If we had surveyed COLPs across the 10,500 regulated law firms just a couple of months ago I guess that 10,000 would have said that the COLP needs to be in the office to do their job effectively. OK, they could work at home on a Friday, but that is a million miles from genuinely flexible lawyering and having a COLP that is predominantly available online and on the phone. How on earth can you supervise effectively; answer the ‘walk by’ questions that uncover something you recognise as important; manage process and have appropriate access to the senior decision makers if you are not in the office? Well in the last few weeks many COLPs and law firms have done just that. And they implemented it in a crisis when the role of the COLP was crucial.
• compliance by the firm, its managers, employees and interest holders with the SRA’s rules;
• that the firm’s, managers, interest holders, employees, and contractors do not cause or substantially contribute to a breach of those rules; and
• compliance with the firm’s terms of authorisation.
These are very wide obligations, considering the broad nature of firms’ duties under the SRA’s rules such as compliance with the general law, ensuring the training and competence of staff and the need to follow anti money laundering provisions.
The COLP also has a crucial role in reporting breaches of the rules to the SRA. Under the Code for Firms the COLP must make a prompt report of any facts or matters that they reasonably believe are capable of amounting to a serious breach of the SRA’s rules or of the firm’s terms of authorisation. However, they must go further than this and also promptly report any facts or matters which they reasonably believe should be brought to the SRA’s attention for the purpose of investigating whether any such serious breach has occurred. The SRA has provided some early guidance and case studies on reporting but these nuanced obligations will require the careful exercise of judgement. Lawyers may make a living out of these skills but they don’t like applying them to their own practice when a regulator may hold them to account for their decision making.
Finally, on reporting, the
Code of Conduct for Solicitors RELs and RFLs
now enshrines the principle that other solicitors in the firm can discharge their reporting obligations to the SRA by reporting the matter to the COLP where appropriate under the belief that it will in turn be reported to the SRA.
The COLP’s wide role does not absolve the firm’s managers of their responsibility for breaches of the rules by the firm. The Code for Firms specifies that this responsibility is joint and several amongst managers. But it is not surprising that in the largest firms the COLP will be a senior expert lawyer with perhaps, a place on the firm’s management board.
However, medium sized and smaller firms, or businesses that are new to SRA regulation face a dilemma. They need to appoint a lawyer of sufficient experience and knowledge to the COLP role and free up the time for them to perform it properly. But even if the firm has such a lawyer available that person is likely to be crucial to the firm in other ways – fee earning, bringing in clients or practice management. This is where an important change introduced by the SRA’s new rules can help. For the first time firms are allowed to outsource the COLP role to an external lawyer under a contract for services.
There are some immediately obvious advantages to this:
• It allows the firm to free up a key manager or fee earner for their core role
• It brings in external compliance expertise in a more “hands-on” and potentially more cost effective way than simply paying for advice.
There are some do’s and don’ts if you are thinking of engaging on external COLP
DO make sure that the lawyer that you are engaging as COLP has sufficient up- to-date expertise.
DO make sure that any contract that you have with the COLP ensures that they can commit sufficient time to the role as required.
DO make sure that the COLP is given full access to information and full co-operation within the firm
DON’T assume that by outsourcing the role you are outsourcing your responsibilities or that compliance has somehow become an external matter
DON’T allow the COLP role to become marginalised
If the last few weeks have taught us anything, it is that we are capable of so much more than we think. And so are our teams. We have already blogged on the changes that might stick following the end to the current crisis, and much of that will be driven by the fact that what seemed impossible has now been done. COLPs are working remotely and many are handling new and difficult issues while doing so. They are not just keeping the lights on.
As law firm partners get to
settle into new routines
many will start to think about what they have learned and what the future might look like. They will consider a 12-18 month exit from lockdown, a permanently changed set of employee and client behaviours and face new financial pressures. Thinking how your next COLP might be part of the growing flexible market can be part of that. Faced with real pressure to increase fee income, is now the time for you to take advantage of the division of labour and hire an external COLP?
Passmore Consulting is built upon a deep understanding of regulation.
Crispin Passmore
has been involved with reforms in England & Wales since Clementi and is delighted that he can now call upon Patrick Reeve to expand our offer in compliance and operational activity. Patrick Reeve is a solicitor, first qualifying in 1990, and involved in drafting the new Standards & Regulations for the SRA. Patrick has run his own firm, acted as an adviser to other law firms on COLP obligations and to regulators beyond the SRA. Keep reading our blogs over the coming months as we expand the services we offer.
2021 update: We are not currently able to take on further outsourced COLP work.
