In Industry Insights, Industry Insights

How many times have we heard or do we use the word compliance in our everyday lives?

According to, ‘compliance’ is the act of obeying an order, rule, or request.  It is the job of the inspectors to enforce compliance with the regulations.

Sounding familiar?  I am sure it does.  Yes, we can agree that compliance is something that the governing body (in our case, the SRA) requires us to do.  It is following the law.  And there are many books and handbooks that tell us exactly how to do that in our day to day work so as to be compliant.

So what are ethics? defines ‘ethic’ as a system of accepted beliefs that control behaviour, especially such a system based on morals.

And do ethics have a role to play in our ever ‘compliant’ legal world?

The simple answer is yes.  Whilst compliance is about following the law, ethics is about doing what is right.  But the reality can be a little more grey, for example, what if doing the right thing is contrary to what the law says?  If compliance is a requirement, then ethics is a choice about which action to take.

As long as you, as a firm are compliant, should ethics really matter?  Or are they already there?  Well, no doubt the policies you have and the training that takes place within your firm will place great emphasis on high-level values of right and wrong.  Whether you mean to or not, you are enforcing two things here – both a compliant regime merely by the nature of how you present yourselves (even down to the footer of your email with your registered number being displayed), but also an ethical one too whereby you are instilling systems of beliefs and educating employees about what is acceptable and not acceptable practice in your firm.

The SRA handbook is very clear to set out how we must be compliant, but it does also take the time to look at legal ethics.  The Principles laid down in the handbook go some way to addressing ethics.  Are the two intertwined?  Surely if we are compliant then we are ethical also?

Richard Moorhead, Professor of Law and Professional Ethics at University College London, suggests that “Compliance is usually seen as being about meeting the rules.  Ethics goes broader.  Most difficult situations involve facts where the rules don’t fit, or help, or where there is a need to go further than say ‘have I complied with the rules?’ ”

If the main focus of a law firm is merely on legal standards, without any specific thought being given to strong ethics, it may well inhibit the sort of values-based culture that makes employees proud and firms great.  Whilst compliance is of great importance, as professionals we should seek to be ethical beings also.  It is important for us to be mindful of this – don’t just assume they are inherently there, flag them up, talk about them and make them obvious.  To do so means you are setting an example to your employees – not just merely do what is required of them because they ‘have to’, but that their professionalism should push them further and encourage them to strive for more.

As Richard Moorhead goes on to suggest “….. that a broader culture of ethicality requires people to promote but look beyond compliance if they are not to come unstuck.”

If firms were to spend as much time focusing resources (specifically those of effort and money) on the training of ethics as well as compliance, it could potentially change the way a firm conducts its business, the way people are trained and treated and could arm people with a means choosing to do the right things, rather than making them do right.

The best firms will recognise the difference between ethics and compliance, but also drive both as key and integral components of the firms’ culture and successful performance.  Ultimately, firms that are compliant and prioritise ethics have a competitive advantage in today’s market.

SRA Chief Executive, Mr Paul Philip, when speaking at the Legal Futures Regulation and Compliance Conference in April earlier this year, said that there is a need to focus on two things – ‘trust and confidence’.  He went on to talk about what is deemed to be ‘the worth of a solicitor’ and what may be considered a ‘solicitor’s professional values’.  In light of the recent SRA Risk Outlook 2015/16 being published, it is clear that these issues are considered of upmost importance by the regulators of our profession.  Integrity is one of the key risk areas identified – it is of paramount importance that legal professionals follow their obligation to the rule of the law and administration of justice, but do so with honesty and integrity.  Surely this could be viewed as an example of us being called to not only being compliant, but ethical also?

Many firms will actively try to promote a culture of ethical behaviour – not merely a compliant one.  They will try to promote the value of employees not just following the rules because they have to, but because they want to – they want to do the right thing by their clients and be the best version of themselves that they can be.  Although this sometimes will involve making tough decisions, it will add value to them as an employee, to the service they provide and the firm as a larger entity.  All in all, everyone wins.

So in conclusion, are compliance and ethics the same thing?

Ethics is the intangible thing inside each of is that drives us and guides us when we make day to day decisions – it is our moral guide, our value system (or lack of?)  Compliance is much clearer – it is about adhering to the rules, policies and regulations as set down by a governing body.  Non-compliance will result in very clear consequences.  Ethics does not have the same set of consequences as it is much more about your personal values – they are our guiding principles to live by.

Andrew Calpen, President of the Law Society recognises that ‘compliance which compromises ethical standards is not helpful.’  Furthermore he goes on to say that the ‘maintenance of professional standards and ethical behaviour is essential.’

I guess I think of them in terms of a venn diagram …… there is most definitely an overlap but both are separate entities too.  Compliance is a ‘reactive reality’, that is, something that we react to.  We did not have anything to do with the creation of the law, we merely react to it.  Ethics on the other hand is more ‘proactive’.  It is a personal choice whether we partake or not.  We could summarise this idea if we think of compliance as the letter of the law, whilst ethics is the spirit of the law.

So I leave you with this thought…..what would you do when you are faced with taking an action that is compliant, but also unethical?  What are the consequences for you, the client and your firm?



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