Challenging behaviour

In May 2023, the Solicitors Regulation Authority (SRA) introduced a new rule into its Code of Conduct for Solicitors, RELs and RFLs (registered European lawyers and registered foreign lawyers) and its Code of Conduct for Firms – one that requires all managers to challenge unfair or discriminatory behaviour.

Law firm culture

It is now standard practice for law firms to have certain values and behaviours that, if properly implemented, will drive the organisation’s culture. But what happens if these behaviours are not observed? Many lawyers are under immense pressure to meet billable hour targets and deliver results for their clients, something that can sometimes take priority over their regulatory duties. As a result, in some cases there is a risk that behaviours falling foul of a firm’s values are inadvertently tolerated when strong results are achieved.

The SRA Code of Conduct for Solicitors has imposed a positive duty on managers to challenge behaviour that is disrespectful or unfair, or amounts to bullying or harassment. Yet, trying to drive a compliance culture which ensures that this responsibility sits with fee earners and managers, and cannot be delegated or outsourced, can be challenging.

Onboarding processes can be complex and misunderstood, and tensions can arise between business service functions and fee earners, so it’s important to be mindful that behaviours and communication remain respectful.

Here I will consider:

• the SRA requirements and guidance on fair treatment and its more recent requirement to call out behaviour which falls below the required standard, and
• how compliance functions work with human resources (HR) and the wider business to facilitate this and the benefits in doing so.

SRA requirements in relation to fair treatment

Paragraph 1.5 of the SRA Code of Conduct requires managers to challenge behaviours that do not meet the following standard: “You treat colleagues fairly and with respect. You do not bully or harass them or discriminate unfairly against them.”

Definitions

The SRA guidance Workplace environment: risks of failing to protect and support colleagues, which accompanies the rule, does not define what “fairly” or “respect” means. It does, however, set out the SRA’s expectation that those it regulates will:

• “Not create or sustain a working environment which risks leading to mistakes and poor outcomes for clients, or to serious ethical concerns. For instance, when staff are placed under pressure to cover up problems.
•  Maintain public confidence in the integrity of the profession and in the legal workplace as a safe and inclusive environment.”

“Manager” is defined as a partner in a partnership, a member in an LLP, or equivalent. While it is clear that holding such a role in an SRA-regulated firm comes with additional responsibilities, it is interesting that “manager” has been defined in this way and does not extend to other individuals who hold senior management or line management responsibilities. In larger firms, or firms with different levels of partner, there will be many leaders and people managers who technically are not obligated to call out such behaviour. Sensibly, many firms have decided that this definition should apply to all managers in the widest sense and that a key part of being a leader is to address behaviours that do not meet a firm’s values.

When interpreting “colleagues”, this is not limited to employees and should be considered in the widest sense to include business services colleagues, other support staff and self-employed consultants.

Given the SRA’s remit, conduct outside of the workplace involving colleagues that falls short of this standard is also in scope.

SRA thematic review

In the SRA’s Workplace culture thematic review (2022), most respondents were largely positive in relation to their own firm’s culture, but some common themes emerged that may have triggered the “fair treatment” requirement, including:

• a perceived disconnect between the actions of senior leaders and the culture they promoted, and
• worries around reporting concerns, including reporting bullying behaviours.

Treating colleagues fairly

Another important distinction to note is that the SRA will not be approaching this in the same way that an employment tribunal would. The guidance, Workplace environment: risks of failing to protect and support colleagues (2023), makes it clear that, in a regulatory context, treating colleagues fairly and with respect is not the same as complying with employment law. While other behaviours, such as harassment and discrimination, are defined under the Equality Act 2010, the SRA will only be determining what amounts to treating someone “fairly and with respect” within a regulatory context.

So, what does “treating colleagues fairly” mean? The SRA says that to establish whether any unfair treatment is serious, it will consider:

• “Whether the behaviour could reasonably be seen by others as intended to bully, belittle, harass, intimidate, undermine or take advantage of colleagues.
• The respective seniority of those involved, and factors such as whether an individual has control or influence over another’s career.
• Whether individuals have specific characteristics or vulnerabilities (for instance in relation to age, sex, disability or ethnicity), particularly if this appears to have been a factor in the behaviour complained of.”

The SRA will also consider how effective supervision is delivered so supervisors should feel able to give constructive feedback while being mindful it is done in a way that does not leave colleagues feeling undermined or targeted. The regulator will be most concerned about patterns of behaviour, so it’s important to address any concerns at the earliest opportunity, and to ensure any recurring conduct is taken very seriously.

