What makes an effective compliance team?

The compliance team, whether that is the COLP and COFA working on their own, a committee selected from members of the firm, or a team of compliance specialists, must complement the business in which it operates. This in turn requires everyone in the business to work in a supportive manner with the compliance team rather than fighting against them or not involving them in decision making. Easy for me to say, but how is this achieved in practice?

I have witnessed a noticeable change in attitude to regulatory compliance and a revolutionary transformation in firms’ attitudes to the business end of their work over the past couple of decades. There is a need to be open to the concept that being a good lawyer is not all that is needed to survive and prosper in the legal services industry. It is necessary to acknowledge that a good lawyer must work in a compliant way among like-minded colleagues.

Why? The bottom line is actually very simple: without a commitment to understanding and upholding regulatory compliance standards, the firm will quickly lose favour with the SRA with consequences for the ongoing survival of the business. The firm may find its authorised status is subject to scrutiny. This in turn may have financial repercussions for the owners who will be unable to deliver services to clients. This means compliance is good for business. Who could argue anything else?

Of course, reaching this position of harmony between the compliance team and the rest of the firm does not simply happen because an individual is given a compliance title and a desk. Effort is needed to make the compliance function an effective one:

• Be clear about the purpose of compliance: More specifically, it is necessary to explain the need to be compliant with regulatory standards in language that is easy to relate to (using SRA-speak rarely appeals to anyone, not least partners who need to budget for compliance and colleagues who may feel it is a distraction). The message can be conveyed quite simply: your firm is only able to open its doors while it is regarded as a safe harbour for legal services.

• The compliance team does not own the responsibility for achieving regulatory standards: The role of the team is to facilitate the right behaviours within the firm. Ultimately, it is the owners who have the responsibility for compliance. Let’s face it, they have most to lose if things go wrong, so why wouldn’t they accept the need to promote a compliance culture? It’s one less thing they need to worry about if they are satisfied they can rely on their employees to do the right thing.

• The owners must be seen to be behaving properly: It’s a risk to suppose that a ‘do as I say, not as I do’ attitude will work. Owners need to lead by example. This requires a zero tolerance attitude to the lowering of standards, not turning a blind eye to maverick colleagues who are too difficult to manage, supporting colleagues who may have ethical dilemmas, encouraging openness and accountability, conducting arguments about compliance behind closed doors, plus acknowledging there may be regulatory risks attached to commercial decisions.

• The compliance team must have a role in decision making: Of course, all businesses must make commercial decisions, take strategic risks, and consider business plans and profitability every day. Law firms are no exception. Owners, however, must also consider whether a decision has regulatory repercussions. Doesn’t it make sense for the compliance team to be privy to this level of decision making and to be able to add to the making of informed choices? This is not to say that the compliance team is the decision maker; rather that they should add their subject knowledge to deliberations.

• Acknowledge that compliance is not a backroom service: It is still not unusual for compliance to be seen as a drain on finances and resources, a necessary evil, a team that stifles growth. However, by facilitating compliance with regulatory standards, the team is encouraging and supporting the longevity and continuing success of the firm. This means that the personnel employed in the team must have soft skills as well as technical know-how. They must be ‘go to’ and approachable. They must be able to influence people and be good communicators. They should position themselves in such a way that they will always know what’s happening in the firm.

An effective compliance team will demonstrate its value to the business. It is created to ensure that the working environment is a safe place in which colleagues can be employed, protected from regulatory censure, and able to work in a way that promotes profitability and sustainability. 

Tracey Calvert is director of Oakalls Consultancy 

www.oakallsconsultancy.co.uk