Hello, and welcome to our latest risk and compliance newsletter!
The premise of this newsletter is very simple – we want to keep you updated with key news in the compliance world. We pull together the most important updates from the regulators, Law Society, legal press etc. to save you time hunting for it. We also comment on each news item setting out why it’s important, and identify any action you need to take.
We are interested to hear your thoughts on this new format – is there anything else you would find helpful? Too much detail? Too little?
MORE complaints information on the cards?
The Law Society has questioned a recent Legal Services Board (LSB) report that accuses solicitors of failing to tell clients about their right to complain. Specifically, the LSB suggests that the complaints information and ‘signposting’ requirements are outdated and that additional demands should be placed on firms.
Why is it important?
Solicitors are already under a strict duty to give lots of information (some would say too much) about complaints. If this is not happening, it is a problem with an individual firm not following the rules, not the rules themselves. Client care letters are already often unwieldy as it is. Perhaps unsurprising, then, complaints information can get lost. We hope that the Law Society continues to push back on this point for sanity’s sake.
What you need to do
Now would be a good opportunity to review your retainer documents (client care letter and terms of business). Do they need an update? Is key information (costs, complaints etc.) clear and written in plain language?
You can read more here
Small firms feel ‘less bullish’ about the future
Recent research conducted by LexisNexis claims that small and medium sized firms are feeling less confident about the future, with 95% anticipating rough times ahead. Coupled with this, the report notes “several examples of disconnect between perception and reality”. For example, most law firms recognise the critical role of new technology, but significantly less are investing in or using the latest legal software to its full potential.
Why is it important?
Compliance and regulation still tops the list of threats to legal businesses. Probably why we are seeing an increase in compliance outsourcing.
The report’s not all negative though, and it is well worth reading for insights into the changing profession. There is a particularly interesting section about what clients what, and what law firms think they want. Efficiency is more important to clients than costs information, according to the paper.
You can download the report here
1 in 5 law firms targeted by scammers
The Law Society says that an incredible 22% of law firms have been targeted by fraudsters in the past year, with roughly 1 in 10 attempts resulting is a theft from client account.
Why is it important?
There is a very real risk that a significant theft could cause you and your firm serious financial difficulty. Insurers will not necessarily pay out, at least straight away, and particularly if someone in your team has ‘opened the door’ to the criminals. The firm’s owners/directors will be required to make good any shortfall on client account. If that is not possible, the firm is at risk of failure or SRA intervention.
Let’s not forget that we are not just talking about the theft of money – the criminals also target confidential data, and often blackmail firms by locking IT systems in cyber-attacks.
The PII insurers are also likely to ask more probing questions about IT security,
What you need to do
You need to put yourself in the best position to avoid becoming the next victim. How secure are your IT systems and processes? If you do not feel qualified to answer that then you should consider a professional review – there is plenty of IT support out there. Don’t forget to keep staff training up to date. We often come across firms that circulate details of the latest scams (e.g. invoice fraud), so everyone knows the warning signs.
This practical guidance on protecting your firm from scams should be required reading.
Switching regulators could soon become more attractive
In a bid to attract more conveyancers away from the SRA, the Council for Licensed Conveyancers (CLC) is planning to make the switch easier by relaxing its PII arrangements. It will ditch its ‘master policy’, allowing insurers to provide six years of run-off cover at no cost to closing firms.
Why is it important?
Setting up competition between the front-line regulators is one of the peculiar features of the Legal Services Act. We have seen a number of big name conveyancing practices eying up the CLC model for some time. There are benefits of dealing with a smaller, specialist regulator – and we have certainly been impressed with their approachability and helpful input. For those with a sizeable practice and the appetite for dual regulation, in theory there is nothing stopping firms hiving off their property team into a CLC-regulated entity.
You can read more here
Slashing the Code of Conduct could be too much, warns LSB
The SRA recently announced that it plans to cut the SRA Handbook from 600 pages down to a mere 50 pages. As much as the thought of a much slimmer rulebook appeals to many of us, the LSB has warned that some firms might not cope with such a dramatic change.
Why is it important?
We think that the 2011 version of the Handbook was a promising start, but a hurried and unfinished job. Whatever your views on OFR, it is here to stay by the looks of things, and will contain less and less detail over time. We agree with the LSB that the SRA must listen to the profession during the consultation period. It has been guilty in the past of pushing on with reform despite almost universal opposition, with predictable results.
What you need to do
Watch this space for reaction and guidance to the new rules as they are published – it won’t be long before we know how much (if any) disruption they are likely to cause.
You can read more on this story here
Another ABS success story!
We are delighted to have helped Bath-based OmniaLegal get their ABS licence. The firm can now offer regulated services in addition to their innovative mix of fixed fee legal products.
You can read more here
Thinking about an ABS? Contact us for a quick chat about your plans.
