Compliance Legal https://compliancelegal.co.uk/ Professional risk management solutions for leading law firms. Tue, 03 Mar 2026 10:03:52 +0000 en hourly 1 https://compliancelegal.co.uk/wp-content/uploads/2019/01/cropped-Untitled-1-32x32.jpg Compliance Legal https://compliancelegal.co.uk/ 32 32 The impact of AI on the legal world https://compliancelegal.co.uk/the-impact-of-ai-on-the-legal-world Mon, 02 Mar 2026 16:45:17 +0000 https://compliancelegal.co.uk/?p=2682 The Impact of AI on the UK Legal World Artificial intelligence is no longer a theoretical discussion point in the UK legal sector — it is actively reshaping how law is practiced, delivered, and regulated. From Magic Circle firms in London to regional practices across England and Wales, AI is influencing everything from research and […]

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The Impact of AI on the UK Legal World

Artificial intelligence is no longer a theoretical discussion point in the UK legal sector — it is actively reshaping how law is practiced, delivered, and regulated. From Magic Circle firms in London to regional practices across England and Wales, AI is influencing everything from research and drafting to billing models and professional ethics.

The UK legal world is not being replaced by AI — but it is being redefined by it!

  1. A Shift in How Legal Work Is Done

AI has moved beyond simple automation. Modern systems can:

  • Review contracts at scale
  • Summarise complex case law
  • Draft first versions of legal documents
  • Identify litigation risks
  • Analyse large volumes of disclosure material

Tools powered by companies such as OpenAI and embedded into legal platforms like LexisNexis and Westlaw have made AI accessible to everyday practitioners.

What previously required hours of manual research can now be completed in minutes — with human oversight.

  1. Impact on Law Firms: Efficiency and Strategy

Increased Productivity

AI dramatically reduces time spent on repetitive tasks such as:

  • Due diligence
  • Document comparison
  • Disclosure review
  • Proofreading

Large firms such as Clifford Chance and Linklaters have integrated AI tools to enhance efficiency and remain competitive in a global market.

Changing Billing Models

AI challenges the traditional billable hour. If a task that once took eight hours now takes one, clients naturally question cost structures. As a result, firms are increasingly exploring:

  • Fixed-fee arrangements
  • Value-based pricing
  • Subscription advisory services

AI is not just a technology shift — it is a commercial shift.

  1. Impact on Legal Professionals

Junior Lawyers

AI is transforming early-career work. Tasks traditionally assigned to trainees and junior associates — such as large-scale document review — are increasingly automated.

This creates both opportunity and concern:

  • Opportunity to focus on strategic thinking and client exposure
  • Concern about reduced hands-on foundational experience

Training models are evolving to reflect this new reality.

Senior Lawyers

For partners and senior practitioners, AI becomes a strategic tool:

  • Faster turnaround for clients
  • Better data-driven litigation strategy
  • Enhanced risk assessment

However, ultimate responsibility remains human.

  1. Regulation and Ethical Responsibility

The UK legal sector operates within a strict regulatory framework. The Solicitors Regulation Authority has issued guidance reminding solicitors that:

  • AI outputs must be properly supervised
  • Confidentiality must be maintained
  • Lawyers remain accountable for advice given

Compliance with the UK GDPR is also critical when processing sensitive client data through AI systems.

The regulatory approach in the UK is not to ban AI — but to ensure responsible use.

  1. Access to Justice and Legal Services

Beyond commercial firms, AI has potential to expand access to justice.

AI-powered tools can:

  • Help individuals understand legal rights
  • Generate basic legal documents
  • Provide preliminary legal guidance

For smaller firms and legal tech startups, AI lowers barriers to entry and increases competition in the market.

If used ethically and responsibly, AI could make legal services more affordable and accessible.

  1. Risks and Challenges

Despite its promise, AI introduces serious risks:

  • “Hallucinated” case citations
  • Over-reliance on automated drafting
  • Data security concerns
  • Professional negligence exposure

The legal profession’s reputation is built on accuracy and trust. Any misuse of AI could undermine both.

This is why most firms adopt a “human-in-the-loop” approach — where AI assists, but lawyers decide.

