and in law firm clients. But how are we actually going to get there with with just everybody opening up their ESG practices? And even if they reduce the number of lawyers whom they say are practising ESG, how meaningful is it going to be?

 

Paul  19:39  
Well, this is interesting. As you know, there are certain practices that are broken away, and, or people start to establish their own practices. A guy called I can't pronounce his second name, but something like Ben McQuhae.

 

Geraldine  19:53  
In Hong Kong. 

 

Paul  19:55  
In Hong Kong. 

 

Geraldine  19:56  
Yes, I know him. 

 

Paul  19:57  
He does a practice based on the Social Development Goals.

 

Geraldine  20:01  
Yeah. 

 

Paul  20:01  
And he has a rating device, which he's willing to share with much larger law firms and much smaller law firms than his where they can do this rating of your clients and decide, because one of the things is that law firms are going to have to choose their clients, this is something they're going to have to face up to. 

 

Geraldine  20:19  
Yep.

 

Paul  20:19  
But to answer your question, what's happening? There is in some of the law firms, particularly the example I'd give you is probably Vanessa Havard-Williams at Linklaters.

 

Geraldine  20:30  
Yep I've worked with her.

 

Paul  20:31  
Linklaters have got a very impressive ESG practice. And they work hard at it. I mean, I think they've put out or I know, they've put out over 200, webinars, client briefings, etc. But I also know that if I ask Vanessa a question that she'll know the answer.

 

Geraldine  20:50  
Yep.

 

Paul  20:51  
Or one of her team will know the answer as it's such a wide front. So I think that what we're going to see, and remember, Linklaters have recently changed Senior Partner. And whereas the last Senior Partner Charlie Jacobs used to pretend he was interested in ESG, the new woman Aedamar Comiskey, doesn't even pretend that she gets it. So there are lots of issues spinning around it. And it's the same with many law firms, which see this as a fee earning opportunity but they don't actually grasp the fact that you do have to provide the service, you have to provide the commitment. And I had a conversation with a Partner at a Magic Circle firm, who told me that one of their heavy hitting corporate lawyers had recently gone to see a client to do a yearly presentation to the board type thing. On every question, the very senior corporate lawyer, who does not know anything, doesn't know anything about ESG, all the questions were ESG. It was about disclosure, it was about the Green Plan, it was about net zero, etc. And according to the person I spoke to, that Partner came back saying, I never want to be exposed like that again. And so that enabled this Partner to be able to go to his Partnership board, to and sort of say, I think you'll find that we need to do something. So it's not just a matter of fees, it's the retention of market share. And I do know that people or firms or companies are leaving their old advisors, because they don't have the capacity to advise them on, say, human rights issues or disclosure. 

 

Geraldine  20:51  
Now what you're saying here, though, is that it's going have to come down to the specialist firms, because the law firms are not willing to make the investment in the learning because I absolutely agree with you, about how much learning goes into it and maintenance of knowledge. So if law firms are not willing to do that, because of short term horizons, and the way they measure performance, then they are going to have to leave that part of the market to the McQuhaes and so on. Do you think that there's going to be enough pressure on them to change? 

 

Paul  23:29  
Yeah, I'm involved with something called Lawyers for Net Zero, you've probably not heard of it yet. 

 

Geraldine  23:34  
Nope.

 

Paul  23:35  
But we will be contacting you. It's an organisation based for General Counsel and in house lawyers. 

 

Geraldine  23:42  
Yeah.

 

Paul  23:43  
And what we're trying to do is to talk to them about issues around, about net zero. And we've got people like Nestle and Aon, and GSK and the pharmaceutical companies etc. So, and the idea is they will learn from each other, and they will start to put in their selection, their procurement process for legal services, demands about diversity, inclusion, demands about climate change, etc. And they will monitor that a little harder, but auditors etc. I mean, that's why private equity companies are buying up all these consultancies that deal with ESG, like, ERM were bought by KKR, etc. And there's a lovely woman called Erin Lyon who's based out of Singapore, and she has something called Elevate and they're a boots on the ground consultancy. But the wonderful thing is that if we can get General Counsel, and if we can get the boards, and if we can get the in house lawyers to say we want you to provde these services and if you want to be our lawyers, we expect evidence of how you've implemented your diversity program. So it's not enough to say, we will have so many women or so many people of colour in on a transaction we actually want to send in our auditors, or if you don't do it, we're not going to pay you, we're not going to employ you anymore. And I was told by Oliver Dudok van Heel, who is the principal sustainability advisor for Freshfields, I was told that when they woke up to it was when a client said unless you do this, I'll be reducing your fees by 30%. And so that's a Partner share of the...

