Ethics under scrutiny: navigating risk, regulation & reality in modern legal practice

Ethics has long been a defining principle of legal practice. But as the regulatory landscape evolves and pressures on the profession intensify, what it means to act with integrity is becoming less clear-cut—and far more contested.

At Legal News Wales’ latest Regulatory & Risk Forum, delivered in partnership with Clyde & Co and Lockton, legal and risk professionals explored how ethical questions are now emerging in increasingly complex and unexpected ways.

The session was led by Tom Bedford, Partner at Clyde & Co, and Nicola Anthony, Risk Manager at Lockton (profiles below).

Tom specialises in defending solicitors and law firms against professional negligence claims and regulatory investigations, with extensive experience advising on Solicitors Regulation Authority (SRA) matters and proceedings before the Solicitors Disciplinary Tribunal. Nicola brings a complementary perspective from the insurance and risk side, advising law firms on professional indemnity, regulatory compliance and emerging risk areas, including anti-money laundering and firm-wide risk strategy.

Emma Waddingham, Founder of Legal News Wales, chaired the event, and said:

“Ethics has always been part of the fabric of legal practice, but what we’re seeing now is a shift in how it is understood, challenged and applied in real-world scenarios. These conversations are critical – not just for compliance, but for the credibility and future of the profession.”

The conversation made one thing clear: ethics is no longer confined to professional rules. It is shaped by culture, context and judgement – and those lines are shifting.

Why ethics is in hard focus

Ethical scrutiny is rising across the legal sector, driven by a combination of societal change, regulatory focus and global events.

Tom Bedford, Partner at Clyde & Co, explained:

“Society has changed. There’s far less tolerance for poor behaviour now – particularly from those perceived to be in positions of power. Lawyers are being held to account in ways we haven’t seen before.”

There is less tolerance for poor behaviour – particularly among professionals perceived to hold power. At the same time, governance and accountability have moved centre stage, with ethics often framed through the lens of ‘integrity’.

Tom added:

“The concept of integrity is increasingly central to how the regulator approaches these issues. But the challenge is that integrity is not always black and white, it involves moral judgement, and that can differ from person to person.”

An expanding scope of risk

One of the most significant shifts is the widening scope of what is considered relevant to ethical conduct, as Tom explained:

“We’re now seeing scrutiny not just of conduct in the workplace, but conduct in private life where it touches on professional practice – and that’s where things become much more complex.”

The discussion highlighted how scrutiny now extends beyond professional duties to include behaviour within firm culture, interactions with colleagues, online activity and conduct outside the workplace where it may impact professional standing.

This creates uncertainty. Determining when private conduct becomes a regulatory issue is rarely straightforward and often depends on the specific circumstances.

Where is the line? From sharp practice to misconduct

The forum’s most candid discussion centred on litigation conduct and the evolving boundary between robust representation and unethical behaviour, as Tom highlighted:

“There was a time when it might have been seen as a badge of honour to catch the other side out. That’s no longer something that can be celebrated; we have to be far more conscious of where that crosses the line.”

Historically, exploiting an opponent’s mistake may have been seen as part of the adversarial process. Today, that approach is under increasing scrutiny.

The key distinction raised was between responding to an opportunity that arises naturally versus deliberately creating a situation to disadvantage the other side.

This reflects a broader cultural shift, away from celebrating aggressive tactics and towards a more principled interpretation of what success in legal practice should look like.

Commercial pressure and ethical decision-making

Participants also explored the growing tension between financial drivers and ethical judgement.

With increased investment, consolidation and performance expectations, firms are under pressure to deliver results – sometimes quickly.

Nicola Anthony, Risk Manager at Lockton, said:

“There is a real tension between commercial drivers and ethical decision-making. Firms need to be confident that they are onboarding the right clients for the right reasons, not simply because there is a financial incentive to do so.

“Lawyers often know, instinctively, whether something feels right or not, it’s about creating the environment where those instincts are acted on and supported.”

The discussion pointed to a need for stronger ethical infrastructure within firms – embedding values, decision-making frameworks and leadership behaviours that support integrity, even in high-pressure environments.