  1. The Future of AI in UK Law

Looking ahead, we are likely to see:

  • AI integrated into everyday legal workflows
  • Mandatory AI competence in professional training
  • Greater regulatory clarity
  • AI-driven boutique firms emerging alongside traditional practices

The impact of AI in the UK legal world is not a temporary trend. It represents structural change.

Final Thoughts

AI will not replace UK lawyers — but lawyers who understand AI may replace those who do not.

The real transformation lies not in automation alone, but in how legal professionals adapt their skills, business models, and ethical frameworks to a rapidly evolving technological landscape.

The UK legal sector stands at a pivotal moment. Those who embrace AI thoughtfully and strategically will shape the next chapter of the profession.

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Vulnerability in the legal profession https://compliancelegal.co.uk/vulnerability-in-the-legal-profession Tue, 20 Jan 2026 16:54:09 +0000 https://compliancelegal.co.uk/?p=2676 In the legal profession, clients often come to us at moments of stress, uncertainty or crisis. For some, these challenges are compounded by vulnerability. Vulnerable clients may include individuals with mental health conditions, disabilities, language barriers, limited financial resources, experiences of trauma, or reduced capacity to fully engage with legal processes. Recognising and responding to […]

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In the legal profession, clients often come to us at moments of stress, uncertainty or crisis. For some, these challenges are compounded by vulnerability. Vulnerable clients may include individuals with mental health conditions, disabilities, language barriers, limited financial resources, experiences of trauma, or reduced capacity to fully engage with legal processes. Recognising and responding to vulnerability is not only an ethical obligation but a cornerstone of effective legal practice.

 

Vulnerability in the legal context is rarely obvious. A client may appear confident while struggling to understand complex advice or may agree to decisions without fully appreciating the consequences. Lawyers must therefore look beyond surface-level interactions and remain alert to signs such as confusion, anxiety, inconsistent instructions, or difficulty retaining information.

 

Supporting vulnerable clients begins with communication. Using plain language, avoiding legal jargon and checking understanding can make a significant difference. Allowing extra time for meetings, providing written summaries, or involving trusted support persons (where appropriate) can help clients feel more secure and empowered. Small adjustments can greatly improve a client’s ability to participate meaningfully in their matter.

 

Equally important is maintaining dignity and respect. Vulnerable clients should never feel rushed, dismissed or judged. A trauma-informed approach—one that acknowledges past experiences and prioritises safety, choice, and control—can build trust and reduce the risk of re-traumatisation during legal proceedings.

 

Ultimately, serving vulnerable clients well, strengthens the integrity of the legal system. When lawyers adapt their practices to meet clients where they are, they promote fairness, access to justice and better outcomes for all. Vulnerability is not a weakness; it is a reminder of the human side of law and of the responsibility legal professionals carry to act with care, patience and compassion.

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Source of Funds Checklist https://compliancelegal.co.uk/source-of-funds-checklist Mon, 23 Jun 2025 12:19:53 +0000 https://compliancelegal.co.uk/?p=2654 Dealing with Source of Funds (SoF) questions is a critical part of your AML obligations as a solicitor in the UK. The SRA and LSAG (Legal Sector Affinity Group) guidance emphasise that this goes beyond simply knowing where the money came from (e.g., a specific bank account). You need to understand how the client accumulated the funds for the […]

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Dealing with Source of Funds (SoF) questions is a critical part of your AML obligations as a solicitor in the UK. The SRA and LSAG (Legal Sector Affinity Group) guidance emphasise that this goes beyond simply knowing where the money came from (e.g., a specific bank account). You need to understand how the client accumulated the funds for the transaction.

This is often distinguished from Source of Wealth (SoW), which refers to the overall origin of a client’s entire wealth, but the two are intrinsically linked, especially in higher-risk situations.

Here’s a breakdown of how to deal with SoF questions for a client, focusing on the practical steps and what the SRA expects:

  1. Adopt a Risk-Based Approach:
  • Your starting point is your Client and Matter Risk Assessment (CMRA). The level of scrutiny required for SoF will depend on the risk profile you’ve assigned to the client and the matter. A higher-risk client (e.g., a PEP, someone from a high-risk jurisdiction, or a complex transaction) will require much more in-depth SoF verification.
  • Don’t assume low risk for existing clients. Even if you’ve acted for a client before, you must still conduct SoF checks for new transactions, and the level of scrutiny should be reviewed based on the current matter’s risk.
  1. Ask the Right Questions (and Document Them):

The goal is to build a clear, coherent, and consistent picture of how the funds were accumulated.

