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Adding ethics to the compliance agenda

Adding ethics to the compliance agenda


The consequences of allowing improper ethics into the workplace will likely be dire for the individual concerned and their firm, warns Tracey Calvert

Compliance professionals are familiar with the concept of continuous assessment to evaluate how successfully they have addressed the various regulatory demands made of them and their firms by the Solicitors Regulation Authority. They look at their breaches records, complaints data, dealings with the SRA and Legal Ombudsman, and similar. The idea is to consider which, if any, of their systems and policies need fine-tuning, where their risk pinch points are, how to remedy hotspots, and how to develop areas of proven success.

This is of course very sensible. The SRA likes to see evidence of this; the handbook is littered with clues in words and phrases such as ‘evaluation’, ‘monitoring’, and ‘continuous improvement’, which begs an answer to the following question: what have we learnt about ourselves and what could we do better or differently?

This year, consider the ethical complexion of your firm. This will ensure consistent and safe individual and firm-wide professional behaviour and facilitate ethical thinking in internal compliance schemes. There may be a temptation to think compliance controls are all that is needed to create an ethical culture, but that is a dangerous assumption. It is prudent for firm owners and compliance officers to understand the behaviours of their colleagues and have confidence they will make the right ethical choices.

Basic ethics have been on the backburner in recent times. The changes in our relationship with the regulator have been colossal and identified by compliance terminology. There has been a need to think about systems and policies which will demonstrate that we have adapted to the SRA’s regulatory style with internal compliance officers, compliance plans, recording and reporting, and systems and policies. Ethical behaviour has not been a key focus of this journey; the emphasis has been on the development of audit trails and less on the consideration of the behaviours of those we expect to comply.

However, successful compliance strategies will not work without solid ethical foundations. As we start thinking about a review of internal compliance processes to align with the 2018 relaunch of the SRA handbook, it is appropriate to consider what ethics mean in your environment.

I have visited many firms which are using the changes in continuing professional development to introduce compulsory training on core ethical and professional conduct subjects (conflicts and confidentiality, client care and money, and ethics in litigation). Such training helps with risk management and should not be underplayed.

Being a good solicitor means much more than having knowledge of the black letter law; understanding and displaying ethical decision-making skills are crucial characteristics of a modern lawyer. There is no doubt that the SRA is considering ethics with renewed vigour. If the first staging post of the revolution in legal regulation has been risk-based regulation and the focus on the compliance framework, the second marker is a return to ethical basics as demonstrated in much of the SRA’s recent policy work. We have had the ‘Question of Trust’ project and several recent SDT decisions where the fundamental ethical concepts of independence, integrity, and trust in the profession have been analysed.

SRA v Ford (case number 11272-2014) shows what can happen if basic ethical responses are not applied. The decision showed that Mr Ford, a sole practitioner from Bolton, had been over reliant on referrals of personal injury work from third parties (to the extent that he had paid out £475,000 in referral fees between 2011 and 2013). The SDT found the relationship with the referrers had meant that the solicitor’s independence was compromised and his actions lacked integrity. Add to this mix the serious Accounts Rules breaches, disregard of conflict of interest considerations, and poor standards of service to clients, and it was inevitable that Mr Ford was struck off the roll. He was also ordered to pay costs of £75,000.

The SRA’s review of its principles, which it describes as the fundamental tenets of ethical behaviour, has led it to suggest a cull. We may be left with just six personal behavioural requirements:

  • Uphold the rule of law and the proper administration of justice;

  • Ensure that your conduct upholds public confidence in the profession and those delivering legal services;

  • Act with independence;

  • Act with honesty and integrity;

  • Act in a way that encourages equality, diversity, and inclusion; and

  • Act in the best interests of each client.

In other words, all the signs indicate there is a regulatory return to the prioritisation of core personal values. Therefore, your compliance culture should be used to clarify the firm’s expectations about acceptable standards and to ensure that inappropriate ethical behaviour is rooted out and challenged. The consequences of allowing improper ethics into the workplace are likely to be dire for the individual concerned and for the entity in which they practise.

Tracey Calvert is director of Oakalls Consultancy Limited