The SRA have now produced their most recent Risk Outlook – a must read for all COLPs and COFAs as to what the SRA are homing in on. Don’t be fooled by the reduction of issues from 10 to 9 – they have simply included cyber security and information security in the same topic, which makes a lot of sense as money and information can of course be inter-related in how susceptible they both are.
In a nutshell, the focus remains on:
Money Laundering:
The SRA remain concerned about the apparent failure of many law firms to comply with money laundering requirements – in fact, they found a fifth of the law firms whose risk assessments they reviewed are falling short.
And the ‘coincidental’ timing of some of the risk assessments submitted to the SRA, understandably raised suspicion that they were newly created, despite the requirements coming in two-and-a-half years ago.
The SRA are upping the ante by warning that they will now be checking 7,000 firms for AML compliance. They have issued an updated warning notice and helpfully put together some further guidance, a checklist and template.
If you have so far escaped the SRA’s scrutiny, review your AML systems, making the firm-wide risk assessment a priority. If you don’t have one – remedy that immediately. Don’t wait to be contacted by the SRA – their patience is clearly wearing thin and they are threatening enforcement action if firms don’t comply.
If you are using or intend to use a template, give thought to each individual matter and the risks this may present – they can sniff out a cut-and-paste job a mile off.
As always, be vigilant and contact us if you need some extra support.
Client money:
The SRA provides some tips as to protecting your client money.
Of course, don’t forget to immediately report a serious breach, for example where client money is lost or taken, even where the money has already been replaced.
Diversity in the profession:
Apparently the large law firms are some of the worst in terms of representative of diversity. Firms that do not promote diversity have a high chance of not looking after their staff or clients properly. And of course, candidates should be judged on their skills and abilities only to generate a fair playing field and to ensure a diverse workforce.
Information and Cyber Security:
Law firms must be forever vigilant as they hold client funds and information which the client expects to be safely looked after. Yet we all know that cyber criminals are becoming more and more adept in their attempts to access emails and accounts.
One vital tip is to ensure ALL your staff – including those on work experience who may pick up an external call or inadvertently open up a scam email – are aware of the risk of insalubrious and canny characters targeting law firms. Nobody is safe from hackers trying to get your information. What may on the face of it sound professional and innocuous, may in fact be far from it.
Integrity and ethics:
The new standards and regulations coming into effect as we all know on 25 November this year, have a focus on ethical standards. The SRA assure us that solicitors are to be encouraged to exercise their own professional judgement rather than the usual tick box approach.
Don’t forget that our ethical standards and integrity extend to a solicitor’s life outside the four walls of the office. If you aren’t sure of where the SRA stand in consideration of such matters, remember the solicitor who sacked his children’s nanny and received an Employment Tribunal judgement of discrimination and unfair dismissal. He was subsequently hauled over the coals by the SRA for breaching principle 6 of the SRA Principles by his conduct and also outcome 10.3 of the SRA Code of Conduct by not notifying the SRA of the judgement.
The SRA Chief Executive has confirmed recently that, despite criticism that they are going beyond the remit of their regulatory powers if they investigate cases of relationships between colleagues, they intend to continue cracking down on alleged sexual misconduct. This stance is likely to be as a consequence of the finding by the SDT against Ryan Beckwith.
Investment advice:
The SRA are concerned over the increase in scam investments and how law firms may be either targeted by promotors of the investment scheme to give the impression of credibility of the scheme or how solicitors become involved in the dubious investment scheme. SRA investigations into questionable conduct around investment schemes is increasing.
Managing claims:
The SRA are maintaining a focus on claims management and raise concerns about false claims and solicitors advancing these false claims, either innocently or deliberately, which can lead to an SDT referral or criminal proceedings. They are particularly noting the situation where introducers are involved.
Meeting legal needs:
With the concern that the general public are in a position to know how and when to access legal services, the issue of transparency is still topical, both in terms of price and services offered, promoting your firm correctly and taking time to understand and assist your client.
The SRA appear to actively encourage new and innovative ideas to promote affordable legal services. See their SRA Innovate initiative for more information.
Standards of service:
Finally, the SRA have a focus on standards of service. A poor standard of service impacts on both your own firm and potentially the profession as a whole. It’s a small world in the legal sphere and word gets about!
Providing your client with clear and non-jargon information of their matter, what they can expect from you and how to complain if they are not achieving those expectations is vital. Undertake a review of some of your files and check what is going on. If there are shortcomings with the standards of service you are providing, then take action now to remedy it.