  • “How did you accumulate these funds?” This is the core question. Don’t just ask for a bank statement. Ask for the narrative behind the money.

          Specifics of the source:

  • Salary/Income: How much is their salary? How long have they been employed? Does the amount of accumulated funds seem consistent with their stated income and outgoings over a reasonable period?
  • Savings: How long have these savings been building up? What was the original source of the money that contributed to the savings?
  • Sale of Property/Assets: What property was sold? When was it sold? Who was the buyer? Can they provide completion statements, title deeds, or other sale documents?
  • Inheritance: Who was the deceased? When was the inheritance received? Can they provide a copy of the Grant of Probate/Letters of Administration, estate accounts, or a letter from the administering solicitors?
  • Gift: Who is the giftor? What is their relationship to the client? What is their source of funds for the gift? (You will need to conduct due diligence on the giftor as well, including ID/SOF/SOW, and obtain a gifted deposit letter if applicable, confirming it’s a non-repayable gift).
  • Loan: Who is the lender? What are the terms of the loan? What is the lender’s source of funds for the loan? (Again, due diligence on the lender may be required).
  • Business Profits: What is the nature of the business? Can they provide recent filed accounts, tax returns, letter from accountant or dividend certificates?
  • Compensation/Insurance Payouts: Can they provide a letter from the paying entity (e.g., the court, insurance company, or their previous solicitor) and bank statements showing receipt?
  • Gambling Winnings: Can they provide official documentation from the gambling establishment or betting platform, and bank statements showing the large win being deposited?
  1. Request Supporting Documentation (and Verify):
  • Bank Statements: These are almost always required.
  • Ideally request full PDF statements downloaded directly from the bank’s online portal (not screenshots or print-offs of summaries).
  • Ensure they show the client’s name, account number, and address.
  • Look for a sufficient period to demonstrate accumulation. This could be six months, it could be five years.
  • Trace large incoming and outgoing transactions.
  • Other relevant documents:
  • Pay slips, employment contracts.
  • Certified copies of sale contracts, completion statements.
  • Probate documents, letters from executors.
  • Gift declarations/letters.
  • Loan agreements.
  • Company accounts, tax returns.
  • Details of a divorce settlement.
  • Cross-referencing: Compare the information provided with other due diligence information you hold on the client. Does it all align?
  • Independent verification: Where possible and proportionate to the risk, seek independent verification of the funds. This could be checking public registers, company house, or using reputable electronic verification tools that link directly to bank accounts (with client consent).
  1. Look for Red Flags and Address Them:

          Be vigilant for warning signs that the funds may be illegitimate.

  • Large cash deposits: Extremely difficult to verify the true source. Most solicitors will refuse cash payments.
  • Unexplained payments from third parties: Funds coming from individuals or entities with no clear connection to the client or the transaction.
  • Funds from high-risk jurisdictions: Countries known for corruption, drug trafficking, or weak AML controls.
  • Client evasiveness or secrecy: Reluctance to provide information or providing inconsistent/contradictory information.
  • Unusual transaction patterns: Funds moving quickly in and out of accounts, or through multiple accounts without clear reason.
  • Funds disproportionate to the client’s known income/lifestyle: A sudden large influx of money that doesn’t fit their profile.
  • Complex or opaque structures: Funds routed through multiple companies, trusts, or intermediaries without a clear legitimate purpose.
  • Urgency without legitimate reason: Client pushing to complete quickly without providing full information.
  • Use of multiple accounts for a single transaction.
  • Adverse media findings: Negative news or allegations against the client or related parties concerning illicit activities.
  1. Document Everything Thoroughly:

           This is crucial for an SRA audit.

  • Record all questions asked: Even if by phone or in person.
  • Record all answers received.
  • List all documents requested and received.
  • Note any discrepancies or red flags identified, and how they were resolved.
  • Document your assessment and conclusion: Explain why you are satisfied (or not) with the source of funds based on the evidence.
  • Sign and date: Ensure all records are dated and signed by the fee earner and reviewed by the MLRO (if higher risk or concerns arise).
  1. Escalate Concerns to the MLRO:
  • If you have any suspicion, concern, or difficulty in verifying the source of funds, you mustescalate it to your Money Laundering Reporting Officer (MLRO) immediately.
  • Do not “tip off” the client that you are suspicious or considering making a SAR.
  • Your MLRO will decide whether a Suspicious Activity Report (SAR) needs to be made to the National Crime Agency (NCA).

