In the second of an occasional series on the business benefits of effective compliance, Tracey Calvert looks at how good complaints-handling can help you make continuous improvements to your business, and how you can achieve this in practice

The Legal Services Act 2007 (LSA 2007) created the setting for a quiet revolution in the provision of legal services; we think and act very differently to how we behaved even a decade ago. Compliance is now at the forefront of everything we do, and it is by no means a gimmick, but an essential feature in every firm; business acumen is at the heart of successful firms; and management responsibilities and corporate governance are mandatory. These concepts are here to stay, and it is not sufficient to simply pay lip service to them. They are vital to having a good relationship with both the Solicitors Regulation Authority (SRA) and clients.

Building a culture where complaints, and other intelligence about the way in which the firm and its lawyers are regarded, are used for positive means will support a programme of continuous improvement and help with the longevity of the business in an increasingly competitive environment

At the heart of the changes has been a re-evaluation of the client. In its infancy, the Legal Services Board drew a line in the sand by stating: “Our goal is to reform and modernise the legal services market place by putting the interests of consumers at the heart of the system.”

We need to demonstrate this in not only how we deliver services, but also how we treat client complaints. Traditionally, complaints were regarded as an unwelcome distraction from the business of lawyering, but this view is no longer helpful or sustainable.

The SRA expects us to comply with the SRA Principles and the SRA Code outcomes, and the Legal Ombudsman (LeO) requires us to address complaints internally and, where this does not resolve matters, direct the client to them and co-operate with their investigation of what may have gone wrong. This is the reason why many firms have reviewed their client care and complaints-handling systems; it is imperative that firms create an effective audit trail of compliance.

Meanwhile, the client psyche has changed. Clients regard themselves as consumers, and appear more willing and more able to research service providers, and less likely to be loyal to a particular lawyer or firm. They are more likely to do homework before instructing a firm, whether by internet research (including reviews sites and social media), or word-of-mouth intelligence.

The potential benefits

All of the above dictates that the traditional attitude towards complaints needs to change. However, making that change can also be of real benefit to your business. You are receiving valuable commentary about, and insight into, your business, hopefully before that opinion is shared on social media or with the LeO. By dealing with issues raised, you may not only avoid possibly wider and adverse publicity, but you also receive valuable information to feed into a programme of improvement.

This theory is supported in independently conducted 2013 LeO research into complaints handling (‘The business case for good complaints handling in legal services’). The findings included the following.

  • Good complaints-handling could increase operating profits by between 2% and 3%.
  • Complaints-handling can enhance a firm’s reputation, which is an asset on which it can earn a return – this can increase customer retention and acquisition, and/or allow a firm to charge a price premium.
  • The data firms collect from complaints is a valuable source of management information that can be used to identify areas for commercial improvement, such as cost efficiencies.

Effective complaints-handling should be at the heart of the firm’s ethos. Whether it is a direct responsibility of the compliance officer for legal practice (COLP) or not, the information obtained from complaints is an essential resource, and must feature in the compliance officers’ toolkit and be understood by the senior members of the business.

Below, I outline some facts which need to be understood and built into your business processes to ensure you reap the benefits.

A complaint can take many forms

The SRA definition of a complaint is an oral or written expression of dissatisfaction which alleges that the complainant has suffered (or may suffer) financial loss, distress, inconvenience or other detriment.

This means that we need to consider more than formal letters written to the senior partner at the end of a matter. A complaint can be expressed at any time and in many ways. Not every complainant will express their concerns in a way that is obviously a complaint; instead, it may surface in the form of repetitive questioning of the fee-earner’s actions, or in the context of conversations with support staff.

Effective complaints-handling will acknowledge the many different ways in which a client can express dissatisfaction, and include policies and procedures to address all concerns in a timely manner.

Everyone has a role to play

Most firms are familiar with the SRA’s expectations and the risks associated with entity-based regulation. The firm is only as safe as its weakest links in terms of its regulatory relationship, and that link is not necessarily a qualified member of staff. Everyone, regardless of role or qualification, must understand the SRA is interested in them and expects them to have an appropriate knowledge of regulatory requirements.

