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Hannah Gannagé-Stewart

Deputy Editor, Solicitors Journal

Made in heaven? Reconciling compliance and fee earning

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Made in heaven? Reconciling compliance and fee earning

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The relationship between the compliance and fee-earning teams should be one of equal partners, especially under the new SRA Standards and Regulations, urges Tracey Calvert

The compliance team may be a large group of people providing solutions to all the firm’s compliance requirements or, instead, only the individuals who have volunteered to be the COLP or COFA. 

But that team’s relationship with the fee earners is one that must work if the firm is to ensure that it operates in an appropriate way. 

Compliance and fee earning is a union which, in my view, should be a pairing of equals, each side coming together to produce the results anticipated by the Solicitors Regulation Authority, which is that their business is a safe provider of legal services. 

Achieving such a partnership is sometimes easier said than done. I continue to see pockets of resistance in some quarters. 

The sense on the part of the fee earner can be that the compliance function is one of business prevention or restriction, while the compliance team regards their role – correctly, in my view – as being part of the business continuity plan. 

Add to this the perception that the compliance team just does not get the lawyering, or that compliance is an administrative function that sits beneath rather than alongside the money earning roles, and it does not bode well for a good relationship. 

Mutual trust

From the other side, I also sometimes see the fee earner and compliance relationship fall apart because the compliance role holders are just not prepared to trust their fee-earning colleagues to identify and handle a regulatory or ethical issue correctly. 

They try to avoid giving the fee earners any responsibilities in this area, sensing it’s easier to keep all of this within the compliance team itself. 

I also see difficulties and frustrations when the compliance team fails to take into account any element of commercial reality or pragmatism in their decision making. 

When that happens, we are not witnessing true risk management at work. Everything is risky about legal services and the compliance team’s strength should lie in the contribution they make to balancing the risks against the facts. 

Looking to the future – by which I mean the time when the SRA Handbook is finally replaced by the SRA Standards and Regulations – this relationship will be put to the test even more.

The tone of the new Standards and Regulations clearly revitalises the focus on the ethical behaviour of individuals, particularly when those individuals are solicitors, registered European lawyers or registered foreign lawyers. In this new regulatory environment, it might not be possible for the compliance team to assume all responsibility for this part of the practice. 

These fee-earning individuals will be required to comply with the SRA Code of Conduct for Solicitors, RELS and RFLs, and I would suggest that their early reading should focus on Standard 3, noting, in particular, the following provisions: 

  • Standard 3.3 - You maintain your competence to carry out your role and keep your professional knowledge and skills up to date 
  • Standard 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. 
  • Standard 3.6 - You ensure that the individuals you manage are competent to carry out their role, and keep their professional knowledge and skills, as wells as understanding of their legal, ethical and regulatory obligations, up to date. 

Additional skills 

A few initial observations spring to mind, in terms of these duties. Firstly, what skills must be added to your professional knowledge to ensure that you are competent and what is competence?

Surely, this must mean a good understanding of ethics and the ability to make judgement calls about professional behaviour. 

Secondly, who is supervising and managing other people providing legal services? This is a crucial decision bearing in mind that these terms are not defined in the SRA’s glossary of terms.

Are we talking about very clearly designated line management roles and appointed supervisors or is the intent to be broader than this and encompass all the informal mentoring roles and roles of influence and decision-making in the firm? 

Related to this is the question of what is being supervised. Are we talking about the traditional file-review role or is this about something more nebulous such as the role of mentor or coach or even an individual involved in the personal development of a colleague? 

Thirdly, what do we need to understand about legal, ethical and regulatory obligations? There must surely be a common starting point in all law firms, but how is a specific law firm’s approach tailored to reflect the particular environment? How can legal, ethical and regulatory obligations be monitored? 

What seems clear from the new Standards is that the compliance function will not be able to achieve all the answers which the SRA expects in isolation. The partnership I mentioned before must be sharper and stronger than ever. 

Of course, the compliance team will continue to ensure that there are suitable systems and processes in place to create the framework for a working environment where all individuals can be legal, ethical, and in a good place in terms of their regulatory relationships.

But the personal accountability of solicitors means that they must also now, if they did not before, own the issues and play an equal role in achieving the desired effect. 

Ground rules

In my view, success will lie in establishing a few ground rules for the development of the compliance-fee earning momentum in the firm. I would offer the following thoughts to start your pondering what needs to happen in order to demonstrate the correct response. 

Visibility of the compliance role is essential. I am no longer surprised, but still a little bemused, to find that the terms COLP and COFA are not in regular use in some firms, let alone that the role holders are known. 

Quite simply, it is essential that everyone in the firm knows who is the designated COLP and COFA, what this means, and what they need to know.

Systems and processes should all be designed so that risks are identified and managed and the compliance officers will be able to track and perform risk management.

The compliance team’s role needs to be understood; I have yet to meet a compliance professional who is telepathic, so we need to ensure that fee earners (and others) know how and when to communicate with their colleagues.

Solicitors and other colleagues who will need to understand these Standards must be identified and supported but be under no misunderstanding about the personal impact of getting these duties wrong. 

If the nature and extent of these ground rules are still unclear, consider what your answers would be to the following questions:

  • In addition to professional knowledge, what skills do our people need to demonstrate? 
  • Who are our managers and supervisors; are the right people in these roles and what training, additional or otherwise, should they receive in order that they are supported in these roles? 
  • What are the legal, ethical and regulatory standards we expect of our colleagues and how do we ensure that this is common knowledge? 
  • How do we assess the legal, regulatory and ethical knowledge of those colleagues providing legal services who are managed and supervised and therefore could prove unsettling to the solicitors?
  • What support can the compliance team give all individuals to ensure that compliance standards are achieved? 

At the time of writing, we still do not know when in 2019 the new Standards and Regulations will be launched. 

However, regardless of the specific date, it makes good sense to make a head start on evaluating and clarifying the partnership between fee earners and compliance colleagues and making sure that both sides are ready for the changes ahead.

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Tracey Calvert is a consultant at Oakalls Consultancy Limited

oakallsconsultancy.co.uk

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