Example Scenario and Approach:

Client: Buying a property for £300,000 cash.

Initial Question: “Mr. Smith, can you please explain how you accumulated the £300,000 for this property purchase?”

Potential Answers and Follow-ups:

  • “It’s from my savings.”
  • Follow-up: “Can you provide bank statements for the last X months/years showing the accumulation of these funds? What was the original source of the money that contributed to these savings (e.g., salary, inheritance, previous property sale)?”
  • “My parents gifted it to me.”
  • Follow-up: “We will need a gifted deposit letter from your parents confirming this is a non-repayable gift. We will also need to conduct ID verification on your parents and obtain their source of funds for the gift. How did they accumulate this money?”
  • “I sold my business.”
  • Follow-up: “Can you provide documentation related to the sale of the business (e.g., sale agreement, completion statement, bank statements showing the proceeds)? Who was the buyer of the business?”

By adopting a structured, risk-based approach and meticulously documenting your enquiries and the evidence received, you can effectively deal with source of funds questions and meet your AML obligations.

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Workplace Culture https://compliancelegal.co.uk/workplace-culture Wed, 13 Nov 2024 21:39:17 +0000 https://compliancelegal.co.uk/?p=2650 Our Operations Director, Monica Desor, recently attended the annual SRA COLP/COFA conference in Birmingham. Having attended the workplace culture breakout session, Monica came away with the following key points. SRA guidance on Workplace Culture Wellbeing is a topic front of mind in the legal sector. More recently the SRA are looking closely into firm culture. […]

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Our Operations Director, Monica Desor, recently attended the annual SRA COLP/COFA conference in Birmingham. Having attended the workplace culture breakout session, Monica came away with the following key points.

SRA guidance on Workplace Culture

Wellbeing is a topic front of mind in the legal sector. More recently the SRA are looking closely into firm culture. This isn’t simply a compliance issue, role modelling should be from the top down.

So what helps to promote a more positive workplace culture?

 Processes, clear values, encouraging innovation, asking what the team want and setting clear expectations/boundaries is a good start. The SRA amended its Code of Conduct in May 2023 so that cultural issues can be brought within scope of the regulators.

What is Workplace Culture

Even though culture is all around us, even at work, it is likely defined by people subjectively. It is your responsibility as an employer to ensure that the shared values and belief systems are clearly communicated to all employees. There should be no confusion on what your expectations are.

It’s the social and psychological environment that shapes the behaviour of people within a firm. A positive workplace culture can foster collaboration, innovation, and productivity, while a negative culture can lead to low morale, high turnover, and inefficiency.

It’s not just your behaviour in work that matters, it’s also your behaviour out of work that has an impact to, within the workplace.

Why is Workplace Culture important

Employees want to feel connected to their colleagues and to the company’s mission and core values. This will result in positive employee engagement. By creating a positive culture and reputation, you can attract top talent. Having an open door and no blame culture also cultivates both trust and shows “we are all human.” Mistakes will be made but you should feel safe to be able to let your manager know.

For more hints and tips follow up social media pages.

 

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AML Compliance. What you shouldn’t be doing. https://compliancelegal.co.uk/aml-compliance-what-you-shouldnt-be-doing Mon, 27 Feb 2023 07:08:41 +0000 https://compliancelegal.co.uk/?p=2296 Money Laundering continues to top the regulatory landscape. With the Russian invasion of Ukraine last year, the issue is now at the political forefront. The Register of Overseas Entities, launched in August 2022, is one mechanism by which the ultimate owners of UK property should now become transparent. However, it is still early days and […]

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Money Laundering continues to top the regulatory landscape. With the Russian invasion of Ukraine last year, the issue is now at the political forefront. The Register of Overseas Entities, launched in August 2022, is one mechanism by which the ultimate owners of UK property should now become transparent. However, it is still early days and only time will tell if the Register is fit for purpose. The Economic Crime and Corporate Transparency Bill, which at the time of writing is at committee stage in the House of Lords, could give the regulator unlimited powers to fine law firms who breach Money Laundering Regulations.