Nicola also pointed to the importance of documenting and evidencing decisions, particularly where firms choose not to act or to decline work. Clear audit trails around client onboarding, conflicts and AML decisions not only support compliance, but can prove critical in demonstrating ethical judgement if later scrutinised.

Regulation: consistency and confidence

The role of the regulator was a recurring theme.

While there is broad recognition of the importance of oversight, concerns were raised around consistency, scope and process. In particular, the length and unpredictability of investigations were highlighted as creating significant stress for individuals and firms.

There was also debate around whether a broader regulatory remit risks diluting focus—particularly where ethical issues are already complex and difficult to define, as Tom remarked:

“The difficulty is that these cases are often unpredictable. You have to take each one on its own facts, which makes it very hard for firms trying to manage risk in a consistent way.”

Attendees highlighted the messaging from the SRA to impose a renewed training focus on ethics and conduct for law firms, which could be up to three hours per year. There was some concern over the resources and time available by firms and individual lawyers to conduct this – by firms of all sizes – and what the content should and could include. The audience called for the SRA to offer case studies and training resources to support them.

The current Upholding Professional Ethics information from the SRA can be found here.

From a risk management perspective, Nicola emphasised the need for firms to move beyond tick-box compliance towards more structured ethical decision-making frameworks; asking not only ‘is this permitted?’ but ‘would this stand up to regulatory scrutiny if made public?’

She also highlighted the importance of ‘file defensibility’ – ensuring that decisions are recorded at the time they are made, so firms can evidence their reasoning rather than reconstruct it retrospectively under pressure.

Practical risk areas: beyond the obvious

Several key areas where ethical challenges are emerging were discussed, including anti-money laundering compliance, conflicts of interest, the use of NDAs and litigation funding.

A notable insight was the distinction between technical breaches and ethical misconduct. In some cases, firms may fall short on process without any underlying dishonesty – raising questions about how ethical risk is interpreted and enforced.

Nicola noted that insurers are increasingly looking beyond technical compliance to assess behavioural risk within firms; examining leadership credibility, internal culture, staff turnover and how effectively firms learn from near misses, not just formal claims.

“It’s not just about having policies in place,” she explained. “It’s about demonstrating that those controls are working in practice – and that firms are actively learning and evolving from the risks they encounter.”

The human factor: culture, pressure and behaviour

Beyond systems and regulation, the forum repeatedly returned to the human dimension of ethical risk.

Behaviour is influenced by pressure, stress, environment and culture. Creating environments where individuals feel able to speak up, admit mistakes and seek support was identified as one of the most effective risk mitigations, as Nicola explains:

“You don’t wake up one day and decide to behave unethically. Something changes. Pressure builds, circumstances shift, and that’s where firms need to be able to recognise and respond early.

“Your people are your biggest asset but if you don’t really know them, it’s much harder to spot when something isn’t right.”

She added that early intervention is key, with firms encouraged to create environments where concerns can be raised without fear of consequence. Regular supervision, strong internal relationships and open dialogue between risk, HR and leadership teams were all identified as critical components of a healthy ethical culture.

AI: the next ethical frontier

Looking ahead, artificial intelligence is expected to introduce a new wave of ethical considerations, said Tom:

“AI is going to be the next big area where ethical questions arise. It’s not just about using the technology – it’s about how it’s used, how it’s presented, and whether that aligns with professional obligations.”

Key risks include reliance on inaccurate outputs, lack of transparency, billing practices and data security, as well as the rise of clients and litigants in person using AI, adding to lawyers’ workloads and stress.

Nicola added that while AI does not change core professional duties, it significantly increases the speed and scale at which issues can arise:

“It doesn’t necessarily introduce new risks but it accelerates existing ones. That makes governance, training and clear internal policies absolutely essential.”

Across the discussion, one consistent theme emerged: firms that embed ethics into everyday decision-making – through culture, documentation, supervision and leadership – will be far better placed to navigate both regulatory scrutiny and commercial pressure in the years ahead.

A shift beyond compliance

The central takeaway from the forum is that ethics cannot be managed through rules alone.

It requires leadership, culture, training and ongoing dialogue.

As the profession continues to evolve, the ability to navigate ethical grey areas may ultimately define not just compliance but credibility.