Why law firm compliance programmes often fail — and how to improve them
Amy Bell, founder of Teal Compliance, non-practising solicitor and chair of the Law Society’s money laundering taskforce, joins Amy Bruce, head of marketing at Osprey Approach, for episode eight of its Empowering Law Firm Leaders podcast.
In this conversation, Amy discusses the best practices for creating a firm-wide culture of compliance, how to be a successful COLP or COFA, and how to avoid SRA fines.
In this episode we cover:
- Why compliance programmes fail
- Best practices for building a culture of compliance
- Impacts of tech on risk management
- Tips to avoid AML fines from the SRA.
Amy’s three compliance rules that every law firm should know are:
Business protection, not prevention
Amy emphasises the importance of viewing compliance as a means of protecting the business rather than a bureaucratic hurdle: “It’s business protection, not business prevention. We often get a bad rep as the ‘computer says no’ people, but we’re actually out there protecting everybody’s jobs and the business.”
Focus on psychological safety
Without a supportive culture, even the most well-resourced and well-communicated compliance programmes will falter. Amy shares: “Back when I had claims, I wanted the ground to swallow me up – I didn’t feel worthy of the solicitor title. I felt awful.” Compliance is about protecting employees from that feeling, which is why a supportive culture and psychological safety is required to support compliance efforts.
Clarity and simplicity
Compliance should be straightforward and easy to understand. Amy advises against overcomplicating things with jargon and convoluted procedures: “Compliance is simply a framework to protect people. It’s not rocket science. What it does have to be is clear and easy to understand.”
Why compliance programmes fail
Amy starts by highlighting that, like her, many current law firm leaders entered the profession when there was a thick rulebook for how to complete the required compliance processes. For years, the SRA has been “chopping away at the rulebook and moving from rules to principles.” The SRA has moved away from telling firms what to do, to outlining only the expected outcome: “This can make it challenging to figure out the right way to do it.”
Amy introduces her framework for creating effective compliance programmes, which is known as the ‘Six Cs of compliance’. The biggest is culture: “You can do the other five Cs, but if you haven’t got a culture that supports compliance, your investment in those other five steps will be wasted.”
The six Cs of compliance
The Teal Compliance Six Cs framework is:
- Clarity
- Capacity
- Communication
- Commitment
- Consistency
- Culture.
Find out more about the 6 Cs of compliance in the podcast episode >
Characteristics of an effective compliance officer
While ensuring compliance is the responsibility of everyone in the firm, compliance officers ultimately have a responsibility to protect the business. Amy shares her four top characteristics of an effective compliance officer to inspire future leaders and help current leaders make the right next hire.
Alignment of risk appetite
“One of the most common reasons I see that people move on from compliance officer jobs…is because there’s a misalignment between the risk appetite of the compliance person and the risk appetite of the firm,” she says. She advises that firms need to test this alignment during the recruitment process to ensure the compliance officer can make decisions independently, without having to escalate every issue to the management team.
Self-awareness
A thorough understanding of one’s own risk appetite is crucial for compliance officers. Amy suggests: “Give yourself some scenarios and ask, what would I do about this?” This self-assessment helps compliance officers to ensure they align with the firm’s risk culture. Amy adds that compliance officers should be able to navigate varying risk appetites within the firm and understand where they stand on the spectrum from risk-averse to risk-tolerant.
Approachability and trustworthiness
“If you’re not trustworthy, or employees aren’t confident you’re not going to ‘go off on one’, they’re not going to tell you anything — and you’re just making your job even harder.” She points out that being calm under pressure, and consistent in demeanour, are crucial for building trust. This approachability encourages open communication, which is essential for effective compliance.
The behaviour of leadership ultimately impacts the culture, and Amy believes the values of the business need to be role-modelled by compliance officers. She recalls her own experiences, noting: “I am very open and honest, even as a boss now. I’ll tell [the team] I’m really sorry I made this mistake.” This openness helps to foster a culture where employees feel safe to admit errors, which is critical for effective compliance management.
Proactive problem-solving
Amy underscores the need for compliance officers to be proactive in addressing potential issues and creating peer support networks. She shares an example from her career: “When I was a fee earner, I used to have a pile of files – we all did – that we were struggling to progress. One day I said, ‘why don’t we have a meeting at lunchtime and everyone can just bring their pile of files, and instead of losing sleep over them at three in the morning, we bring it to the team meeting and help each other?” Such initiatives can significantly reduce stress and improve problem-solving within the team.
Building a resilient compliance culture is essential to risk management in SME law firms
Building a resilient compliance culture in SME law firms demands a proactive approach to navigating regulatory landscapes and fostering a supportive environment. Today, compliance isn’t just about adhering to rules but ingraining a culture where every team member understands their role in safeguarding the firm’s integrity.
Strategies must prioritise clear communication, robust training, and consistent monitoring to ensure compliance efforts are not only effective but also integrated into the firm’s daily operations. By championing transparency and accountability, firms can mitigate risks, enhance client trust, and foster a workplace where compliance is a shared responsibility.
Watch the full interview with Amy Bell now to discover more practical advice and guidance for cultivating a resilient compliance culture in SME law firms to enhance long-term success. You’ll also hear Amy’s exclusive advice on how to avoid AML fines from the SRA and the impact of tech on staying compliant.
Listen on Spotify, Amazon Music, or YouTube now.
