Keeping it clean - Risk and compliance

In the legal sector, near-universal remote working arrived overnight. Transactions underwent a digital transformation and platforms many had never heard of, such as Zoom, were suddenly in general use. Imagination, too, was applied to delivering the services, advice and support that vulnerable clients needed.

Software provider Insight Legal’s chief operating officer Deborah Witkiss notes that lawyers’ scepticism about using ‘the cloud’ was instantly overcome. ‘We definitely saw a change in people being open to the ideas of remote working – using cloud technology, working with electronic files more than paper files,’ she says. And, of course, this was accompanied by the switch to a flexible working regime.  

One year on from the first lockdown, this Gazette roundtable was convened to focus on issues of longer-term concern – what measures have firms put in place to control and manage the multiple risks of remote working?

These range from the challenge of supervision, through the wellbeing of people, to regulatory duties and compliance.

Juniors especially [needed to know] they had senior people around them who could be with them and help them with day-to-day issues

Fariha Butt, Saracens

First steps

‘I think communication was at the top of the agenda,’ says Fariha Butt, a director at London firm Saracens. That meant ‘making sure that we got that right with the clients, but also making sure we got that right with colleagues. Often, we were having “huddles” two or three times a day, just to let people feel comfortable. The juniors especially [needed to know] they had senior people around them who could be with them and help them with day-to-day issues.’

Saracens was already using Microsoft Teams, so everyone was familiar with the technology the firm leant on to function. For management, the new restrictions and remote working threw up a greater number of issues, so management meetings went from twice-weekly to daily.

Firms’ levels of preparedness were subject to chance. Nick Wilcox, of employment, regulatory and partnership-focused firm BDBF Employment Law, says the firm had recently moved into new offices. Fortunately, as part of that move, BDBF had overhauled its IT systems and equipment, making the transition ‘fairly seamless’.

There were challenges for firms with consultant and ‘new law’ models, too. ‘We were quite ready for the way the pandemic forced everyone to work, but we still had big challenges,’ Nigel Clark, chief executive of Nexa Law, says.

Like several firms at the virtual table, Nexa Law increased headcount during the pandemic – and ‘onboarding’ lawyers and clients is ‘a constant challenge’, with the process needing to work for lawyers aged from 21 to 75, says Clark. The firm has now developed its own app for ‘client onboarding’.

People

As a profession, the law has always policed its ‘gateway’, with members assessed most heavily on entry. It is no surprise therefore that careful recruitment is the most important risk safeguard for many.

‘The greatest risk management tool that you’ve got is actually recruitment,’ Ian McCann, chief executive of Leeds litigation firm Legal Studio, says. ‘Start right with culture and character – find the right people to become part of your team.’

Legal Studio operates on a consultant model. McCann advises that when looking at candidates, the way to do it is ‘reckless honesty’. ‘Having those conversations with people and understanding: why do you want to do this? What motivates you? What is it that you want to bring to this? Why do you want to become a consultant? What does your client base look like?’

Keeping the welfare of consultants front of mind is also important in limiting risk, he adds: ‘Make sure you’re looking out for them, because another risk factor is that it’s been a challenging year.’

It’s almost that in our rush for… tangential issues that we sometimes concentrate on, we’ve forgotten the basics that are essential to us as members of the profession,  which are actually selling and delivering legal services

Jayne Willetts, Jayne Willetts & Co

‘I’d like to think that our case management system and our peer reviews still hold good,’ Barry Davies, practice manager at Swansea firm Douglas-Jones Mercer, adds. He wants to know how people are managing more generally. He quotes a colleague who used a phrase that underlined the point of this: ‘We need to make sure that we’re working from home and not living at work.’

‘One thing we did concentrate on straight away was staff morale,’ says Robert Banner, consultant solicitor at Banner Jones.

‘We had many, many staff who quite naturally were extremely worried, so we encouraged remote meetings, we encouraged them to have their own social meetings.’ The firm even booked ‘a nationally known magician to give the whole firm a show online. That was terrific [for] the staff, they felt really together.’

Banner adds that in common with several attendees, ‘we also concentrated on the furloughed staff, because they were the guys at home on their own, so we wanted to make sure they were kept in the loop.’

Indemnity

The risks identified by our roundtable attendees are reflected in the caution with which professional indemnity insurers are now approaching the legal sector. Questions that insurers ask about support for wellbeing sit side by side with those about the robustness of systems.

‘We’ve noticed a spike in [suspicious cyber] activity and people trying to access our systems,’ Davies relates. ‘The questions are coming through quite heavy on that and are quite detailed as well.’

