Preventative measures

Solicitors operate in a highly regulated sector and need to manage their firms’ reputations in an environment where risk management is more important than ever. Is the current model, favoured by most of the regulators, too focused on disciplining wrongdoing, rather than more active engagement to stop it in the first instance and promoting ongoing competence?

Your relationship with regulation

Ask yourself these five basic but critical questions: 

1. In your firm, is the Solicitors Regulation Authority (SRA) viewed in a positive light or with fear? 
2. Is the role of the SRA seen as being only to police solicitors through enforcement or also to help solicitors and law firms in avoiding regulatory problems? 
3. Would you like your team to be helped more with prevention of rule breaches by the regulator?
4. Do you do enough risk management training as a firm? 
5. Does your firmwide training plan include training on the SRA obligations on a regular basis? 

I invite you to rethink your relationship with regulation because in November 2022 the Council for Licenced Conveyancers (CLC) hosted a debate on the issue and representatives from both the SRA and CLC spoke, along with myself. It left me questioning if the SRA’s efforts at supporting compliance are being missed by the profession. I concluded that many positives about the SRA are lost to the enforcement noise surrounding the minority of solicitors who get it wrong.

As Stephen Ward, the CLC’s director of strategy and external relations, explained, the CLC approach is of ‘assisted compliance’, in which the regulator seeks to collaborate with those it oversees (the legal profession) to achieve compliance. ‘It’s not about us simplifying the rules or expectations. It’s about us helping the firms and individuals that we regulate to meet our expectations and the requirements of the law. We can also describe it as helping practices deal with issues before they cause harm to the client or public interest” (tinyurl.com/2p9xybxd).

For a small and niche regulator, engagement with the professional community it regulates is easier and the scale of the challenge is less. But for the SRA, ‘there are added complexities when you regulate over 150,000 practicing solicitors in 10,000 plus law firms,’ said Chris Handford, its director of regulatory policy. ‘It’s not just about the number, but also the differences between them, the different business models, size, provider types, the different areas and categories, activities and client types.

‘It’s worth remembering that most firms do want to get things right when we look at them. They are trying to do things correctly, or at least they want to, but they don’t always succeed in that.’

Taking a preventative approach

The SRA puts out a lot of constructive material that can assist in taking a more preventative approach including:

• the SRA Standards and Regulations; 
• guidance – this includes an issue-by-issue resource, outlining the SRA view of good practice which is perhaps underutilised by solicitors and firms; see for example, ‘Do I need to operate a client account?’;
• warning notices which the SRA says may ‘help you understand your obligations and how to comply with them’;
• the SRA update email sent to compliance officers and those who subscribe, which is also replicated on the SRA website;
• the annual compliance officer conference held in Birmingham and accessible online as recordings;
• the professional ethics helpline operated by the compliance specialists at the SRA; and
• the SRA website which lists events including webinars, conferences and videos (as well as a YouTube channel).

The SRA is therefore using a preventative approach to a degree, but is it doing enough? During the debate I argued that they haven’t. This was picked up by Legal Futures who quoted me as urging all regulators to move to an ‘assisted compliance’ model like the CLC operate[s].

“We [the legal professions] have focused too much over the last decade on enforcement … we should be focused on high standards of consumer protection through information, prevention and building confidence in the regulators.”

Close working between regulator and those it regulates ‘really empowers businesses to thrive and their clients to get what they want from them. That ultimately is the purpose of legal regulation.’

The SRA is effectively providing materials to help you manage the risks in your firm but how familiar is your team with them? What is your policy on sharing the SRA resources within your firm? The debate requires your attention as the SRA is providing materials to support law firms but only the specialists in regulation are fully engaging with them. 

Why this matters

If you are a conveyancing and/or a probate firm you might prefer the option of CLC regulation as it can be less scary than the high-profile enforcement approach of the SRA. The reality though is that the SRA is sharing huge amounts of material to support law firms on a broad range of regulatory topics such as insurance, competence of solicitors, training and ethics. Perhaps it’s time we as a profession embraced the need to train our teams along the lines of SRA expectations. 

In practical terms you should have a plan to share the SRA materials in context. This sounds easy and larger firms with professional support lawyers can assist fee-earning staff to keep up to date, providing training and sifting the material into bite-sized and specific practice area chunks of information. However, for the bulk of the sector (the small to medium practices which make up just over 8,000 of the nearly 10,000 law firms) a different approach is needed. For my clients I now ask: 

• are your compliance officers able to put on courses on the resources available?
• are they able to share good risk management training regularly?
• are ethics and the SRA materials shared with solicitors and do they confirm they have read the material?
• do you link performance on supervision and risk management to career progression and pay? 

As a provider of training to law firms on risk and ethics I have always made use of the SRA materials with the caveat that they are a basic minimum and rarely best practice. For example, on the issue of supervision the SRA resources are a fine starting point for basic knowledge but lack the practical ‘how to’ guidance and will not help your supervisors develop their supervision skills. 

The preventative materials are available from the SRA, so an effective plan to use them makes sense. 

Wider risk management

Your professional indemnity insurance provider, the Legal Ombudsman and the Law Society including the Leadership and Management Section all produce material designed to help you manage the risks of running a law firm. So it’s worth considering what your practical prevention plan is? Who will lead on prevention of complaints, prevention of negligence claims and, yes, on managing the SRA enforcement risk? We are just over ten years into the introduction of the mandatory compliance officer for legal practice (COLP) function in law firms so that role or a lead partner might be the right choice for your firm. 

The challenges of the post-pandemic era with hybrid working, developing our people and the increased regulatory scrutiny make it even more important to have a plan for the foreseeable future on prevention. 

Prevention is the role of both the SRA and law firms on a joint basis and it’s important to look beyond the legal press horror stories of firms facing disciplinary action. If you’re prepared however, you’re unlikely to wind up in the tribunal.