Effective supervision: the start of a new compliance culture

One of the most striking features of the regulatory system ushered in by the SRA’s new Standards and Regulations (S&R) is the focus on supervision – or rather “effective supervision” – and management which is expected from individual solicitors.

The clues are in Standards 3.5 and 3.6 of the Code of Conduct for Solicitors: 3.5 Where you supervise or manage others providing legal services: you remain accountable for the work carried out through them; and you effectively supervise work being done for clients. 3.6 You ensure that the individuals you manage are competent to carry out their role, and keep their professional knowledge and skills, as well as understanding of their legal, ethical and regulatory obligations, up to date. These individual standards are reinforced by requirements in the Code of Conduct for Firms, such as: 4.3 You ensure that your managers and employees are competent to carry out their role, and keep their professional knowledge and skills, as well as understanding of their legal, ethical and regulatory obligations, up to date. 4.4 You have an effective system for supervising clients’ matters. Hiding in plain sight, the words “effectively” and “ensure” demonstrate the level of responsibility which will be expected. You must achieve the desired result in terms of supervision rather than simply have any old supervisory regime and you must make sure that your management achieves what’s specified in the standard. Recent disciplinary decisions reveal why this might be of such concern to the SRA and reinforced the regulator’s belief that effective supervision and management in the workplace can help maintain standards. These decisions provide a reminder that effective supervision is an essential tool in terms of making certain that solicitors and others working in law firms do not misbehave, and that management creates the right culture and ethical responses.

ESSENTIAL TOOL

For example, in 2016, a solicitor was struck off on dishonesty charges. The solicitor had pretended to carry out litigation and had provided her client with email updates on a case which did not exist. On leaving her job, she closed the case by taking money from another client’s account, falsifying probate records and sending a cheque for the exact amount of the maximum damages the client had intended to claim. Few people would criticise the disciplinary action but what about supervision of the individual, and would appropriate oversight have rooted out such improper behaviour? In another matter, a solicitor whose lack of supervision contributed to a decision that a trainee’s two years of work did not count towards her qualification was rebuked and fined £2,000 by the SRA. The solicitor in question, an in-house legal consultant authorised as a training supervisor, was on maternity leave for 14 months, leaving her trainee unsupervised – but still undertaking legal work as a trainee – over that period. The regulatory settlement agreement records that the supervising solicitor had not complied with her regulatory obligations. Lack of appropriate ownership of the supervisory role, and oversight of regulatory requirements more generally, resulted in consequences for trainee and supervisor alike. And last year, a junior solicitor was removed from the roll because she backdated 23 letters and made misleading statements in client matters. She said she had wanted to show her supervisors she was in control of her files and they were progressing. She said she had intended to act in her clients’ best interests but it was “simply a case that I was no longer able to cope”. Would it not have been easier simply to speak to the relevant people in the business?

STING IN THE TAIL

This attention on supervision and management will not be a surprise to anyone in a compliance role who knows that they must be satisfied that their colleagues act ethically. However, it might make less comfortable reading for anyone with a role in the firm in terms of reporting lines, or in the monitoring of client matters, adherence to firm policies, appraisals or similar. In other words, the significance of supervision and management in law firms and the role of supervision in supporting an ethical and regulatory-compliant workplace cannot now be ignored by all individuals in the firm, and the SRA is expecting additional input from solicitors and others who they regulate. Fair enough, but there is a sting in the tail with these expectations, and the standards we must meet. This is because nowhere in the S&R are the words supervision, supervising or supervise defined. The same goes with management. There is some time before the launch of the S&R on 25 November 2019, and preparing to comply with the supervision and management standards should be one of your priorities. We have been given a very clear message: the 2011 Handbook intended to create the impetus for the creation of a firm-wide culture where compliance with regulation and ethics could be embedded. We have, more or less, achieved that now and well-run firms will have visible compliance and compliance professionalism in place. The 2019 S&R are part of an evolutionary process where compliance must be married up with individual professionalism. Keeping the law firm authorised is a team effort, and that includes roles for supervisors and managers.

VITAL COGS

Looking at supervisors, we are of course familiar with the concept of a more experienced individual having oversight of more junior staff, and perhaps undertaking auditing services to check the quality of legal services being performed. My feeling is that the SRA expects more. In many ways, the supervisors and managers are the ambassadors for the firm, and vital cogs in the ethical and compliance framework. Here are some initial thoughts to start off a review of processes:

What do we mean internally when we designate individuals as supervisors or managers? Would our expectations of our supervisors or managers be consistent with what is described in the S&R?

In particular, in terms of supervision, are the right people in place and do they have the right skillsets? Sometimes supervision appears a little like no man’s land when fundamental questions are not answered; why are we supervising? To whom should we show greater loyalty; to the colleague who is struggling or to the firm that employs the individual? What concerns should we be reporting back to other colleagues?

Undertaken properly, supervision is a discrete work stream. Do our supervisors have the time to give this role the appropriate attention?

As a firm, do we have policies to enforce our supervisory and managerial roles. If we are looking at Standard 3.6 of the Code for Solicitors, what checklists could we create so that individual solicitors are supported in their task of ensuring that colleagues’ legal, regulatory and ethical knowledge is appropriate?

What resources will we provide to support those in supervisory or managerial roles? For example, will they have access to data which supports with a thorough assessment of someone’s legal, regulatory and ethical knowledge? Is access to complaints data and perhaps file inactivity reports needed? Is there access to all incoming and outgoing correspondence, including emails if necessary?

Do we have policies to explain what we expect from colleagues when they are being supervised and managed? Do our colleagues know what’s expected of them in terms of the need to be open, honest and accountable?

 As a firm, are we tailoring the supervisory and managerial expectations to achieve the desired results notwithstanding the different types of individuals who are the recipients of the supervision and management?

 Are we facilitating regular supervisory and managerial meetings? Appropriate supervisory and managerial methods will feed into and encourage many positive behaviours in the workplace and support an ethical environment. These include monitoring and improving client care values, addressing the competencies which are expected of solicitors when delivering a proper standard of service, developing appropriate training regimes, and fostering the all-important virtues of openness and accountability. We must ensure that we support our individual solicitors and managers to achieve these goals.