Rather than viewing the compliance function with scepticism, trust it as a fail-safe for individual judgement calls, argues Tracey Calvert
It is the lazy and cynical view of some that the compliance function is none other than a business prevention department, or that compliance professionals lack an understanding of the realities of providing legal services. If the compliance team is functioning properly, then nothing could be further from the truth. It should operate with an understanding of the non-negotiable need to adhere to regulatory and ethical standards and apply an appropriate compliance culture to support these. Sometimes the compliance team does have a role in preventing business, specifically where that business is illegal or unethical, or not in the interests of maintaining the firm’s reputation or commercial position. In other words, sometimes the role of the compliance function is to empower colleagues to say ‘no’. It grants the right to refuse to do something which is legally or ethically incorrect or otherwise contrary to the firm’s culture. WHEN TO SAY NO Acting in a client’s best interest is a principle, or core value, we all recite without much need for prompting but it is wrong for anyone to assume that this means the same as acting on a client’s instructions regardless of any other considerations. Test your colleagues on the Solicitors Regulation Authority (SRA) Principles by asking them what they consider is the meaning of each. And be quick to correct them if they believe that the duty to act in the best interests of the client overrides all else. Wrong! Or more precisely, wrong if that means that other values such as integrity, upholding the rule of law and acting in a trustworthy manner are sidelined to achieve this. The SRA does not have sympathy for anyone in the disciplinary hot seat who argues that their behaviour was motivated solely by the duty to act in their client’s best interests. A recent example of this is the widely publicised case involving an experienced solicitor who had been admitted in October 1978. His errant behaviour centred on the fact that he had prepared an enduring power of attorney for his client in 2010 but backdated it to 2003. He then witnessed signatures as if the document had been completed in 2003 to avoid the need to prepare the correct documentation, which was a lasting power of attorney (LPA). He explained that the client had “winced” when told of the registration fee relating to the completion of a proper LPA and that he responded by going “too far” in trying to help her. The solicitor also described his actions as a “one-off isolated incident and a single departure from habitual adherence to strict standards of integrity and ethical propriety…”. He added that his intention had been to save the client “the burden, confusion and potential distress, and expense, of an LPA”. One-off or not, the consequence was the solicitor’s strike off; a salutary reminder of the need to know when to say no to a client regardless of the circumstances. Other examples of miscalculated decision-making have been described in SRA resources. Consider the invaluable “Balancing Duties in Litigation” paper, which was originally published in 2015, and refreshed in 2018. In justifying the decision to reissue this resource, the SRA said: “A key theme continues to be the conflict between the principle of acting in the best interests of each client and other, often higher-priority principles, such as acting with integrity or upholding the rule of law and proper administration of justice.” This is essential reading for the compliance team and all litigating lawyers with its useful reminders about when to say no, whether that relates, for example, to clients’ instructions as to how to conduct cases in court, drafting inappropriate non-disclosure agreements and in acting improperly, placing us at risk of being accused of misusing our position as officers of the court. The importance of being able to say no pervades every aspect of practice. The regulator’s expectations are clear: we are expected to make tough decisions, which will not always make us popular with our clients or even our peers. Other examples include our duty to ensure we make the right call about not acting in conflict of interest scenarios, or where there is a confidentiality/disclosure conflict. Also consider the risk of making improper decisions when dealing with other people’s money, especially if not saying no means that we are at risk of providing banking facilities. The risk of drawing up documents and agreements which might be beautifully and skilfully drafted, but place us in precarious positions such as when acting on clients’ instructions to close down discussions in non-disclosure agreements, or when dealing with unrepresented individuals, are another risk hotspot. Individual solicitors, and others with whom the compliance team work, face pressures every day to please their clients. The challenges faced in any scenario where the lawyer is with their client, in a court room or when negotiating, are enormous. Integrity will be the required response and that is made an easier choice reinforced by the knowledge that the employer will support decisions which might be challenged by the client. It is the function of an effective compliance team to remove the stress of this type of decision-making and empower colleagues to say no when this is the correct legal and ethical choice. This will be achieved through the culture of the firm, which is of course the domain of the owners of the business, but implemented through the championing of the culture by the compliance team. This culture needs to be clearly communicated to all colleagues, starting on day one. Regardless of the experience of the new colleague, it is essential that they understand the firm’s ways and culture. Key messages include the value that the firm places on the maintenance of its ethical core and reputation and what the firm will and won’t tolerate in terms of decision-making by employees. After all, the employees are the ambassadors for this vision. SOUNDING BOARD Support to reinforce these messages is delivered through the compliance team’s role as a safe harbour in which to discuss concerns, plus the drafting of appropriately devised policies, controls and processes. The latter, when drafted with the support of the business owners and with a sense of the firm’s identity, will include statements about the firm’s position so it is easier for an individual to explain – even apologise for – not being able to say yes. These controls must be monitored to ensure that they are both effective in supporting the culture and that they are used by colleagues. Ways to monitor for compliance will be engineered by the compliance team but will require input from other members of the firm. For example, the compliance team should be supported by key internal champions. In particular, these champions should all be solicitors who are in supervisory and management roles in the firm and who must adhere to roles which will be introduced by the Code of Conduct for Solicitors in November’s new SRA Standards and Regulations. The significance of these standards should not be underestimated by the individuals concerned or by the compliance team: “3.5 Where you supervise or manage others providing legal services: a you remain accountable for the work carried out through them; and b you effectively supervise work being done for clients. 3.6 You ensure that the individuals you manage are competent to carry out their role, and keep their professional knowledge and skills, as well as understanding of their legal, ethical and regulatory obligations, up to date” Finally, the compliance team should utilise training to deliver these messages. The indicators of a solicitor’s competence, as demonstrated currently in the Statement of Solicitor Competence, extend far beyond technical ability. Consider some of the attributes expected of a competent solicitor and use these as triggers for training on all the so-called soft skill qualities which the regulator has decreed make an individual an effective lawyer and employee. Some of these skills support tough decision-making, so training on communication with clients is highly recommended. The message from the SRA is very clear: it’s law and ethics first, and then client instructions follow only where these can be aligned with our core values. We are not our client’s servant regardless of anything else, and a bad one-off decision can have career challenging consequences. Do your colleagues have the support to make sure their choices are well made?
Tracey Calvert is a consultant at Oakalls Consultancy Limited oakallsconsultancy.co.uk
Under the law, should your right to express your opinion – be it on politics, the environment, abortion, or anything else – trump my right to go about my business unhindered, whether or not I happen to agree with your opinion?