 

Geraldine  25:42  
Exactly. So that's the margin. So what I think we're getting to is that there is incremental change, that will be, we hope, demanded by the clients.  

 

Paul  25:55  
Yeah. 

 

Geraldine  25:56  
It, that's really targeting almost a symptom of that wider problem that we were talking about around earlier, which is the billable hours, which is culture, which is how people are remunerated and rewarded. So ESG, as important as it is as a topic in itself, it is actually going to be the thin edge, right that should open up one hopes into broader cultural change, rather than coming at it the other way, which is the advantage that the specialist firms have or the New Law firms have because they start with their core values in place, and then it becomes second nature to be doing the ESG work and to be investing in the time that's needed to scale up. So this is actual going to work to the disadvantage of the larger law firms. 

 

Paul  26:48  
Yeah. Well, I have a project going just now which you may be able to help with, because I'm trying to get the words greenwashing translated into as many languages as possible. So I can put up on my screen the words, greenswashing. But I think you're absolutely right, there is this issue that law firms will have to face up to and that is unless they change, then things are going to change to the disadvantage, but in saying that I was talking to someone the other day about Law.com's survey on women, and how many women Equity Partners there were in London law firms. 

 

Geraldine  27:34  
Yeah.

 

Paul  27:34  
And American law firms. And a lot of them didn't answer. Now that information was there. You know, they can't say we don't know how many women Partners we have, it might well be that they have well under their target, which is a frequent problem. I think Freshfields is about 18% or 20%, when they've been promising more for about 20 years. Clifford Chance have announced a 40% target. So you need auditing. But the thing is that it is just pressing a button, you know how many women Partners you have, you know how many women are Salaried Partners, you know the number of Partners in your firm, and you know the ones who are paid profit out of the profits. It's pushing a button, and they wouldn't even push the button. And that's firms like Linklaters or  Freshfields, where the Senior Partner is a woman. 

 

Geraldine  28:35  
Mm hmm. 

 

Paul  28:37  
How did that happen? 

 

Geraldine  28:38  
Yeah. 

 

Paul  28:39  
Didn't they consult her or doesn't she sort of say, well, anything to do with gender, and equality I want to see us answer in an open way? And the fact they wouldn't answer just struck me as being incredible. 

There's something really interesting because Slaughter & May are offering their Associates that they can work less hours for less money. But to do that, you have to establish the norm. So is the norm 40 hours a week gets you 40,000 and therefore 20 hours a week gets you 20,000 or they say 80 hours a week gets you 40,000 and therefore, if you want to go down to 20 hours a week, that is down to 10,000. So it's fascinating that they can't, they don't seem to actually think things through that if you're going to offer people the ability to work less for less money, then you have to establish what the norm is. So a Newly Qualified in a law firm perhaps gets 80,000. So if he or she wants to work half the week 40,000. And by half the week do they mean 40 hours, which most people would put down as a full week?

 

Geraldine  30:03  
You know, what is becoming really clear to me as we're talking, Paul, that the real issue, whether it's around billable hours or gender diversity numbers and stats, is transparency. That strikes me as the real issue with large law firms. 

 

Paul  30:20  
Well, one of the interesting things is a firm in London called Mishcon de Reya is an interesting firm, and they are doing an IPO quite soon. And they said they want to be subject to corporate rules, so that they are you know transparent, they think they are transparent anyway. And they've got the very C class, or is it the B class recognition? So they're on a journey to do that. But why are law firms not transparent? I mean, the fact is, when I started off as a lawyer in Edinburgh, no other Partners actually knew what the other Partners earned. It was quite interesting. And they kept that very quiet and they wouldn't let you see and they wouldn't tell you. And then when I came down to London, it was a bit more transparent. But again, when they started to deequitise people in the last 10 or 15 years, move away from the lockstep system. 

 

Geraldine  31:23  
Yeah. 