With so much change on the horizon we thought that it would be a good time to outline several key areas that you should avoid when dealing with Money Laundering compliance.

  1. Your Policies, Controls and Procedures should be fit for purpose, current and relevant. Although the SRA do have some suggested templates available on their website, you should really think about the Money Laundering risks that apply to your business. Your Policy documents should be updated at ‘regular’ intervals and make reference to the most recent legislation and guidance notes. The SRA recently imposed a £20,000 fine on a firm for failing to have Money Laundering systems in place. Interesting to note, the SRA did not actually find evidence of any money laundering taking place.
  2. Don’t be afraid to challenge what your client is telling you. One running theme that we come across is where a firm will accept a client’s instructions as they have a long-standing relationship with them. Yes, this does mitigate the risk but does not completely eradicate it. For example, if your client is a corporate entity and has had a recent change in ownership, which you have not recorded on file, new individuals would have come into the business. Do they need to be formally onboarded?
  3. Do not presume that delivering training to your staff when they join the firm is sufficient to meet the requirements. Money Laundering is an ever-changing landscape, and the risks around this will continue to develop. We have already seen the implications of the Russian invasion of Ukraine. Cryptocurrency is another emerging risk that the regulators have identified. You will therefore need to ensure that refresher training to all staff is delivered on a regular basis (once a year would work).
  4. Clients provide you with statements to confirm that the money is sitting in a bank account. Problem solved then? No. Don’t assume that the bank has carried out sufficient checks against that money. Again, the risk is mitigated but not eradicated. Even UK banks have been levied with fines for Money Laundering failures. Look at the matter as a whole to see if the pieces of the jigsaw fit. Electronic verification providers are useful here.
  5. Don’t think that ticking boxes on your client and matter risk assessments is enough. It’s not. When, and not if, the SRA come in to carry out an Audit of your Money Laundering controls they will pick up a file and want to see evidence of how you have come to risk assess a matter. Narratives are good, they tell a story.
  6. Don’t assume that your firm does not require an independent audit of its Money Laundering controls. Otherwise known as a Regulation 21 Audit. It probably does, and you will have to demonstrate pretty cogent reasons to the SRA for not carrying one out. Oh yes, make sure it’s ‘independent’ as you can’t be seen to be marking your own homework.

For more top tips and hints, please follow our social media pages.

AML Audit & Compliance.

We have more information on AML Compliance and AML Audit services we offer.

If you have any questions or would like to make an enquiry please contact us.

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Three years in. What have we learned? https://compliancelegal.co.uk/three-years-in-what-have-we-learned Fri, 01 Apr 2022 12:34:34 +0000 https://compliancelegal.co.uk/?p=2288 As it is now three years since the launch of Compliance Legal, we thought that it would be a good time to reflect on what we have learned through our interaction with the legal profession. Our key learnings: Standing still is not an option. Whether its SRA regulation, your people, processes, technology or even global […]

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As it is now three years since the launch of Compliance Legal, we thought that it would be a good time to reflect on what we have learned through our interaction with the legal profession.

Our key learnings:

  1. Standing still is not an option. Whether its SRA regulation, your people, processes, technology or even global world events, law firms must learn to adapt and embrace change. The hybrid working model was something that the legal profession didn’t truly embrace before 2020 but, as we saw, evolution and not revolution was the key. Your staff are now expecting a greater work life balance. If you want to attract and retain talent, be prepared to innovate otherwise there is a real danger that you could get left behind.
  2. Your people are your biggest asset. Be prepared to bring them on the journey, encourage and empower, invest in their self-development and support them when things are not going to plan. A recent SRA Workplace Culture Thematic Review concluded that a positive workplace culture is intrinsically linked to effective risk management and avoiding regulatory breaches. Supporting your staff could have real tangible benefits.
  3. You need to make time for compliance. A common theme that we have come across is that although senior leaders are keen to adopt an effective culture of compliance, making time to implement is a big challenge. This will not go down well with the regulator if they investigated you. So put some time aside in your calendar every week to review and reflect on where you are, where you want to be and what needs to be done. The SRA even suggested, in a recent review, that sharing central compliance roles across senior leaders is recommended.
  4. Money Laundering is the biggest risk to the profession. The SRA now seem to provide almost weekly advice and guidance in this area. They have also announced that additional resource will be allocated to their internal supervision teams and will be increasing engagement with firms. Don’t wait for that email, get your house in order now.
  5. If things do go wrong, don’t panic. There have been numerous reported cases of junior solicitors backdating documents or forging signatures on forms, which have resulted in strike offs by the Solicitors Disciplinary Tribunal. Have an open-door policy with your staff and encourage them to raise issues as soon as they become apparent.

