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Strengthening Compliance: Supporting the COLP and COFA In Law Firms
July 11, 2023

Strengthening Compliance: Supporting the COLP and COFA In Law Firms

Introduction

The roles of the Compliance Officer for Legal Practice (COLP) and Compliance Officer for Finance and Administration (COFAs) are crucial in ensuring that law firms adhere to the highest standards of professional conduct and compliance with regulations set by the Solicitors Regulation Authority (SRA). Non-compliance can result in severe consequences for both firms and individuals, including sanctions, substantial fines and, in extreme cases, being struck off. Therefore, it is essential for compliance officers to stay up-to-date on regulatory requirements and ensure that their firms adhere to all relevant rules and regulations.

However, as the legal landscape becomes increasingly complex and the regulator more relentless in penalising those who fail in their obligations, compliance officers often face various competing demands on their time, which could hinder their ability to perform their duties effectively. In response, many law firms are seeking ways to support their COLPs and COFAs more efficiently.

In this article, our compliance team explore the challenges faced by the COLP and COFA and discuss the benefits of providing additional support to help them fulfil their responsibilities, leading to better compliance and reduced risk for the firm.

The Challenges Faced by COLPs and COFAs

COLPs and COFAs are tasked with a wide array of duties, including implementing policies and procedures, monitoring compliance, and reporting non-compliance issues to the SRA. Furthermore, they frequently need to balance these tasks with fee-earning work, business management, and other operational roles.

This multitude of responsibilities creates a significant time burden for most COLPs and COFAs, which may lead to reduced focus on crucial compliance aspects, increasing the risk of non-compliance and potentially serious consequences during SRA investigations.

If you are a compliance officer your responsibilities are set out in paragraphs 9.1 and 9.2 of the Code of Conduct for firms and are as follows:

As a COLP, you must take all reasonable steps to:

  • Ensure compliance with the terms and conditions of your firm’s authorisation.
  • Ensure compliance by your firm and its managers, employees or interest holders with the our regulatory arrangements which apply to them (except any obligations imposed under the Accounts Rules).
  • Ensure that your firm’s managers and interest holders, and those they employ or contract with, do not cause or substantially contribute to a breach of the regulatory arrangements.
  • Ensure that a prompt report is made to us of any serious breach of the terms and conditions of your firm’s authorisation, or the regulatory arrangements which apply to your firm, managers, or employees.

As a COFA, you must take all reasonable steps to:

  • Ensure that your firm and its managers and employees comply with any obligations imposed upon them under the Accounts Rules.
  • Ensure that a prompt report is made to us of any serious breach of the Accounts Rules which apply to them.

All firms need to decide how the COLP and COFA operate within their business structure, but as highlighted in guidance from the regulator:

“Irrespective of the size of the firm, it is up to the management of the firm to review the effectiveness of its COLP or COFA. If you are a sole practitioner and also the COLP and the COFA you need to review how well you are undertaking the roles.”

Approaches for Supporting COLPs and COFAs

Recognising the importance of the compliance officer’s role, law firms have explored various strategies to offer adequate support, including:

Appointing a Deputy

One approach involves appointing a Deputy to the role who can share the responsibility of ensuring compliance within the firm. A Deputy can assist with monitoring, policy implementation, and other key tasks while providing a backup resource during the compliance officer’s absence.

Collaborating with Third-Party Consultants

Another solution involves seeking external support in the form of third-party compliance consultants such as The Strategic Partner.  Our compliance specialists can provide up-to-date knowledge on SRA regulations, advise on best practices for compliance management, provide training programmes, and offer additional resources to help the firm and their COLP and COFA to navigate complex regulatory issues. It is the role of the consultant to ensure your firm is compliant and with the focus we have for firms across the industry our exposure is much greater enabling more effective and efficient decision making and response times.

Investing in Legal Tech

Legal software  (such as case management systems) can play a role in maintaining compliance within law firms. When properly implemented and supported by robust systems and control measures, technology serves as an essential foundation for effortlessly meeting regulatory requirements.

Understanding the crucial role of the COLP and COFA

The roles of these compliance offers are essential for maintaining a compliant law firm in today’s challenging legal environment. By providing sufficient support to those appointed, law firms can ensure better adherence to regulatory requirements and reduce the likelihood of facing non-compliance issues during SRA investigations.

Investing in strategies such as investing in legal tech and collaborating with third-party consultants can lead to strengthened compliance efforts, increased efficiency, and an overall more robust legal practice. This proactive approach will not only benefit the COLP and COFA but also contribute to the long-term success and reputation of the firm.

Regulatory Guidance and Support from Industry Experts

At The Strategic Partner, we work with firms and their COLPs and COFAs to assist them with managing risk, compliance, and regulation through various bespoke training and outsourced support solutions. Our goal is to ensure the firms we work with have and retain a compliant structure enabling the firms, their managers, and owners to focus on running their businesses and servicing their clients.

If you believe your firm may be at risk or wish to confirm your firm is achieving the required standard, we offer a range of compliance solutions at The Strategic Partner, including:

  • Review – A review of the firm’s approach to regulation and compliance to include all regulatory requirements and AML procedures. The output of this provides the firm with a written gap analysis and solutions to remedy any issues.
  • Training – Whether you seek training on a 1-2-1 or group basis, The Strategic Partner has a range of training courses and mentoring programmes to suit any firm. We can also design any additional bespoke courses that you need. We have provided training to firms of all sizes, and our clients range from sole practitioners through to multi-office, multi-service firms with overseas offices.
  • Auditing– Procedural staff, systems, and files to ensure the procedures are up to the required standard and being implemented at case level with a report of the outcome.

Packaged Solutions – Implementation of robust solutions to ensure the firm achieves compliance and then maintains compliance through the provision of ongoing support and assistance: –

Risk, Regulation and Compliance Service (including AML)

Risk, Compliance, AML Guidance and Register Administration Service

Get in touch with The Strategic Partner

For more information on The Strategic Partner and to discuss how we may be able to assist in accelerating your risk management or compliance and regulation or simply to keep this up to date you can call us on 020 3911 9710 or email us info@thestrategicpartner.co.uk.

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