 

Paul  31:23  
I think that you're getting this eat-what-you-kill type mentality, coming from the States and infecting everyone else. And then you've got a degree of well, the opposite of transparency, non disclosure, who gets what? Who's equity who's not equity? Maybe that's why they didn't answer because they didn't want their own Partners to know how many women were not on equity, because then women Partners may have come out and said, we want equality, we want parity of treatment. We work as hard as these people work.

 

Geraldine  32:02  
But then you also get this poison, I think, which is the spin of messaging, which is...

 

Paul  32:08  
Yeah.

 

Geraldine  32:08  
Really worse than saying nothing at all right? So not answering the question on the Equity Partners who are female is one thing, but it's when something is put out that you know was written by a bunch of lawyers and you think, well, you're not, there's something that you don't want to answer here. 

 

Paul  32:27  
Yeah. I had an interesting discussion on women, and the law and inequality with a number of people like the FT and legal businesses. 

 

Geraldine  32:38  
Yeah. 

 

Paul  32:39  
And I said, you always show the percentage of women who come into the profession, so it's about 50-50. 

 

Geraldine  32:46  
Yeah. 

 

Paul  32:46  
Then you show the percentage of women who survive as Senior Associates maybe 5, 10 years down the line and maybe by that time, it's 75-25. And then you show the number of women who make it to Partner so we're down to maybe 20%. Today, and you put up that this firm has 20% women Partners, this firm has 30% female Partners. And I've always said to them, do it the other way around. This firm has 80% male Partners, this firm has 70% male Partners. And in other walks of business, if you went into business and said that the firm is 70% of the senior people in this firm, are men, you'd go no, that's not right, that's not as it should be. And also the fact is if you're losing so many women and the journey through, why are you losing them, what do you need to do to support men and women lawyers, particularly women lawyers?

 

Geraldine  33:50  
But what is the issue, I think, on the diversity front is that those numbers that you were talking about are actually fairly equal, from Graduate to Associate to Senior Associate, more would be these days, when I look at announcements of promotions, more would be promoted to Senior Associate and Special Counsel, which is the kind of interim that we have in many firms in Australia, more would be women. And now we're getting more women into Partnership. But it's that question that you were asking about the equity. That's where the power really lies. And that's where the inequality is the most stubborn.

 

Paul  34:33  
But that's where the disclosure is really important. 

 

Geraldine  34:36  
Yeah. 

 

Paul  34:37  
Because you know, you need to know that someone's been paid three times what you're doing, and you're doing the same. 

 

Geraldine  34:44  
Yes. 

 

Paul  34:45  
That perhaps you're regarded as a more talented lawyer type thing. I mean, I came from that background where you had lockstep and it went up and de-de-de. And we had an international lockstep at Freshfields. And at the time, and one of the reasons lots of people left Freshfields was we had an annuity system whereby not only did you have a lockstep but when you retired, you were meant to have devoted so much of your life and forgone income to develop the firm that they gave you a pension thereafter. Now they've change those rules. Because essentially, people wanted money now rather than the future. But it actually was quite good because it meant that you wouldn't lose an important member of your team to a rival firm, just because they could get another 20, 50,000 or whatever. 

 

Geraldine  35:43  
Yes. 

 

Paul  35:43  
They had a real investment in the long term interests of the firm. And it has its abuses. 

 

Geraldine  35:51  
I want to ask you a final question, Paul, because this has really sharpened my thinking. Having spoken to a few other lawyers, especially the new ones coming out and having been large law firm refugees, it's sharpening my thinking around really how much large law firms are going to have to change. So a word of advice, then, for the up and coming ESG specialist or someone with aspirations to be an ESG specialist? I mean, I'm talking about someone who's really looking to be taken seriously in an area like climate change law. 

 

Paul  36:28  
Yeah. 

 

Geraldine  36:28  
What would you advise them if they, if they're looking at the start of their career or a couple of years in how to develop? 

 

Paul  36:37  
Decide what you want to be, you can't be everywhere. You can't be doing green bonds or socially linked or sustainably linked bonds, and also be doing advising perhaps, companies on their carbon emissions. 

Geraldine  36:54  
Yeah.

