The Solicitors Regulation Authority has warned delegates at a conference about how good times for legal services are related to higher standards of compliance.
The “Compliance and the role of COLP and COFA- six months on” conference in London warned that the tough economic climate facing law firms has in some cases created temptation to stray from the compliance path.
Anthony Townsend, the Chief Executive of the SRA said: "When market conditions are tough and financial problems begin to bite, individuals who are usually principled and ethical can succumb to pressures and temptations, getting drawn into schemes and poor practices that put their clients, their businesses and their future at risk. The large majority of legal professionals act scrupulously even when the going is tough. In the last week I have seen an example of an individual who, despite having to close a firm in distressing circumstances, has acted with the highest standards in her clients’ interests, and co-operated fully with the SRA.
"But some will succumb, and this is a real concern for us. If the firms who give in to these pressures act in a way that is not in the interests of their clients, then these clients are put at risk, confidence in the sector is undermined and the cost of protecting clients and the public goes up."
The combination and pressure of public sector budget cuts, changes to legislation and a poor economic climate have been just some of the many factors contributing to law firms experiencing significant financial problems.
Anthony Townsend comments: “These pressures create not only economic challenges for firms, but also particular pressures upon those working in compliance – COLPs and COFAs – and upon the SRA, as a regulator. The challenge for us is how to use our limited resources to have the most impact in mitigating these problems.
"Targeting bad practices that put clients at risk and undermine public confidence is therefore an immediate priority for us."
The SRA website has advice for firms managing finance, including details of the good and poor behaviours against which to measure practice outlined in the handbook. The information can be accessed from the home page at www.sra.org.uk
A copy of the speech can be found here