New Guidance for Lawyers Advising Clients on Human Rights Risks

On 17 July 2017, the International Bar Association Legal Policy and Research Unit (“IBA LPRU”) released a Handbook for Lawyers on Business and Human Rights to provide guidance for business lawyers and their corporate clients on how to address human rights risks in corporate and commercial transactions.

The Handbook was developed by drawing on the expertise and experience of a number of different disciplines represented by business lawyers, human rights lawyers and experts, businesses, investors, civil society and academics. It contains precedents and substantive guidance on how to address human rights risks – risks to people – in relation to specific legal practice areas: corporate mergers, acquisitions and restructuring; and commercial contracts, including supply, distribution and franchise agreements.

IBA LPRU Director, Jane Ellis, stated, “There is a significant knowledge gap in the legal profession despite increasing demand for advice and expertise in business and human rights. To address this, we have now developed a unique online handbook, of which the first two chapters will try to address the relevance of human rights to commercial transactions and M&A transactions. Through context, case scenarios, discussion exercises, sample checklists and further reading and resources we aim to assist lawyers to understand the importance of human rights due diligence for contemporary business and the ways in which lawyers (in-house and external) can provide advice to companies that is aligned with broader risk management and human rights perspectives.”

When the author of the United Nations Guiding Principles on Business and Human Rights, Professor John Ruggie, observed that business lawyers were among the most consequential new players in the business and human rights debate, he attributed it to their access to and influence with corporate executives. Five years later, business and human rights is a rapidly expanding area of law and practice and business lawyers have a key role to play, not only because of their relationships with corporate executives but because the promotion of business and respect for human rights are mutually reinforcing.

Businesses operate alongside the continuing expansion of economic activity from north and west to south and east, the movement of people across and within borders, and rapid developments in technology and social media. This presents them, and their advisors, with complex challenges like how to address human rights risks. Addressing these challenges requires new ways of thinking – and new ways of lawyering.

Nicolas Patrick, partner and Head of Responsible Business at DLA Piper commented that, “Addressing these complex challenges requires more than just technical, legal advice and purely legal solutions. If business lawyers are to retain a competitive advantage in an increasingly globalised marketplace they must draw on other disciplines and expertise to advise their clients.”

Lawyers must understand the institutional, economic, geopolitical, environmental, social and ethical factors that affect the entire ecosystem of governance and regulation that can and does influence markets, financial systems and business transactions and interactions – this includes laws, hard and soft but also voluntary initiatives, international human rights standards, and social and moral norms and expectations.

To support lawyers respond to the demand from businesses and address these complex challenges, the IBA LPRU is also developing a curriculum and training programme for lawyers on business and human rights, which will be piloted in Australia, in partnership with the Law Council of Australia. The IBA LPRU will monitor and assess the programme’s impact and make any necessary changes before making it available to IBA members.

Bar associations around the world also have a role to play. Especially those where major business and finance centres are located, like Hong Kong, Singapore and Japan. Bar associations should draw on the Handbook and the curriculum once completed or develop similar initiatives to ensure that the knowledge gap in the legal profession is addressed and local lawyers are adequately equipped to advise businesses.

Whether they have a regulatory or merely a representational function, bar associations must support lawyers to promote respect for human rights and the rule of law, prevent corruption, enhance fair competition, encourage critical thought and innovation and manage risks to their business clients. Not least because they are uniquely positioned to affect change on this front but, and most importantly, they have a responsibility to ensure the development of a strong, independent and effective legal profession, which goes hand-in-hand with well-functioning markets, stable financial systems and enabling business environments.

To properly serve their clients’ interests, business lawyers must not only understand that the promotion of business and respect for human rights are mutually reinforcing, but be able to counsel their clients on what this means in practice. To make this happen the entire legal profession must be engaged.