COLP role risks prompting culture of silence at firms, warns top adviser


Harrison: firms should consider taking out insurance for COLP

Law firms should not appoint the lawyer who handles their indemnity insurance as the compliance officer for legal practice (COLP) or risk discouraging lawyers from owning up to their mistakes, a leading City solicitor has advised.

Richard Harrison, who heads the lawyers’ professional liability sub-group at Clyde & Co, said the lawyer who deals with a firm’s professional indemnity insurance arrangements “will no doubt have spent time cultivating an atmosphere in which individuals feel comfortable approaching them with issues which might need to be notified promptly to insurers or lead to claims”.

If they were also the COLP, they might then have to report the matter to the Solicitors Regulation Authority (SRA), even if no claim actually arose. “As a result, people may shy away from sharing their problems,” he predicted.

Mr Harrison highlighted the difficult role the COLP will have: “There is the potential for a COLP to take a view on matters which his or her partners/members believe is over-cautious, and exposes the firm to the unwelcome attention of its regulator. Inevitably COLPs will need to tread a careful line between discharging their obligations to the SRA and looking after the proper interests of their firm.”

The SRA has still not confirmed when firms will have to start nominating their COLPs and also their compliance officers for finance and administration (COFAs), a process that was originally due to be completed by the end of last month; however, it maintains that COLPs and COFAs will still formally assume their responsibilities from 31 October.

Mr Harrison said the compliance officers should consider written agreements with their firm. For the COLP this could include an indemnity for any personal liability incurred, the right to take legal advice at the firm’s expense in relation to his or her duties and who the ‘client’ will be in relation to such advice, and an obligation on the firm to allow the COLP sufficient time and resources to perform the role.

“The firm may wish to consider taking out management liability insurance that would specifically cover the role of COLP,” he added.

Ahead of taking on the role, Mr Harrison said COLPs should be developing or updating a compliance plan, setting up systems to allow them access to all necessary business information and client files, arranging systems that allow the COLP to ensure compliance, and establishing a means of recording failures to comply.

 

Tags:




Leave a Comment

By clicking Submit you consent to Legal Futures storing your personal data and confirm you have read our Privacy Policy and section 5 of our Terms & Conditions which deals with user-generated content. All comments will be moderated before posting.

Required fields are marked *
Email address will not be published.

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Blog


Keeping the conversation going beyond Pride Month

As I reflect on all the celebrations of Pride Month 2024, I ask myself why there remains hesitancy amongst LGBTQ+ staff members about when it comes to being open about their identity in the workplace.


Third-party managed accounts: Your key questions answered

The Solicitors Regulation Authority has given strong indications that it is headed towards greater restrictions on law firms when it comes to handling client money.


Understanding vicarious trauma in the legal workplace

Vicarious trauma can happen to anyone who works with clients who have experienced trauma such as domestic or other violence, child abuse, sexual assault, torture or being a refugee.


Loading animation