In Industry Insights

Toxic cultures are closely related to poor ethical behaviours. When a person is subjected to bullying, harassment or unreasonable pressure they are more likely to get themselves into regulatory hot water.

Under enough pressure, the act of backdating a document, misleading a client, or hiding a mistake can seem like the only way out for an otherwise ethical lawyer.

Through its recent Thematic Review, involving responses from over 200 solicitors, the Solicitors Regulation Authority has recognised a serious problem in law firms. 

Around 25% of those surveyed reported negative workplace cultures, including overwork, intolerable pressure to meet targets and bullying.

The result is a new formal Guidance Note (Workplace environment: risks of failing to protect and support colleagues), which sets out the SRA’s concerns and expectations of those it regulates.

This is a significant change of tack for a regulator often criticised for going after individual wrongdoers, including very junior lawyers, whilst ignoring toxic employers and unsupportive managers.

Wellbeing is now a regulatory requirement

A recent LawCare report found that many lawyers are “stressed, tired and anxious.”

The SRA Thematic Review and accompanying Guidance and Case Studies make it clear that law firms are responsible for the wellbeing of their team.

“We expect firms to create and maintain the right culture and environment for the delivery of competent and ethical legal services to clients with effective systems, supervision arrangements, processes and controls in place.

This includes taking steps to run businesses in a way that supports wellbeing by minimising the risk of working practices and workplace behaviours leading to poor mental health. A failure to put in place systems that protect employees may lead to an increased risk of breaching our regulatory requirements.” – Workplace Culture Thematic Review

The SRA accepts that legal practice can be busy and stressful at times. And although they are unlikely to take action against “one off” examples of poor management, where it is clear that workplace culture contributes to unethical behaviour and poor outcomes for clients, they will take regulatory action.

Victims of (and witnesses to) bullying, harassment and discrimination are encouraged to make a report directly to the SRA

This indicates that the regulator views these behaviours as serious breaches of the Codes of Conduct.

The specific rules that the SRA are are likely to consider are:

  • Paragraph 2 of the Code of Conduct for Firms (Compliance and business systems)
  • Paragraph 4 of the Code of Conduct for Firms (Service and competence, including supervision)
  • Paragraph 3.5 of the Code of Conduct for Solicitors (the personal duty on managers and supervisors, an often-overlooked part of the 2019 Code)
  • Principle 6 of the SRA Principles (“You act in a way that encourages equality, diversity and inclusion”)
  • Principle 2 of the SRA Principles (“You act in a way that upholds public trust and confidence in the solicitors’ profession and in legal services provided by authorised persons”)

And the SRA Guidance goes further – much further – than outlawing negative behaviour. 

Firms should “do everything they reasonably can to look after their staff’s wellbeing”, which means taking proactive measures to protect and support employees.

Striking the right balance

Every law firm leader should read the Thematic Review and Guidance. It is arguably the regulator’s most important work for some time. 

And it has significant management implications. Who wants to be named and shamed as a toxic employer?

Law firms will have to ask themselves several questions. Should we be thinking about proactive measures such as culture audits as a risk management tool? How do we attempt to measure wellbeing across the firm?  What is the “right” amount of pressure to put people under?

Let’s be clear – the new SRA guidance does not absolve individual wrongdoers from blame or sanction. It simply promises to bring toxic cultures under the spotlight.

If the regulator can encourage better law firm cultures, that should translate into more ethical behaviour by solicitors and fewer disciplinary prosecutions.

The proof is in the pudding, so it’s said. We’ll be keeping a close eye on how the guidance is enforced.

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