Posted by Karen Garthwaite, head of professional development at Legal Futures Associate ILFM [1]
Garthwaite: Succession planning is vital
The departure of a compliance officer for finance and administration (COFA) can create immediate regulatory headaches for any law firm regulated by the Solicitors Regulation Authority (SRA).
Unlike other senior roles where interim arrangements might suffice temporarily, COFA positions require formal SRA approval and cannot remain vacant without triggering compliance obligations.
Despite this critical dependency, many firms operate without robust succession plans for their COFAs, leaving themselves vulnerable to regulatory disruption and operational chaos.
Recent market volatility has highlighted the importance of business continuity planning across all aspects of legal practice management. The rapid movement of senior professionals between firms, unexpected departures and evolving regulatory expectations have created an environment where succession planning can no longer be treated as something just affecting partners, fee-earners or clients.
Understanding the regulatory framework
COFAs must demonstrate appropriate qualifications, experience, and regulatory standing before approval. The application process typically takes four to six weeks, assuming no complications arise. Firms cannot operate without an approved COFA, meaning any gap in coverage creates immediate regulatory non-compliance.
The SRA requires COFAs to possess sufficient seniority within the firm to discharge their duties effectively. This eliminates many potential internal candidates and creates a narrower pool for succession planning. The role demands both technical competence in financial management and sufficient organisational authority to challenge senior fee-earners when necessary.
Emergency succession protocols
Every firm should establish clear protocols for COFA absences, both planned and unplanned. Temporary absences can typically be managed through delegation arrangements, provided these are properly documented and the absent COFA remains contactable. Longer absences require formal interim arrangements or replacement appointments.
Emergency succession protocols should identify specific individuals authorised to make critical decisions in the COFA’s absence. These must clearly define decision-making authority, escalation procedures and communication channels with the SRA.
Documentation should include emergency contact details for key stakeholders, including external advisors and regulatory contacts.
Internal development strategies
Building internal COFA capability requires long-term planning and investment. Firms should identify high-potential candidates early and provide structured development opportunities. This might include compliance training, and exposure to regulatory reporting processes.
Cross-training between COFA and COLP (compliance officer for legal practice) functions can create valuable succession options while enhancing a firm’s overall governance capability.
Finance managers and senior accounting professionals often represent the optimal balance between technical competence and organisational credibility. However, developing COFA capability requires exposure to firm-wide financial management and regulatory compliance, not just departmental financial reporting.
Firms should create opportunities for potential successors to participate in budget processes, audit preparations and regulatory communications.
In larger firms, additional professional qualifications can strengthen COFA applications, but many smaller practices successfully appoint existing finance staff or fee-earners to the role based on their practical experience and firm knowledge.
External recruitment considerations
For bigger firms, external COFA recruitment presents both opportunities and challenges. Experienced COFAs bring immediate credibility and established regulatory relationships. However, they require significant onboarding to understand firm-specific systems, cultures and risk profiles.
Compensation expectations for experienced COFAs have increased substantially as demand outstrips supply in the larger firm market. Budget accordingly and consider non-financial incentives such as flexible working arrangements, professional development opportunities or enhanced pension contributions.
SME firms face different recruitment realities. Dedicated COFA roles are rare, making it more practical to recruit finance professionals who can absorb COFA responsibilities alongside their primary duties. This approach often proves more cost-effective while providing the regulatory coverage required.
Geographic location increasingly influences recruitment across all firm sizes. Remote and hybrid working arrangements have expanded the potential candidate pool beyond traditional commuting distances.
However, ensure any remote working arrangements comply with SRA requirements for adequate supervision and firm integration.
Knowledge management and transition planning
Effective succession planning requires comprehensive knowledge management systems. COFAs accumulate institutional knowledge that extends beyond formal procedures and policies. Regular knowledge audits should identify critical information that exists only in individual memory and ensure appropriate documentation.
Transition planning should commence well before anticipated departures. Establish mentoring relationships between outgoing and incoming COFAs, allowing for gradual responsibility transfer. This approach reduces risk while providing valuable development opportunities for successors.
Consider creating COFA handover templates that standardise knowledge transfer processes. These templates should cover regulatory relationships, ongoing compliance issues, key deadlines and critical contact information. Regular updates ensure handover materials remain current and useful.
Strategic integration
COFA succession planning should integrate with broader firm succession strategies. Consider how COFA transitions might impact other role-holder positions, particularly COLP arrangements. Coordinated succession planning across all regulatory roles can create efficiencies while maintaining governance standards.
Partnership succession planning should explicitly consider COFA implications. Retiring partners often hold multiple governance roles, creating succession challenges across several critical functions simultaneously. Early identification of these overlapping responsibilities enables proactive planning and smoother transitions.
The regulatory landscape continues evolving, creating new challenges for COFA succession planning. Firms that invest in comprehensive succession strategies will position themselves to maintain regulatory compliance in the face of change.
Effective COFA succession planning requires commitment from senior leadership, adequate resource allocation and regular review processes. Firms that treat this as a routine business continuity measure, rather than an emergency response, will be in good stead should they need to react to unplanned changes in the future.
For more information about other ways in which the ILFM supports COFAs, please visit the website [2].