Find out more

For more of our top tips, please follow our social media pages, or alternatively please get in touch.

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Why a second pair of eyes, and ears, isn’t always a bad thing https://compliancelegal.co.uk/why-a-second-pair-of-eyes-and-ears-isnt-always-a-bad-thing Wed, 17 Nov 2021 08:06:41 +0000 https://compliancelegal.co.uk/?p=2285 Compliance Consultants With the recent increase in law firms looking to work with compliance consultants, we look at why businesses outsource some of their regulatory duties. As compliance consultants live, sleep and breathe risk management, they could be in a better place to anticipate when things are about to go wrong. This could save you […]

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Compliance Consultants

With the recent increase in law firms looking to work with compliance consultants, we look at why businesses outsource some of their regulatory duties.

  1. As compliance consultants live, sleep and breathe risk management, they could be in a better place to anticipate when things are about to go wrong. This could save you cost, time and even the wrath of an SRA investigation. To demonstrate, the SRA recently contacted a firm for sight of their AML Firm Wide Risk Assessment, which they didn’t have in place even though this has been a requirement since 2017. No doubt, the SRA weren’t impressed which resulted in regulatory action. The firm then contacted us and we worked with them to address the issues that had been raised. Had the firm worked with us earlier, we would have picked up the absence of the AML Firm Wide Risk Assessment and put one in place.
  2. On your professional indemnity insurance renewal, a declaration that you work with a compliance consultant could reduce your premium. Underwriters like to see that you are serious about compliance and don’t merely approach this as a ‘tick box.’
  3. As time engaged on the compliance officer role cannot be billed to clients, your senior fee earners are being used for work that could be outsourced, at a competitive rate, which would free them up to generate fees for the firm.
  4. Does your compliance officer have time to undertake the role? Were they voluntold to do it? Do they have the necessary experience and training? Is compliance always at the bottom of their to do list? Although these are the types of challenges that most businesses face on a daily basis, the SRA will not accept excuses if things go wrong.
  5. Although compliance starts at the top, it should be embedded within the fabric of your firm. From our experience staff tend to engage in the process when they know that an external consultant is involved. In fact, they see us as part of the wider team!

If you would like some further information around outsourcing your compliance functions, contact us today.

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Thinking of setting up a law firm? https://compliancelegal.co.uk/thinking-of-setting-up-a-law-firm Wed, 07 Jul 2021 10:34:53 +0000 http://compliancelegal.co.uk/?p=2279 Are you a legal professional or non-lawyer seeking entry and regulatory approval into the legal services market? Or you may be an existing firm looking to restructure your business model? There are some key requirements you will need to think about before you set up your own Law Firm business. Our Director of Compliance Tony […]

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Are you a legal professional or non-lawyer seeking entry and regulatory approval into the legal services market? Or you may be an existing firm looking to restructure your business model? There are some key requirements you will need to think about before you set up your own Law Firm business. Our Director of Compliance Tony Kang gives us his top five tips.

Know your structure

Traditionally only a solicitor was able to set up a law firm. However, the Legal Services Act 2007 opened up the market to non-lawyer management and ownership. You can now set up your business in a number of ways:

  • Sole practitioner. Where a solicitor is the only manager and owner.
  • Traditional partnership. Which would require at least two legally qualified individuals in the structure.
  • Corporate entity (LLP or Limited Company). Accountants will tell you that this is a more tax efficient way of setting up your business. As the entity is a separate person, shareholders and directors are not liable for any debts incurred.
  • Licensed body (ABS) through a corporate entity. This is where you have any type of non-lawyer management or ownership in the structure.

