Whether you are a sole practitioner or a managing partner of a legal practice, you must prepare for the increased regulation, scrutiny, and oversight inherent in the new SRA regime. Law firms across England and Wales should already have begun evaluating their compliance and control systems, but this is now being brought into sharper focus as firms are expected to nominate their Compliance Officer for Legal Practice (COLP) by 31 July 2012.
Even though expectations of evidential compliance has never been higher from the SRA, insurers, clients, and management, resources to perform compliance functions have not increased commensurately. Compliance programs must meet demands — to perform better, dig deeper, provide broader coverage, faster — without significant additional expense. To assist their COLP, leading firms are already embracing technology that can help them manage their day-to-day compliance functions and meet these new expectations.
New technological tools such as COMPLETIONmonitor make compliance in the high-risk areas of residential and commercial property law both more effective and more efficient. Compliance technology can help utilise existing resources and can extend the breadth and depth of coverage.
As COLPs build their compliance programs, plan improvements, and determine the associated costs, they should realise that technology is integral to the solution. The COLP, like other managers or partners within a firm, can leverage technology to automate manual processes and maintain audit trails while greatly improving efficiency, precision, and overall effectiveness.
More importantly, technology can play a key role in fulfilling requirements to test the adequacy of compliance policies and procedures. It allows the COLP to focus on analysing results and identifying potential breaches rather than performing labor-intensive, manual reviews.
The SRA and, given the new ABS environment, potential investors expect to see technology at the heart of a firm’s compliance strategy, demonstrating a robust culture of compliance. And in the face of growing regulatory demands for information, technology can assist with timely production of key indicia of the operation of the compliance program.
In addition, senior partners, accreditation scheme auditors, management boards, and partners dealing with PI Insurance renewal forms are demanding more assurance with respect to compliance as they are asked to certify, report on, or oversee the effectiveness of risk management (and nowhere is this more relevant that highest-risk areas – namely the property department). Technological tools can help provide a robust foundation for these representations.
Unfortunately for many solicitors firms, they are not exploring or embracing the idea of compliance technology. Some firms maintain manual compliance processes, which are time-consuming, costly, and prone to error, although clearly having an external audit is better than nothing. Others combine manual and automated processes, making it difficult to reconcile data and ensure accurate real-time reporting. Some firms, even the more progressive firms, have purchased or built risk programs on piecemeal basis. It is not unusual for us to see a firm and be told they have a combination of a case management system, CRM, Outlook Explorer (diary and tasks) panel management-imposed tracking systems to update and spreadsheets to update .This approach could lead to disparate, nonintegrated which duplicate data and are costly to maintain yet fail to provide a consolidated view of risks.
Law firms and their COLPs who do not leverage technology to modernise their compliance may find that they expend valuable human resources on manual processes that could be directed to better use. They may put the firm and its employees at risk by not having as broad or as deep a focus on compliance risks as other firms and missing indications of noncompliance that would otherwise be revealed and addressed early. And, as the use of technology continues to grow, they will find that they are not meeting industry “best” practices or even industry “standard” practices. This last point is relevant from a compliance perspective but also from the point of view of demonstrating insurability to potential PI insurers or being able to receive work in certain panel management situations, for example being able to act for certain lenders on commercial or residential conveyancing.
Here are some of the main reasons to integrate compliance optimization technology into your compliance program
- COLPs and COLFs can spend more time analysing data rather than gathering information.
- Increased efficiency leads to less red tape and cost reduction.
- It enables identification conflict of interest management, a key area of the Code.
- Data accuracy is enhanced, which reduces risks by limiting human error.
- It demonstrates a prudent, responsible compliance culture, providing confidence to the SRA.
- New infrastructure, especially web based services, can scale quickly as the business grows, and it is resistant to staff turnover
- It allows the COLF and COLP to track issues uniformly, eliminating ad-hoc records.
- It can identify important training requirements
- It may impact your attractiveness to PI insurers.
- It reduces the panic and burden of inspections by automatically generating predesigned reports that can be downloaded at the request of the SRA
As COLPs scramble to make their firms compliant they have to be careful not to implement technologies and processes with little thought to their impact on the firm. Thus, firms can end up either under-controlled — which leads to exposure to the SRA— or over-controlled, which means overburdened processes and ballooning costs. Choose wisely but choose something.
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