Our search for a COLP candidate led to some difficult questions

Our recent search for a new colleague qualified to play the role of compliance officer for legal practice (COLP) within the firm has highlighted just what a new world we are all working in from a compliance perspective.

As managing partner, I have historically taken quite a hands-on approach to risk management, chairing the firm’s risk committee and taking ownership of a number of change projects, such as our overall preparation for outcomes-focused regulation (OFR) and our response to the introduction of various new pieces of legislation.

But, with the move to OFR and the specific requirement to appoint a COLP (and a COFA, although that has been more straightforward), we decided that it was time to appoint a full-time compliance professional within the business.

The gist of our thinking was that while a managing partner or CEO should spend a certain amount of time on risk and compliance in order to signal its importance to the wider firm, that commitment should not swamp other strategic elements of the role.

Moreover, some separation of powers is appropriate, as occasionally a managing partner should be challenging colleagues to work in ways which, while better from a commercial perspective, may lead to complex or subtle regulatory considerations on which an independent and specialist view would be helpful for a better overall result.

Our search for a COLP candidate attracted interest from candidates from a variety of backgrounds, including those from risk functions of existing law firms, but also those from other industries and from the regulatory sector itself. We were very pleased with the response to our brief, but the selection process highlighted two practical challenges in relation to which we needed to refine our approach as we narrowed down to a final shortlist.

The first issue was that of how senior the appointee needed to be: what in practice would amount to the “sufficient seniority” required by the rules. Some take the view that this can only mean a partner. However, we have always taken the view that while partners will contribute to many important decisions within the firm, they do not need to be the only decision makers, and that decisions requiring specialist skills or knowledge are often better taken by others.

In order to ensure that our new COLP has and is seen to have appropriate access to information, we have provided a number of additional assurances about such information access as part the structure of the role itself. We believe that a specialist lawyer dedicated to the role and with full access to our information systems will deliver a much greater contribution in the role to both internal and external stakeholders than a partner taking on the responsibilities as part of his or her wider caseload.

The second and closely related issue was that of where the COLP should fit within the firm, both from an organisational perspective and indeed from a physical one. Should the firm’s COLP, as a qualified solicitor, sit within one of our practice groups? Or, as a senior manager, should he sit within our business services teams?

The arrangement we have chosen to implement is to have our COLP rotate through the legal teams on a periodic basis. This approach is intended to support the development of working relationships across the firm and to ensure the COLP is seen by all of our lawyers as a professional colleague who is there to promote the success of the business through driving best practice and strong risk management, and not as an occasional auditor needing full introduction on every interaction with the business.

Of course, there are many different approaches to satisfying the new COLP requirement and our approach is just one of them. There is of course no absolute requirement for firms to make a new appointment to the COLP role. In some cases, it will be assumed by the firm’s risk and compliance partner, in others by another partner who ‘has time’ for the role. However, we believe that the answers we have come to represent the best ones for our business over the first few years of the new regulatory order.