Compliance can reset the ethical compass on 'the way we do things here'

How much do you trust your partners to do the right thing?
And, what does 'the right thing' mean to you, as managing partner? Does it mean doing whatever it takes to increase profits and gain a competitive edge? Does it mean complying with the letter of the law, rather than embracing the spirit of the law? Is your view of 'the right thing' aligned with the views of your partners and is that view embedded within your firm's culture? If your firm does not have a shared set of guiding principles, you can be sure that each of your colleagues will be acting in line with their own priorities.

In some cases, this is a good thing - individuals with strong ethical and moral frameworks will often
go above and beyond the call of duty to protect their firm and clients. But, it is the people who lack such strong foundations who you should be concerned about, particularly if they are team leaders or have political sway within your firm. They are the ones
who are more likely to set the moral and ethical
compass on 'the way we do things around here'. This may involve, for example, retrospectively padding timesheets to meet billing targets or rushing through due diligence on big-name clients - actions which
are so commonplace that some fee earners fail to register them as wrong.

Too often, partners are so focused on achieving profit goals that they take 'shortcuts' on critical risk and compliance processes. They treat compliance
as a tickbox exercise, rather than as a valuable
tool to protect them, their clients and their firm.
But, compliance is about doing the right thing for
the firm's previous, current and future generations
of staff. Scandals have a way of creating widespread reputational damage, which affects both business development and recruitment and retention efforts
in the short, medium and long term.

Of course, this is not to say that the rules and requirements which are imposed on law firms are always fair and beneficial. Many regulations have been (rightly) described as flawed and a resource-consuming burden. Some have even created significant problems in the short term by putting
the onus on law firms to decide if they are compliant, rather than providing clear guidelines.

But, each regulation exists for a specific reason.
It is, in short, intended to help the market to do the right thing. So, before labelling a regulation as a burden, each fee earner and law firm should consider the spirit behind it. How does the regulation align with best practice internationally in the legal market and in client industries? Which opportunities does it present to make the firm better managed and to improve client services? It is only then that a constructive debate can be held between law firms and regulators.

The truth is that many law firms don't have a culture which is firmly grounded in moral and ethical principles. A powerful way to start changing that is to engage partners with the need to view regulatory compliance as a critical risk management tool rather than a burden.

Until next time,