Supervision is a fundamental requirement for those delivering legal services to meet the regulatory objectives set out in the Legal Services Act 2007. However, as highlighted in recent guidance released from the SRA on Effective Supervision, merely putting supervision arrangements in place is necessary but insufficient to fulfil firms’ regulatory obligations.
“Firms should take proactive steps to make sure that supervision is working effectively, and supervisors are accountable.”
Furthermore, firms are warned that failure to supervise staff properly and to meet supervision requirements in the Codes of Conduct and rules might lead to enforcement action against a firm, its managers, or its employees, even if that failure has not resulted in direct harm to clients.
In this article, we highlight some of the key points raised in the guidance notes and how firms can ensure they meet the expected requirements.
For those firms who work with The Strategic Partner to outsource their risk and compliance and policy management a new and up to date Supervision Policy will be issued very shortly.
IF you are not part of our compliance network and would like to learn more see the bottom of this article for more information and how to contact us, or click the link to find out more about:
2. What are the requirements?
Rules on supervision are found in the SRA’s two codes of conduct.
Rule 3.5 of the Code for Solicitors under Service and competence, dropped in relatively unnoticed in 2019. However, it was an important change to supervisors’ duties:
“Where you supervise or manage others providing legal services:
a) you remain accountable for the work carried out through them; and
b) you effectively supervise work being done for clients.”
Rule 4.4 of the Code for Firms extends the responsibility to the entire management team (“You have an effective system for supervising clients’ matters”).
Within the key themes of the guidance notes, the SRA highlights the accountability that regulated individuals and firms have for the actions of those they supervise.
“Regulated individuals and firms are accountable for the actions of those they supervise. Legal services providers (other than freelancers and sole practitioners with no staff) should therefore arrange for one or more appropriately experienced individuals to supervise the legal services the firm provides in order to provide assurance to the organisation that all the legal services it delivers are of appropriate quality and are delivered in accordance with our Standards and Regulations.”
For information on what the regulator expects in regard to appropriate supervision arrangements, you can download the guidance notes here, which also covers other advice on areas including:
- Choosing supervisors
- Choosing supervision arrangements
- How much work supervisors should check
- When supervisors should check work
- What checks should involve
- When supervision should happen face to face
- Supervision and contractual commitments
- Recording supervision arrangements
- Remote, hybrid and agile working – read our previous remote working guidance blog here
- Supervising work outside an employment relationship
- Supervising solicitors who practise advocacy
- Supervising trainees and aspiring solicitors and other legal professionals
3. Anti-money laundering requirements
The SRA have published guidance to help those they regulate understand their obligations under the Money Laundering Regulations (MLRs) and how to comply with them, including appropriate internal controls. Where relevant, solicitors and SRA authorised firms should take this guidance into account when deciding on their supervision arrangements.
4. Effective Supervision in Law Firms
With such detailed guidance notes released, the SRA is clearly setting out its expectations for firms to take their obligations seriously with regards to supervision and accountability.
Putting in place effective supervision procedures is key to fulfilling these regulatory obligations. Make sure the firm has specific and documented supervision procedures. Ensure your staff know how they will be supervised, their obligations, and how your supervisors must supervise them. Firms will approach supervision in many ways, and whichever way your firm approaches supervision at a case, department and firm level, document it and ensure it is clear.
Introduce supervision touchpoints where staff are expected to seek the guidance of a supervisor even if they feel they know what to do (for example, a litigation matter being set down for trial or before an exchange on a property matter).
Furthermore, you must ensure your supervisors are accessible and have the proper time to supervise. Being too busy to provide your staff with supervision time is not a defence to criticism from the regulator or your insurer.
5. Understanding compliance requirements
Risk management and Compliance is a requirement for every law firm and there is no margin for error. A firm that has not developed a robust approach to manage risk and compliance is at risk from investigations by the regulator, fines, and sanctions, alongside increasing insurance premiums.
How confident are you that your AML prevention procedures are adequately maintained and sufficiently applied, and would they hold up to strengthened scrutiny?
If you believe your firm may be at risk or wish to confirm your firm is achieving the required standard, at The Strategic Partner, we offer a range of solutions.
- Regulation 21 AML 2017 Independent Audit – Our service provides firms with a completely independent audit and ensures the review is completed and reported on in accordance with the regulatory requirements. The output of which provides the firm with a written gap analysis and solutions to remedy any issues that rise and ensure the firm is compliant, find out more.
- Training – Our typical AML Training includes:
- AML Training for ALL staff to meet the firm’s obligation to provide annual training.
- 1-2-1 training for the MLRO and MLCO on their obligations and requirements.
- Practical training for those involved in client onboarding to ensure their ID and AML checks are correctly completed. Find out more.
- File Reviews/Auditing – At TSP we engage with firms undertaking files reviews where we consider procedure, 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.
We will work with you to ensure your firm operates in a fully compliant environment and stays there. Through achieving this, the compliance officers in the business can be assured and confident that their obligations are being met, enabling them to focus on other areas of the firm.
Our flagship compliance products are designed to give law firms cost-effective solutions that maintain an ongoing relationship across a 12 month period and beyond. You can view the 2 packaged services by clicking the following links and viewing our detailed product brochures:
- Risk, Regulation and Compliance Service including AML
- Risk, Compliance & AML Guidance and Administration Service
We can also help with:
- Detailed Firm Strategic Review
- Risk Assessment, and Independent AML Audit Service
- Process and Document Drafting
6. Get in touch with our compliance team
We would be pleased to discuss your current approach to regulation and compliance and how our services will assist you in ensuring your firm is protected.