No let up for law firms from the regulators

Partners and managers at law firms face a constantly shifting regulatory picture as Covid-19 continues to make its presence felt both professionally and personally.

With 212 pages of new guidance on AML from LSAG recently released and a series of high profile fines and stories of non-compliance hitting the press in the course of this year so far alone, it seems that there will be no quarter given to firms who fail to comply with regulatory requirements. This despite the fact that firms are having to focus on keeping their businesses going whilst at the same time managing a series of unprecedented demands on their time and attention including coping with high volumes of work in teams such as conveyancing, private client, employment and insolvency and managing client expectations during this time as well as the wellbeing of staff.

Here at Legal Eye our risk and compliance experts are seeing the effects of the changing regulations every day. Our associates are experiencing an increase in enquiries from law firms as they continue to adjust to the significant changes being required of them due to the global pandemic. New and emerging risks are facing firms as staff balance work and family commitments and continue to work from home during this lockdown. Firms are moving from a viewpoint where they just need to ‘get through’ the next few months to starting to take some really well thought through strategic steps in their approach to risk management in the longer term.

For better or worse many of the aspects of new ways of working that firms have had to adopt over this past year and more are here to stay. We are advising firms to explore ways that they can manage their risk management processes and procedures – including providing training and supervision for staff – through digital means.

With new AML guidance issued only this week and the regulator fining firms for things like breaching price transparency requirements it’s clear that there is no grace being afforded to firms when it comes to meeting their risk and compliance obligations. Firms really need to make time to engage with experts such as us here at Legal Eye to develop their thinking rather than waiting for any return to a ‘new normal’. We’re speaking to new and existing clients every week to advise on next steps and offer some practical advice. We’re also providing outsourced resource for firms who want to keep a tight control on staffing costs at this current time. Outsourcing is an option that is becoming more and more attractive to law firms as they seek to access specialist expertise and control costs.

Whilst there may have been some who saw risk and compliance as an area where they could potentially make savings at a time when costs need to be keenly managed; that might not be easy when there is a real pressure to adapt the firm’s processes, policies and systems to ensure a robust risk management is in place in order to protect the firm and clients and to guard against falling foul of the regulator.

With outsourcing providing access to specialist expertise on a ‘call off’ basis it could be worth considering engaging an external risk and compliance adviser who can provide expert help without adding to staff overhead.

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