Industry News

COLP & COFA: ‘INDEPENDENT’ THINKING

12 August 2011

The authorisation of Alternative Business Structures (ABS), the introduction of the Quality Assurance Scheme for Advocates (QASA) and the increasing pressure on Market Regulators by the Legal Services Board have all recently raised the issues surrounding the independence of the legal profession. Setting aside the complex questions with regards to external ownership and the pressures this brings on individual lawyers; or the pressures on an Advocate to obtain favourable references from a member of the Judiciary; concentrating on every day practice by a lawyer in a traditional legal practice: how independent are individual’s within the profession given the changing legal market and the pressures placed on them by employers, referrers and clients?

Is Principle 3 of the SRA Handbook 2011 that individual’s maintain their independence (not simply provide independent advice to clients) an enforceable reality or a utopian ideal that a Compliance Officer for Legal Practice (COLP) can never truly monitor and that neither they nor the Solicitors Regulation Authority (SRA) can truly enforce?

When a COLP, diligently monitoring the compliance position of individuals within their practice, asks the question ‘Are they independent?’ How are they to respond?

For many years the SRA has given tacit consent to practices only providing services to a single client or obtaining work through a single source. How can Principle 3 be reconciled with the regulator’s approach? Even if the practice does have a number of different sources of income, many fee earners are all too acutely aware that their employment relies entirely on a single client or referrer continuing to provide instructions and makes them extremely susceptible to that client or referrer’s demands.

Beyond the pressures of satisfying individual clients and referrers, individuals are under increasing pressure from employers, whether a Legal Services Body or a Licensable Body, to increase fee income through client acquisition and retention. Such pressure is often the cause of ‘cut corners’; failures to address and confront client complaints; or the acceptance of instructions beyond the risk parameters normally accepted by the firm. Surely such pressure goes to the heart of an individual’s independence and risk management?

And then how does the COLP monitor the financial pressures and borrowing patterns of individuals within the practice? In the dire economic climate how can a COLP monitor the borrowing levels and therefore the susceptibility to external influence of all employees? And should they be required to do so? Is such monitoring ‘unthinking compliance’ that goes too far in an attempt to mitigate and manage risk? And yet monitoring compliance with the SRA Handbook 2011, including Principle 3, is part of the role of the COLP.

The reality is this: no individual can fully comply with Principle 3 in the current legal market, no COLP can fully monitor and be responsible for the independence of individuals and the SRA cannot practically bring enforcement action against individuals for a breach of Principle 3 unless it is accompanied by a breach of another SRA Principle.

So, while Principle 3 embodies a utopian idea to which the legal profession aspires, should we not be facing the facts? Should the SRA not ease uncertainty and ambiguity? As a profession should we not be focusing the Principle on what really matters: independent advice in the best interests of clients?

In the intense legal market place there is no such thing as an independent individual. We all have pressures and we are all subject to external influence. We should be judged on whether our integrity and professionalism withstands such pressure. What use is Outcomes Focused Regulation if the goals are out of reach and everyone knows it?

Ian Braithwaite
Client Relationship Manager

T: 0113 385 4483
M: 07432 695 289
E: ian.braithwaite@lbslegal.co.uk

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