Driving a positive culture

If employers truly want to create a culture in which everyone in the firm is valued regardless of their tenure, background or role in the firm, the “fair treatment” requirement presents an opportunity to put this into practice.

As a starting point, firms should consider how well the requirement has been communicated across the organisation. Working with HR and senior managers to ensure awareness and engagement, this should be documented as part of your equality, diversity and inclusion (EDI) policy, protection from harassment and bullying policy or other appropriate policies and procedures.

Firms also need to consider what support managers need (regardless of whether or not they are partners) to challenge behaviours in an appropriate way. This may require careful consideration on whether the setting, approach or timing for doing so would aggravate, rather than resolve, the situation. Advice may also need to be taken from HR on whether a more formal process should be undertaken, depending on the severity of the conduct.

Firms should do everything they reasonably can to look after the wellbeing of those who work in and with the firm. The obligation is to protect them from bullying, harassment, discrimination and victimisation, while supporting them so they can work safely and effectively.

Addressing behaviours that fall short

Firms should reflect on whether they have created appropriate reporting avenues for unacceptable behaviour and that these have been communicated to all staff. This is particularly important given that the conduct may not always be witnessed by a “manager”. Colleagues need to feel comfortable to escalate complaints and to be aware of the procedures for doing so. Firms also need to build confidence in their leaders and provide them with the training and resources to challenge behaviours effectively, particularly if the affected individual is uncomfortable in doing so themselves.

As noted above, the compliance team itself can be particularly vulnerable to receiving robust or challenging communications from senior members of the firm. It is important that managers who witness communications that cross the line challenge them and make it clear that behaviours falling foul of the firm’s values are not tolerated. Senior members of the compliance team may wish to consider who is going to be the most effective voice in calling this out. Should the challenge come from them or a more senior partner? Feedback to the affected individual on what you have done to challenge the behaviour will be key in building trust that the firm lives by its values.

Depending on the size and nature of the organisation, firms may also wish to invest in a culture audit. This could be done internally or externally and use tools such as a desk-based review of policies, processes and exit interviews. An anonymous staff survey and targeted interviews or workshops could be used to measure how successfully the existing culture aligns with the values and expected behaviours of the firm. Given the extent of the definition of “colleague” within a firm’s culture applies so widely, any audit should include business service colleagues as well as fee earners.

Consequences

In some areas, it appears that we are seeing a shift in the nature of the SRA’s approach from an ‘outcomes’ focused approach to more prescriptive rules, with increasing expectations that firms take more responsibility for solicitor behaviour. This likely means that firms facing an SRA inspection will no longer simply be able to produce a policy or training records to evidence compliance with their Code of Conduct obligations. As a result, we can expect to see more challenges around what happens when staff do not attend training, or behave badly or in a way that doesn’t reflect the required values. It’s worth considering how such challenges fit into your processes and what the consequences are.

Role of compliance professionals

Given the potential for conflict between what is required from an employment law perspective and our regulatory duties, liaison and proactive working between HR and the compliance and risk functions is essential. One way to achieve this alignment is to ensure compliance and risk are involved in any review of HR policies, including anti-bullying and harassment and disciplinary processes. Firms should also consider their approach to appraisals and what checks are conducted on employees both prior to employment and on an ongoing basis. This will ensure potential colleagues who have a history of demonstrating behaviours that do not meet the firm’s values are not recruited. If both new and existing staff are aware of the firm’s values this should deter them from demonstrating behaviours that fall short of these standards.

Additionally, where an investigation is necessary, decisions should be made collaboratively with HR. Compliance officers may be the ones best placed to advise on the SRA regulatory requirements, including reporting, but HR will bring employment expertise to the table. The risk team should also look at the internal reporting processes and ensure that it’s clear how colleagues can challenge the behaviour of others, and what the channels are for doing so.

The role of risk and compliance professionals continues to evolve and the duty to be both an independent adviser and a strategic partner to the business or firm is more important than ever. Compliance officers are likely to play a pivotal role given that the compliance officer for legal practice (COLP) and the money laundering compliance officer (MLCO) are usually the ones tasked with deciding what should be reported to the SRA. They will be instrumental in proactively driving high standards in working practices, supporting wellbeing and minimising risks on the rare occasions that these behaviours arise.