Is our compliance officer actually complying?

By Sarah Charlton of BlueSky Legal Finance & Management Solutions

Sarah Charlton of BlueSky Legal Finance & Management Solutions

In the first of a new monthly ‘Ask the Expert’ series from Insight Legal, legal finance and management specialist Sarah Charlton considers a question many partners at smaller firms must have asked themselves at some point


Q: We are a small, four-partner high street law firm. At our last partners meeting, concerns were raised regarding our ability to adequately assess the performance of the team member whom we have tasked with ensuring compliance. What mechanism could we put in place to give all the partners peace of mind that the correct process and checks are being followed?


A: This is a really good question as it highlights the responsibility that exists for all four partners to make every reasonable effort to ensure that the firm remains compliant – as opposed to just the regulatory role-holder(s).

I see this more so in small-to-medium-sized law firms, where there is an informal disconnect of responsibility between the partner(s)s who hold key regulatory roles – COLP, COFA, MLRO and MLCO – to that of the remaining partners.

In large practices, you tend to see a head of compliance who is supported by a compliance team, so their issues are likely to be slightly different.

Let’s assume that one partner holds all the key roles mentioned above. How could you be sufficiently satisfied that they are discharging their duties proficiently? There are a few indicators that you could use.

First, periodical compliance updates to all of the partners would be a positive sign and this could be delivered in an array of formats:

  • A report – agree the length of the report and the key issues that it should cover.
  • A compliance pack – this could include the results of internal/external audits, the client bank reconciliation, new breaches, evaluating lessons learnt etc; or
  • A high-level information sheet that is RAG (red, amber, green) colour coded – this could include a broader snapshot of the firm’s compliance and best practices to include the Information Commissioner’s Office, Lexcel and duties of the senior responsible officer for the Conveyancing Quality Scheme and Wills & Inheritance Quality Scheme. Supporting detail is only provided to items listed on the information sheet as amber or red.

Second, if the partner’s fee income remains unchanged despite taking on these roles, this could be an indicator that they aren’t able to make time to discharge their compliance role. Alternatively, it could simply be that they are working additional hours to manage both their fee-earning and compliance roles.

Legal Futures has published a number of articles which have called into question the culture of long hours in law firms across England and Wales. This still seems to be viewed as acceptable although this is unlikely to be a valid defence to your regulator for non-compliance.

Third, what’s new? The legal press widely publicises regulatory changes, so it is unlikely that the remaining three partners would be oblivious to any upcoming significant regulatory changes. If the role-holder has not made any changes to your policies and/or processes off the back of what you have read in the press, this could be a warning sign that the role is not being discharged proficiently.

You could ask the role-holder what changes might need to be put in place to remain compliant. If the response is generally that no changes are required/being made, then this could be an indicator that compliance gaps already exist.

I would also hope that any role-holder would stay up to date by attending the Solicitors Regulation Authority’s annual compliance conference, which is free and can be accessed in person or online.

A further challenge in a four-partner firm is that the partners are often running their own departments, which can create a silo mentality. The partners are often suspicious that there could be compliance gaps but they simply don’t know how to start the conversation with the role-holder or they are firefighting their own department(s).

Hopefully, this has provided those partners with the inspiration of a starting point to have that open and transparent conversation with your fellow partners – remember you are all ultimately responsible, role-holder or not!


Sarah Charlton has a BSc (Hons) in Applied Accounting and is a Fellow member of the Association of Chartered and Certified Accountants. Her career spans over 35 years working within the legal sector for both small and medium sized law firms, fulfilling roles from CEO through to COFA.  During her career she has worked with a number of legal regulators, professional bodies, academia and government organisations in the UK and overseas. Sarah is also a Fellow of the Institute of Legal Finance & Management, serving as chairperson between 2010-2012 and continues to serve on the Executive Council. 


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