Tracey Calvert is a highly experienced regulatory compliance specialist with extensive knowledge of legal ethics, professional conduct, financial services and anti-money laundering regulation. She has been the owner and director of Oakalls Consultancy Limited since 2009.
A senior SRA executive recently described the legal landscape in Shakespearian terms as a “brave new world”. To add a touch of realism I’d rely on Darwin’s observation and say that it is not the strongest of the species in this new world that will survive, but the ones who are most responsive to change.
Head in the sand, and an attitude that it will all go away, is not an option whereas a little bit of navel- gazing will do wonders at this moment in time.
It is true that times are changing. It’s a different and more competitive marketplace now. The SRA has started to accept applications from prospective Alternative Business Structures (not Tesco, but the Co-Op and DAS are amongst the first applicants) and it’s likely that these new boys will be launching their own legal services models in the next few months. The SRA has also changed its approach to regulation with the launch of a new Handbook last year. It’s not just any old rule book (in fact it’s not all rules) but is instead the regulator’s toolkit with which to introduce outcomes-focused regulation (OFR) and risk-based regulation. It also enables the SRA to complete its realignment as an entity-based regulator able to consider everyone working within a law firm and ensure that firms focus on effective management and risk management.
Firms should already be considering their existing ways of working and asking themselves whether they are fit for purpose in this new world. Firms with quality standards, such as ISO9001 and Lexcel, have a good foundation but should not be complacent. The SRA has warned against firms falling into “unthinking compliance” or “compliance painting by numbers”. Instead, firms must consider what makes them unique – their business model, clients, work – and plan accordingly.
And this revolution is on-going. The next step is the appointment of compliance officers – one for legal practice (your COLP) and one for finance and administration (your COFA). Firms need to notify the SRA of their nominees by 31 March 2012 and appointments will be confirmed by 31 October 2012. Again, the SRA has issued warnings. They say that these roles are essential for the successful operation of OFR and that they will want to see officers with “sufficient resources, seniority and unambiguous championing from those running the firm….firms that fail to do this will be running a serious regulatory risk”.
So the message is clear: a fuss-free relationship with the regulator requires some regulatory navel- gazing to ensure that you have demonstrable systems in place to reflect and manage your regulatory risks. Careful consideration must be given to your compliance officer appointments. They shouldn’t be there in name only but should be playing a full and well-supported role in your regulatory functions. If you haven’t started to plan for this, time is of the essence and it is time well-spent. The legal world is changing and only those who make changes will survive.