Business as usual: the straightforward expectation with a sting in the tail

My work is made interesting because compliance is not a static topic. Some commentators go so far as to describe it as dynamic. One of my tasks – and yours too if you are employed in any sort of in-house compliance role – is to rise to the challenge of responding to legal and regulatory changes.

Last year it was all about data protection, insurance regulation and price transparency. This year we need to ensure that we are ready for the launch of the SRA Standards and Regulations, on which point please note if you weren’t already aware, that this is to be the title of the remodelled SRA Handbook.

Compliance is all go, all the time. However, at some point in our compliance programmes, it is highly sensible to stop, and take a moment to take stock. Take stock of the core constant and never-changing expectations about us and our behaviours when providing legal services. In the hurly-burly world of change, it would be foolish not to understand the legal, regulatory and ethical duties which are the constant topics.

ETHICS PRIORITISED

Why is this necessary? Well, we are of course expected to accommodate change. By now we are both used to this and good at this. But this isn’t enough; we are also expected to have a ‘business as usual’ awareness, an understanding of the basic requirements, that apply to us and the services we provide regardless of the type of environment we work in.

Let’s focus on ethics, or professional conduct, which is having a moment in the spotlight. The SRA Standards and Regulations shout out the news that ethical behaviour is at the forefront of the regulator’s thinking once again. The clues that this would be the case originate in SRA risk resources already in circulation. If you need convincing, read the warning notice on non-disclosure agreements, the commentary on integrity and ethics in the 2018/19 Risk Outlook, and the recently updated “Walking the Line” materials. These all ask us to consider and prioritise an ethical position.

The demonstration of ethics in the Standards and Regulations is particularly obvious from the SRA Principles. We will see the removal of the business-orientated duties, which appeared in 2011, and a return to what some of us remember as the core behavioural values. We are also going back to a clearer message about solicitor accountability in connection with both personal conduct and also the conduct of the colleagues they manage or supervise in the SRA Code of Conduct for Solicitors.

Interestingly, the Solicitors Disciplinary Tribunal casework reports are crowded with decisions about solicitors and others who have simply misunderstood their basic regulatory and ethical duties. It is not just dishonesty issues that reach the tribunal. The question of whether we are trustworthy extends to more than just our honesty with client money and similar, and many individuals have found themselves being called to explain their manifestations of misconduct.

My question to any manager or owner of a law firm, any compliance officer or in-house compliance professional, is a simple one: are you confident that your colleagues understand the ‘business as usual’ expectations?

It is too easy to assume that colleagues know their basic legal, regulatory and ethical duties but this assumption is dangerous and your colleagues’ understanding should be assessed. Too often, work pressures, clients, and commercial interests are all at play side lining the duties that arise from either being a regulated person or otherwise working in an authorised firm. Added to this, ignorance or confusion about professional duties, and the result is a perfect storm which can result in regulatory scrutiny.

So what ethically-based topics are worthy of your time and reflection? Do all your people understand what they must do to keep themselves safe, and to be a reliable ambassador for your firm, and avoid accusations of unprofessional conduct? Client care, complaints handling, referral arrangements and undertakings are all topics where misunderstandings will not end well. Do your policies re ect the correct starting point and do your people understand what they must do and, as importantly, why this is so?

ESSENTIAL SUBJECTS

I’d like to focus on two other topics: confidentiality and conflicts of interest. These are the two essential subjects that must be applied accurately, yet too often we lose our way and do not apply our duties with pinpoint precision.

Confidentiality requires every single member of the firm to understand their role in keeping clients’ secrets, well, secret. A few things trouble me with this seemingly straightforward expectation; this applies to absolutely everyone but do we make this sufficiently clear to all members of the firm? Do we use appropriate language to deliver this message to our non-lawyers? Do fee earners think that the pressures of work will entitle them to a little exibility, so that, if taking a telephone call in a public arena involves the discussion of confidential issues which could be overheard, this will be shrugged off with a ‘well, that’s life’ explanation? Do fee earners understand the duties owed to former clients and the backpack of confidential information that they carry round with them from one job to another? Information barriers – why would anyone think their use is anything other than a high-risk strategy?

Knowledge of conflicts of interest needs to be tested too. Conflict of interest – or our inability to act in the best interests of an individual client – is misunderstood on several levels. For example, the nuances of the regulatory definitions of own-interest conflict and client conflict are frequently glossed over so that concepts such as a significant risk of conflict needing to be considered as much as an actual conflict and related matters needing to be assessed are missed.

Confusion also arises about the extent of the duty. Do your colleagues understand when the duty starts and ends? Do they appreciate the need to monitor for a conflict event throughout the relationship? When will acting on different sides of a project, do they appreciate why this makes the scoping of a retainer important and why prompt file closure is a sensible precaution?

People think that they understand their duties, but do they really get these constant but complex topics? In my experience, it is too risky to assume that all your colleagues understand them and apply them properly. Training is the antidote, whether it’s delivered by a third party or whether you organise yourself in-house. Label it as refresher training if necessary, to avoid upset, but nevertheless this is your opportunity to test and reset your colleagues’ thinking.

The training will lose its impact if it is delivered as a rules-based lecture. What’s the point of this; the recipient is not required to pass an exam. Instead, colleagues must know the consequences of their misunderstandings, what is expected of them by both the regulator and you, how the firm handles concerns, high-risk scenarios, and the recording of breaches.

A programme of learning on these basic topics is a good use of your resources. For non-solicitors, it provides them with core knowledge that they might otherwise never gain. For solicitors, it allows them to re-evaluate their decision-making priorities. For the managers, owners and compliance professionals, it provides a baseline by which to start managing and mitigating risks. Firm-wide training means that everyone will be supported in complying with these constant topics. SJ

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Tracey Calvert is a consultant at Oakalls Consultancy Limited

oakallsconsultancy.co.uk

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