Research your market

Although new business failure rates for the first two years of operating are at around 30%, you will still need to consider how you intend to secure new instructions. If you have an existing book of clients, will your current employer allow you to take these with you? Does your contract have any covenants or non-poaching clauses that restrict you from contacting current clients? You will need to think about how you intend to market your business as the SRA will not allow you to make direct unsolicited approaches or cold call potential clients. Generating new business will be a key challenge for you.

Business Plan and Financials

Preparing a robust business plan will help you map out your journey and give the opportunity to self-reflect. Your business plan should address the key risks to your proposal and contain a Strengths, Weakness, Opportunities and Threats analysis. By doing this, you are already putting in place measures to address the challenges that your business will face when it begins operating.

Instruct an accountant to help out with your financial forecast and be conservative with your figures. The SRA will require a forecast for the first three years.

Professional Indemnity Insurance

As part of your application to the SRA, a valid insurance quotation will be required. With the exception of the ‘traditional’ structures, the minimum level of cover required is £3m. You can only obtain your quotation from the SRA list of Participating Insurers for the current indemnity period. Based on your projected turnover for year one, expect to pay a premium of between 5% – 7.5%. As part of the proposal, your broker will also require a comprehensive business plan and financial forecast.

From our experience, obtaining a valid insurance quotation is often the biggest delay encountered at this stage of the process. You will need to factor this into your timetable for approval.

Prepare and submit your application

Once you have your core documents ready (structure, business plan, financial forecast and insurance quotation) you will need to complete the SRA application forms. Depending on the type of structure and work areas, these will involve a combination of a form for the entity, role holders, financial services and money laundering approvals. All submitted forms will require declarations from your lawyer manager (any false declarations could be deemed dishonest) and, once the application pack is ready, submission can be made via your MySRA account. If the SRA require additional information, they will raise these issues with you as part of the decision making process.

Your business proposition will require a considerable degree of thought and planning. If you would like some assistance with the process of setting up your own law firm, we can help.

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Top 5 Tips for your COLP https://compliancelegal.co.uk/top-5-tips-for-your-colp Thu, 01 Apr 2021 15:52:32 +0000 http://compliancelegal.co.uk/?p=2270 All SRA regulated law firms must have a Compliance Officer for Legal Practice (‘COLP’) in place. The COLP must be a manager or employee, as defined by the SRA Glossary, and formally approved into this role. Some firms have adopted a tick-box approach to the role of COLP by allocating it minimal time. However, these […]

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All SRA regulated law firms must have a Compliance Officer for Legal Practice (‘COLP’) in place. The COLP must be a manager or employee, as defined by the SRA Glossary, and formally approved into this role. Some firms have adopted a tick-box approach to the role of COLP by allocating it minimal time. However, these firms should take into account that if things did go wrong and compliance was not achieved, the SRA will turn to your COLP for answers.

For those COLP’s currently in the role, what are the key requirements? We have outlined below five simple tips to get you started.

COLP top tips:

1. Know the Rules

The first thing you should be doing is taking into account the SRA Standards and Regulations. Since November 2019 two separate Codes of Conduct, one for firms and one for solicitors, have been in force. The Standards also contain key requirements that would be relevant to the COLP. For example, do you carry out work that falls within scope of the SRA Transparency Rules? Are you considering making management and ownership changes to your firm? Do you operate a client account?

2. Policies and Procedures

You will need to ensure that your firm, depending on its size and nature, has appropriate polices and procedures in place. An office manual is usually a good place to start, annexed to which should be your key policies. If things did go wrong, the SRA could question you on whether that policy was in place and, more importantly, was it followed?

3. Monitoring and Implementation

You could have the best polices in the world but if nobody is reading them then they aren’t worth the paper they are written on. All polices should be circulated to staff when they join the firm. We also recommend that staff then refresh themselves with these polices at least once every 12 months and/or when there has been a major change in regulations. As part of staff performance development plans, an annual declaration confirming all polices have been read and understood is also a good idea.

4. Training

The SRA statement of solicitor competence defines the continuing competences that are required from all solicitors. This can be evidenced through a number of ways, which includes staff training. The COLP should take the lead on training and be able to identify any gaps in knowledge.

5. Support

Most COLP’s also have conflicting duties, which could include fee earning and wider business management. These time pressures often result in the COLP role being left at the bottom of the pile. This will not go down well with the SRA during an investigation into your firm, so consider additional support for the role. Some firms will appoint a Deputy COLP, and others will work with third party consultants for additional support.

