Countdown to Legal Services Act: The need for good risk management

In my time advising law firms, I have learnt one irrefutable truth – lawyers, while fantastic at managing risk for clients, can be poor at risk management within their own firm.

 

This is not really the fault of lawyers, far from it; it’s just what happens to those who’ve spent years being totally immersed in the law, then suddenly find themselves running a business.

 

One of my primary roles as an accountant is in helping managing partners identify weaknesses, manage risk, spot opportunities and maximise profitability.

 

At a time when traditional law firms are under threat from the implementation of the Legal Services Act, and trying to get to grips with Outcomes Focused Regulation (OFR), the need for good risk management has never been more acute.

 

As I discussed in my previous blog on OFR, firms will be responsible for meeting the requirements laid down in the SRA Handbook and operating effective systems and procedures.

 

Senior managers will need to take greater responsibility for creating the right culture and determining for themselves the approach to delivering the right outcomes for clients.

 

I am advising law firms not yet familiar with the full ramifications of OFR to take immediate action to:

 

– Read, understand and comply with the new SRA Handbook

 

– Review your regulatory systems and procedure

 

– Nominate appropriate staff to be COLPs & COFAs

 

– Train all staff

 

– Ensure the firm’s regulatory culture is ‘fit for purpose’

 

A fantastic starting point for firms who are committed to overcoming these challenges is the Law Society’s Lexcel Practice Management Standard.

 

As a qualified Lexcel consultant, I have advised many firms on what they need to do to gain this accreditation and the process itself forces firms to think about how they can become more robust against challenges and threats.

 

It’s no surprise that as October 6 approaches, we have witnessed more firms going through this process to ensure they are in the best possible shape to deal with everything that Legal Services Act, Alternative Business Structures and OFR can throw at them.

 

Karen Hain is partner and head of professional practices at Moore and Smalley Chartered Accountants and Business Advisors.