Nearly one in four of the UK’s Top 100 law firms have given the role of senior compliance officer to the managing partner or senior partner – showing the importance that they are attaching to this new regulatory requirement. Since January 1st 2013 the Solicitors Regulation Authority (SRA) has instructed all law firms to appoint a “Compliance Officer for Legal Practice” (COLP) to oversee risk management and compliance within a firm and to have responsibility for the firm’s systems and controls. The research shows that 13 per cent of firms in the Top 100 placed the COLP function with their General Counsel. However, an overwhelming majority of COLPs also operating as General Counsel were in the Top 50 firms, with only one General Counsel COLP in the next 50 by turnover.
Compliance professionals
The research, which was undertaken by search company Edward Drummond, found that 16 per cent of the Top 100 law firms had a specific compliance professional taken on for the COLP responsibilities. Meanwhile, 14 per cent of the Top 50 firms had handed the COLP title to a risk and compliance professional, while 19 per cent of firms ranked 51-100 had taken this step.
Dan Watts, Director at Edward Drummond, says: “It is great to see Managing Partners of law firms taking a big active interest in compliance and risk but over time they will want to consider separating their role from that of COLP.It is not reasonable to expect that those partners responsible for delivering targets on profitability and on new business would also give the firm completely impartial and independent advice that might slow that sales growth or restrict short term profits.” He added that “Unlike previous compliance roles in law firms, COLPs have a personal obligation to report apparent conduct breaches to the SRA. This might put off those within the firm from approaching a COLP for guidance, when they might previously have done so. An independent compliance professional who is dedicated to the role is in a far better position to take on the responsibilities of being a COLP than a lawyer who has to balance this function with their day to day caseload.”
Conflict dangers
He pointed to the dangers of conflict which could undermine the role. “Having the same person riding both of these horses has the potential for problems. This would be in direct contrast to a publicly listed company where an internal auditor or non-executive director can provide a completely independent view on potential conflicts.”
Mr Watts added that good corporate governance " would suggest that we will see more independence given to the risk and compliance function. The banking crisis has shown what can happen when the risk and compliance function is unable to independently express its reservations to the executive function.”
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