Countdown to Legal Services Act: Who’ll be your COLP and COFA?

As part of the move towards ‘outcome-focused regulation’ when the Legal Services Act 2007 becomes law on October 6 2011, the Solicitors Regulation Authority requires firms to appoint a compliance officer for legal practice (COLP) and compliance officer for finance and administration (COFA).


Each role involves the appointment of an individual of sufficient seniority to manage extremely important duties, based on an approach that is sharply focused on the identification, mitigation and management of risk.


The appointments must be made by March 31 2012, but this something that law firms need to be giving serious consideration to now.


Why the new roles are in everyone’s best interest


The SRA believes that COLPs and COFAs, responsible for implementing appropriate controls, are in the interest of both the public and the profession.


The remits of COLPs and COFAs will not affect the responsibilities of other individuals, such as principals of traditional law firms, to work within the controls, or the role of the governing body to oversee the controls.


Stipulations relating to the COLP and COFA roles are explained in the current draft SRA Handbook and include an opportunity for these duties to be carried out by suitable employees who are not necessarily managers.


Flexible system reflects diverse practices


The requirements are flexible enough for firms to make arrangements that suit their own business in regard to its structure, areas of practice and needs of clients.


This means sole practitioners themselves could perform the COLP and COFA roles. In a larger firm, these roles will need to be carried out by dedicated individuals, typically people who are already leading compliance and finance teams.


An opportunity to review risk management


The SRA has been asked for extra directions and formal guidance on the new roles, but is reluctant to set out their duties more rigidly, or to draw up detailed job descriptions because it believes firms should be responsible for making arrangements that reflect their own circumstances. Many firms already have suitable systems to manage their risk.


The appointment of COLPs and COFAs will not mean firms having to replace existing arrangements. Instead, they represent an opportunity to review risk management in the context of the new requirements and decide who should assume the COLP and COFA roles, with the authority and support to carry them out effectively.


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