Posted by Richard Hinton, business development director, Decision Insight Information Group, of which Legal Futures Associate SearchFlow is part
Hinton: non-compliance penalties are already flying through offenders' letterboxes
The introduction of the new SRA Handbook on 6 October 2011, and the creation of compliance officers for legal practice and finance and administration (COLPs/COFAs), was the first tangible wave of a further tightening of audit and control procedures among law firms. The regime seeks to create a framework for solicitors to adopt risk management and control processes that should, frankly, already be well established for the majority.
It’s pleasing no doubt that the vast majority therefore complied and registered nominated solicitors and finance directors to pick up the COLP and COFA chalice respectively. Yet, a staggering 800 had not registered on expiry of the deadline at the end of July and 600 still haven't – do these really believe that the regime will not flex its muscles and that by ignoring this, they will remain hidden? It can only lead to questions being asked about their approach and practices with other matters.
The simple truth is that there is no place to hide and indeed non-compliance penalties are already flying through offenders' letterboxes. In 2012, the proportion of interventions that cite breaches of the code of conduct has accelerated from 32 to 55%.
So, where do you start? Well, aside from registering appropriate people, it’s essential that the firm embraces honesty about what is and what isn’t working with their team and processes right now. This isn’t a simple tick-box exercise – this is a root-and-branch review of the cultural, strategic and structural elements to the law firm that is needed to ensure the right mindset is adopted.
Have the partners and fee-earners set the necessary rigorous standards – the checks and balances, the control gates? Do they know the bottlenecks? Can they provide detailed audit trails? Could they in all honesty, when questioned, know whether their client-care letters are compliant, with the right wording rules, that fees and disbursements are quoted in the correct manner and that more rigorous ID and anti-money laundering checks have been made, even on well-known clients?
For some, the shorthand may be, “It’s been fine for 40 years, therefore…”, but that doesn’t wash anymore. The new regime may feel intimidating, but the new standards and requirements ensure that for the great many, it serves to reinforce the quality they already demonstrate with their clients, with the operation of their practice and the calibre of their staff.
So, if the SRA come a-knocking, you have four weeks to comply with an investigation – and it’s all about evidence of processes being demonstrably in place and followed by all. Could you be ready? There are also far more rigorous reporting requirements that must be implemented by January 2013.
In my next blog next week, we’ll look at some of the elements in practice and the implications of non-compliance – in case you need any more convincing.
SearchFlow has joined forces with compliance and performance consultancy Legal Eye to advise law firms on risk management compliance
Tags: compliance, compliance officer for finance and administration, compliance officer for legal practice, risk management