This means that everyone must understand the roles of the compliance officers, and others with a risk and compliance function, and operate in an atmosphere of openness and responsibility. In terms of effective complaints-handling, this requires agreement and communication of who needs to know what in order to keep the firm compliant.

Training on the following issues should be delivered to all relevant members of staff.

  • Regulatory requirements – the impact of the SRA style of regulation on all individuals within the firm, and the non-negotiable Principles and Outcomes which are relevant to effective complaints-handling.
  • The role of the LeO – when the ombudsman is likely to become involved in a complaint, the requirement to co-operate and the possible consequences of LeO involvement.
  • The risks of bad client care – for the individual and the firm, including regulatory and disciplinary consequences, fines, adverse publicity and other reputational issues.
  • The firm’s requirements – what the business expects from everyone in terms of effective complaints-handling, from the concept of openness through to an understanding of the systems and procedures which must be followed.
  • Soft skills – handling complaints is not always going to be easy, so understanding how to manage the relationship with the client, and, very significantly, how to communicate in a non-adversarial manner in what may be a difficult situation, may reap rewards.

In addition, if a person has been nominated to be the ‘complaints partner’ or similar, they may need training to understand the role they play in the risk and compliance hierarchy of the business. Complaints may unearth breaches of regulatory or legal duties which must be shared with the COLP and the compliance officer for finance and administration (COFA) for the purposes of recording and reporting requirements. Complaints may also indicate concerns about particular fee-earners or departments, which should trigger the need for a discussion about how weaknesses can be handled.

All complaints need to be captured and addressed

As suggested, a complaint is not only going to materialise in the form of a letter to a senior member of the firm. Clients and firms communicate in many ways, and complaints will be received similarly – not only by letter but also in person, by telephone or by email. It is essential that the firm’s systems and procedures acknowledge and record all of these.

This requires both training of all staff, and a means to ensure that, however the complaint originates, it is directed to a common complaints forum so that it can be logged and assessed.

Effective complaints-handling – if we regard this as including learning from customer insights – should also extend to a monitoring of social media to ascertain what people are saying about the firm. While a client may not have decided to raise a complaint internally (and if this is the case, you need to consider why), they may have chosen to make their negative views public. Doing a Google search for the firm’s name can yield some interesting data to feed into the firm’s intelligence network.

Similar intelligence can also come from other sources, such as client satisfaction surveys. While this may not indicate a complaint, the feedback – particularly comments of a negative nature – can be put to good use in improving client care.

When addressing the complaint with the client, it is important to consider that individual’s needs and circumstances when dealing with matters on their behalf and, at the most basic level, when communicating with them. The SRA expresses this concern in the language of the SRA Code, particularly in the client care outcomes in chapter 1. The LeO has also repeatedly made the same point. For example, the publication Listen, Inform, Respond: A guide to good complaints handling asserts that clear, comprehensible language and a neutral tone should be used when communicating with complainants.

Lessons must be learnt and communicated

The traditional view of complaints-handling as a means to an end is no longer sustainable. Building a culture where complaints, and other intelligence about the way in which the firm and its lawyers are regarded, are used for positive means will support a programme of continuous improvement and help with the longevity of the business in an increasingly competitive environment. Lessons can be learned in terms of internal procedures, particular departments and individuals, and the firm’s image, and, in my opinion, it is very shortsighted not to use such information.

One prerequisite to achieving this result is communicating with staff so they understand how their behaviour or actions have been perceived and, if necessary, change what they do. This need not be adversarial feedback, and may be better received if seen as a means of personal development. In this way, effective complaints-handling can lead to future prevention.

Complaints-handling also needs to be an ongoing process. Monitoring complaints data, by reference to type or by department or fee-earner, will create data which empowers the decision-makers in the business to decide on actions which will enhance the firm’s ethos.

All firms have to deal with complaints. A bad response is to create a culture where complaints are not addressed in an open and timely manner. A good response is a simple one in which all complaints are dealt with promptly, all members of the firm understand their obligations, there is clear communication with the client and, as important as anything else, lessons are learnt which improve the level of client care.

If you want to know more…

 … about other benefits of effective compliance, see the link in ‘Related files’ above right, to the first article in this series, ‘The flip side’, by Michelle Garlick and Joanne Smith, which covered the benefits of compliance with SRA regulations in the May 2014 edition of Managing for Success.