Millie Balkan, risk and compliance manager at Goodman Derrick, adds: ‘I had to do a two-hour Zoom call with six, seven, eight different insurers with a slide show… to pay them hundreds of thousands of pounds!’ Insurers, she says, ‘asked for slides on financial resilience, working controls during Covid-19, furlough, redundancies… [and] the risk that we’re exposed to in relation to wellbeing.’

Balkan notes that while firms have staff on furlough, lawyers who are working may have seen their workloads increase. She references recent reports of US-headquartered City firms where an average chargeable time per day of 14 hours has been recorded.

‘That’s a huge red flag and it’s going to drive up premiums, because it is not right for people to be working a time-recorded, chargeable 14 hours a day,’ she says. ‘Mistakes are going to be made and I think that the whole profession is going to pay for that.’

‘The day never seems to finish when you’re at home,’ Winchester firm Shentons’ practice manager Adrienne Edgerley Harris cautions. ‘You’ve got to put in some boundaries.’

Fox & Partners’ chief operating officer Emma Sell stresses: ‘We upped our employee assistance programme as part of our permanent health package and made sure it was one that could actually be used… We wanted to make sure that people are aware they can use the counselling sessions, the firm’s not going to have a problem with it… it’s been really well received.’

Supervision

Jayne Willetts, a sole practitioner specialising in professional regulation issues, highlights the risks heightened by the pandemic response. ‘One of the main problems is not with the more senior members of the profession, but with the more junior members and what I call the “new blood”,’ she says. ‘We need to go back to basics in terms of what some of us would regard as the DNA of being a solicitor.

‘In the past 48 hours, I’ve had two firms consult me about breach of an undertaking in a client conflict and both of them were errors by younger members of the profession. It’s almost that in our rush for… tangential issues that we sometimes concentrate on, we’ve forgotten the basics that are essential to us as members of the profession, which are actually selling and delivering legal services.’

‘Through no fault of their own,’ Sell says, ‘the junior lawyers perhaps feel that it’s not the same as just being able to walk and tap someone on the shoulder, knock on their door.’ She attributes that in part to junior lawyers’ knowledge of how much some senior colleagues are juggling at home – the increased visibility of caring responsibilities, for example.

But do not, Edgerley Harris warns, neglect the welfare of senior people: ‘They have the experience to know what work they can do and what work they can’t, but they feel quite exposed, quite vulnerable, in that they’re picking up the pieces and trying to… run a firm with all the financial and other worries, being worried about all the staff including their own fellow senior solicitors.’

Legacy

There is a consensus in this group that when normal office and professional life is allowed to resume, the ‘return’ will be to a ‘hybrid’ model. As Saracens’ Butt puts it: ‘We have that flexibility now so why would we not run with it? Why would we not have that dual system where people can go off and do whatever they need to do at lunchtime, go to Tesco and do their shopping, and then come back and carry on with work, or drop the kids off, or be there for their children, or whatever it is that they want to do. If we now know we have the capability to offer that flexibility, why would we not want to do that and embrace that?’

Recognising that should change the focus of training in firms, Banner reflects: ‘Working at home [is] a discipline that people need a lot of training in. Everybody’s taking it for granted.’

I really hope the legal industry takes advantage of this and we get a positive out of the pandemic. I think there’s a real opportunity for the industry as a whole

Nigel Clark, Nexa Law

The delivery of training itself has also had to change, Insight Legal’s Witkiss notes. Although Insight Legal is a software provider, its extensive training programme had been delivered in a traditional way. ‘When the pandemic hit,’ Witkiss recalls, ‘we worried that people would immediately put things like training on hold because it couldn’t be done face to face. Classroom-style training and face-to-face training is always something that we’ve delivered.’ But ‘those fears we had were unfounded’, she adds, as training successfully moved online.

Some training needs to address supervision needs, Witkiss notes. ‘The training that we were being asked to provide was far more about how to put systems in place, how to put procedures in place, within the technology, to make sure that things don’t slip through the net… it wasn’t the law firm wanting to change the way that they work, it was just keeping the way that they work and keeping engaged with their staff – but from a distance.’

Managing to do that well, Nexa Law’s Clark concludes, should be a competitive advantage for any firm. ‘I really hope the legal industry takes advantage of this and we get a positive out of the pandemic. I think there’s a real opportunity for the industry as a whole,’ he says. ‘When I qualified in 1999 as a solicitor in London, I didn’t have a choice about how I worked and the way I worked. Now, both for our customers, the clients, and for our lawyers, there are opportunities. It’s up to everyone who runs a business within law to work out who they want to be.’

For more on these topics, members can attend a free Law Society webinar – Trust vs Control: The practicalities of law firm and financial management, from a distance.  Click here.