 

Paul  36:56  
So I would sort of say, focus on what really interests you and take the gamble. If you're a litigator, do look at these cases, look at how it evolves. Also look at the history of climate change litigation, and how that because it's pivoted away from tort law, the idea that there's a duty of care.

 

Geraldine  37:19  
Yeah, a  brand new duty of care.

 

Paul  37:20  
Yeah, be held responsible. It's more of a public law issue now, or a consumer law issue, or a stock exchange non disclosure issue. And so I will be looking to see how I become a lawyer in the area that I'm interested because I think if you're becoming a climate change litigator, you're probably less a private tort lawyer, than a public administration lawyer, because you're looking often at statutory interpretation, but you're also looking at the behaviour of companies. 

 

The other thing I would say, is that what we're failing to realise as part of the repurposing of companies is that they will be judged as government bodies are judged in terms of rules that are more like administrative law rules. And why I say that is if you look at the Shell case, which is a good example, they are saying, oh, we're just a little company, there's only one of us and they're making us change our plan etc. We know our plan's inadequate, but we need to, you have to understand we're just a small, sickly child in the playground and these big bullies are coming along. Well, Shell emit something like 70 million tonnes globally, of CO2. The Netherlands do about 7 million tonnes. So Shell does 10 times as much damage to the atmosphere through the emissions of carbon emissions than Holland does. And probably, if you put it all together, much of the European Union. So these companies, these multinational companies, cannot expect to be judged in a less onerous way than countries are judged or government suggests. 

So it's up to you, as a ESG. lawyer to use your imagination, try and see where it's going. I have to say that being ahead of the wave can be a very cold place. And because I mean, I was talked into doing climate change by one of my women PSLs, a woman called Elizabeth Arten, who now works for the Government lawyers. And for two years, she'd come into my office every morning and say, Paul, can we do something on climate change? And I'd said, go away, Elizabeth, go away. I've got all these big corporate deals to do, please go away. And then someone would come and say to me, Paul, business and human rights, I said, what does human rights have to do business, don't annoy me. 

 

But over time, because I realised that what has happened to me in my career, and this happens to a lot of us. I started out in the East End of Glasgow, doing homelessness, doing advice for battered women, etc. I become an academic and I went the academic route and I did write lots of things about various things, including human rights, etc. And then when I became a lawyer, I think maybe I got lost for part of my career a bit because I was so busy, see, acting for the fossil fuels, the chemical companies, or whoever. And I would say to people who challenged me about my role as a lawyer for these companies, I would say to Greenpeace or friends there, I can move the dial further than you can in a day, you take a year, you bring your pathetic dinghies out, I can get my client to sign up to this that and the other. 

And then I realised I could get some clients to do it, I could get some clients to do it. I mean, GE was a great example, ICI were great examples. They changed. GE had Eco-magination. And GE, reason they were so good at what they did, was that they were hit with strict liability for PCBs in the Hudson River in the States. So they were made liable for that. And this was really a really difficult thing. But after that, they became a very different company. And it was an honour to work for them, actually. And I had ScottishPower, who were exclusively a coal generating per station, who are now a renewable company, almost exclusively, a renewable company. They're owned by Iberdrola, who are the Spanish energy company, and they've gone off, we did offshore, we did onshore, we did everything to do with the wind. In Scotland, there's a lot of rain, and there's a lot of wind. So we really had a good thing to do. But the whole thing is, it's great if you can match up your values with your practice, your professional practice. But you know, the wonderful thing is, it's there. 

 

Geraldine  42:25  
Yeah. 

 

Paul  42:26  
You know, you're not, you know, you're not pushing against the tide. You're actually, you're on a, just doing stuff.

 

Geraldine  42:36  
Well, I think that that's excellent advice. So in there is that use your imagination, be courageous, and I think it's also that you're going to have to have an appreciation of the systems that are involved, which is what you were getting it when you were talking about companies really now being judged by administrative law standards. And that's a systemic, if you're, if you have an overview of the system and appreciation of how they interact, you'll spot it . So I think that that's brilliant advice. So Paul, I want to thank you for sharing your wisdom with us because I think that this is going to be a fascinating discussion for anyone to listen to. Thank you so much. 

 

Paul  43:17  
Well, great to talk to you again, and great, well, good luck in your journey. 

 

Geraldine  43:21  
Thank you.

 

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