Principles post-Panama Papers

A set of ‘Panama Papers scandal’ guidelines for lawyers assisting clients with offshore companies has been published.

The ‘Report of the Task Force on the role of lawyers and international commercial structures’, was launched at an event in London this week by the International Bar Association (IBA) and Secretariat of the Organisation for Economic Co-operation and Development (OECD). The task force was established in December 2016, after the Panama Papers scandal, where about 11 million electronic files from the Panama law firm Mossack Fonseca were publicly disclosed. This was followed in 2017 by the Paradise Papers scandal, the public disclosure of more than 13 million documents, many from the Bermuda law firm Appleby and associated service firms.

The task force explored whether lawyer-client confidentiality is being exploited to cover up unethical or illegal acts, and whether lawyers are hiding behind the ‘few bad apples’ excuse without looking at the overall regulatory structure. It also considered the extent to which lawyers are taking responsibility for their role in facilitating arms trafficking, corruption, mass drug addiction and terrorism financed by the transfer of illicit funds.

The report outlines eight principles to support lawyers in detecting, identifying and preventing illegal conduct in commercial transactions. Rather than duplicating existing guides or seeking to prescribe how lawyers should act in certain circumstances, it ‘focuses on high-level issues of principle that should assist governments in policy formulation and in guiding lawyers as to how they should conduct themselves, consistent with a lawyer’s underlying domestic legal and ethical obligations’.

On misuse of confidence and privilege (principle 2), for example, the report states legal professional privilege is fundamental but should not be used to ‘shield wrongdoers’ and lawyers ‘should give due and proper consideration to refraining from acting for a client’ if aware of, or with reasonable grounds to believe, ‘the main purpose of the retainer is to allow the client to be able to rely on the confidential nature of the lawyer–client relationship’.