Compliance Legal can provide your COLP with an ongoing compliance support service. We offer this service as a fixed project fee or monthly retainer. Get in touch with us today to see how we can help.

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SRA Transparency Rules https://compliancelegal.co.uk/sra-transparency-rules Mon, 18 Jan 2021 16:30:38 +0000 http://compliancelegal.co.uk/?p=2263 SRA Transparency Rules. Grace period is at an end.   We previously published a blog on how your firm should be complying with the SRA Transparency Rules (‘the Rules’). Despite the Rules coming into force in December 2018 the Solicitors Regulation Authority (‘the SRA’) is still finding that a small minority of firms are not […]

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SRA Transparency Rules. Grace period is at an end.  

We previously published a blog on how your firm should be complying with the SRA Transparency Rules (‘the Rules’). Despite the Rules coming into force in December 2018 the Solicitors Regulation Authority (‘the SRA’) is still finding that a small minority of firms are not meeting the required standards. As a result, the SRA has now begun its clampdown on some firms and recently announced the first four sanctions.

So what are the SRA Transparency Rules and why do firms need to comply? These are some of the questions that we have recently received in our inbox. Read on for some tips and guidance.

What are the SRA Transparency Rules?

Introduction of the Rules followed the Competition and Markets Authority’s legal services market study of 2016, which concluded that the absence of sufficient information on price, quality and service hindered the ability of consumers and small businesses to engage with the market. It recommended that regulators, including the SRA, set a new minimum standard for the information published by those firms they regulated.

Do all firms need to comply with the Rules?

Some parts of the Rules (complaints and the SRA Digital Badge) are mandatory to all firms. The Rules only require your firm to publish price and service information if it is offering work in the following areas: conveyancing (residential); probate (uncontested); motoring offences (summary offences); immigration (excluding asylum); employment tribunals (unfair/wrongful dismissal); debt recovery for businesses (up to £100,000) and licensing applications (business premises).

What information do I need to publish?

Firms within scope of the Rules are required to publish information about price and service. All firms, regardless of their work areas, are also required to publish details of their complaints handling procedure and display, in a prominent place on the website, its SRA Number and the SRA Digital Badge.

Price information must be presented in a clear and easy to understand format. A firm must also provide a total cost, if this is not possible provide an average or range of costs; explain the basis of charges, including any hourly rate or fixed fees; highlight likely disbursements, and their costs; be clear on whether VAT is included and, for conditional or damages-based fees, explain when clients may have to make payments.

For service information a firm must explain what services are included for the quoted price; highlight any services not included within the price, which a client may reasonably expect to be; include information on key stages and typical timescales of these and publish the qualifications and experience of anyone carrying out the work and of their supervisors.

On complaints, all firms must publish details of its complaints handling procedure including, details about how and when a complaint can be made to the Legal Ombudsman and to the SRA. From our work in this area we are finding that complaints policies often omit reference to how a complaint can be made to the SRA.

What happens if I don’t comply?

The SRA has already taken a pragmatic approach with those firms who have not fully complied with the Rules. Interestingly a ‘soft launch’ of the Rules took place in November 2018, with mandatory requirements coming into force 12 months later. Although the Rules have formally been in place for over a year, the SRA have only now announced the first four sanctions against firms who have, despite being repeating warned through engagement, failed to comply. What is clear is that the SRA will now be allocating more resource to investigating issues of non-compliance, and the grace period afforded to firms during the initial COVID period has come to an end.

How we can help?

Although the SRA has provided useful templates to meet these requirements, we have found that taking a bespoke approach to publishing this information has clear benefits and will make your website standout from its competitors. It is also a good opportunity to review other parts of your website and bring it up to date. Profiles for departed members of staff often remain on websites for a number of months.

If you are in any doubt as to what you need to include on your website, Compliance Legal can assist. From the firms that have instructed us the most common themes emerging include a lack of time and understanding of the requirements, as well as issues encountered with individual website designers.

Compliance Legal can project manage your transparency requirements, and our web designing team will also review your site to ensure that it is compliant with the Rules. For firms who do not have a website our teams can design and delivery bespoke solutions to meet your requirements.

If you would like further assistance with this then please contact us today.

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