Establishing a two-way relationship with your clients
By Leah Darbyshire, Community Manager, Legal Compliance Association
Many compliance professionals in law firms are also practising lawyers. But what can you learn about compliance from your clients?
If your clients are corporate or public sector organisations, they will certainly be facing compliance challenges of their own, which you can be sure will come down the line to your firm in due course, through Outside Counsel Guidelines.
Take, for example, information security. Public sector organisations and banks are under pressure from the Information Commissioner's Office to keep personal data safe following some high profile leaks. As a result, the obligations of legal businesses to keep client data confidential have been intensified by both an alarm sounding by the ICO and by clients themselves, passing their compliance responsibilities up the chain.
Compliance officers in corporate organisations also want to avoid connections to high profile scandals such as the collapse of the clothing factory in Bangladesh, which negatively affected British retailer Matalan. If your clients are performing due diligence on all of their suppliers, it makes sense that they will want to perform due diligence on you and all of yours.
While it would be beneficial to take some time to find out what your clients are worried about, beyond those risks currently protected by the Handbook, changes being made by the SRA mean that you might be in a position to help your clients with regulatory compliance soon, too.
The SRA is concerned with professional independence and has expressed, most recently in its July Risk Outlook 2015 its worries about cases of ‘excessive zeal' in which a lawyer's duties to their client(s) seem to have compromised their duties of independence.
Its oversight regulator, the Legal Services Board, is showing an equally keen focus on the activities of lawyers working in-house and last month published the response paper to its discussion on the topic, which ended in April 2015. The paper signals the LSB's intention to discuss final recommendations on this topic at its autumn board meeting.This will run concurrently with a consultation that the SRA has promised to undertake by April 2016 into its regulation of in-house lawyers.
Speaking to a number of general counsels recently, across a range of organisations, their main concern is with what will now be expected of them by the legal regulator and how they should interpret principles based regulation in practice. In-house lawyers can feel even more alone in this than law firm COLPS do because their employers are not bound by the regulation, which is a personal obligation that in-house lawyers must comply with in order to continue to practice. Their employers, on the other hand, are likely to care far more about industry sector regulation and their industry regulators such as the FCA in financial services or Ofgem in utilities.
"Many global law firms have general counsel who manage the firm's relationship with regulators and who represent the firm's interests in responding to proposed regulatory changes. They would be ideally placed to advise in-house counsel on how to meet their potential new SRA regulatory requirements," commented Manju Manglani, editor of Managing Partner magazine."A simple starting point would be to initiate an informal chat between the firm's general counsel and the client's general counsel to explore the latter's potential concerns regarding SRA compliance and any other upcoming regulatory changes in the client's markets. This relationship-building meeting could help the firm to identify and develop new ways to support the client prior to any regulatory changes coming into effect."
She concluded: "Peer-to-peer conversations between the law firm's general counsel and the client's general counsel could be invaluable in strengthening the firm's relationship with the client. This would likely lead to new instructions for a range of the firm's practice groups in the longer term."
Interpreting SRA regulation into practice is something that law firms have had to get to grips with rapidly over the past four years. For sure there are still gaps and areas of confusion but the SRA Chair, Enid Rowlands, made it clear at the regulator's July 2015 board meeting that it will continue to put the onus for deciding what is ethical and compliant and what is not onto lawyers and their firms, although the regulator does provide advice and support on this, with its Ethics hotline, for instance.
So it seems that the learning process between lawyers and their clients might actually be a two-way street. Perhaps it is time to arrange some compliance focus groups with your best clients and their general counsel? After all, on either side of the fence will be lawyers, working in different environments, yes, but with the same professional duties and the same regulator.
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