Sector Insight: How to guide your legal practice through regulation changes
Deborah Edwards, the Professional Services Director at Insight Legal, explains how to adapt to an ever-changing regulatory environment.
As legislation continues to evolve, so does the role of the legal practitioner. The last two years have brought about significant changes in regulation, with new protocols such as the European Parliament’s GDPR regulation and HMRC’s Making Tax Digital initiative designed to bring law firms up to speed with the modern digital world.
With the new set of rules much less prescriptive in nature, the onus will be on firms to assess and adjust to their individual needs, prompting further action from practice managers to ensure their staff and IT systems can operate in line with the new regulations.
Understand the changes and act swiftly
Among many other responsibilities, a significant amount of a practice manager’s time should be dedicated to maintaining the compliance of the firm, working closely with compliance officers.
Managing compliance can be difficult to balance on top of the responsibilities of client work. Yet, with legislation and industry guidelines seemingly ever changing, it is imperative that managers stay abreast with all new and revised regulations which will impact all areas of the practice.
Practice managers must therefore take time to familiarise themselves with changes well ahead of their enforcement and adapt practises accordingly with any necessary changes. Doing so will not only ensure that their firm survives, but continues to thrive with full compliance.
A significant amount of a practice manager’s time should be dedicated to maintaining the compliance of the firm, working closely with compliance officers.
What’s more, decision makers must also react swiftly once a breach or risk of breach to any industry legislation occurs within their practice and take the required action to avoid further disruption.
Whether this be notifying the regulating body, reporting discrepancies or updating files with the correct information, managers must be aware of the correct steps to take in order to resolve any issues and conduct these in a timely manner.
Reduce risk whilst maximising fee earning time
To be successful, a practice must be able to learn and adapt quickly and mitigate any risk of breaching the regulations which underpin their staff and operations.
For example, it is essential that financial staff are fully trained in line with all accounts legislation and procedures, especially when changes such as the new SRA accounts rules are enforced.
Providing critical training and support before such adjustments occur will ensure that staff have the right knowledge to continue operating in accordance with regulations, to reduce the risk of a breach and the resulting consequences.
However, it is important that law firms also have up-to-date software that is still fit for purpose once new legislation is introduced. Having software to manage your accounts and generate reports will save precious hours that can be reinvested back into fee-earning activity.
For accounts staff in particular, such tools are now essential. For example, the rules regarding payment of interest to your clients stipulate that the payment to them must be “fair”, but also that you may, by agreement, come to a different arrangement with them.
There are some older software systems which apply prescriptive rules – some even in line with the old Law Society limits and de minimis rules.
For firms formulating and applying their own procedures in line with the “reasonableness” rule, you need your systems to be adaptable to you. Managers must therefore contact suppliers imminently to check the status of their systems and whether they will continue to support the business once news regulations are introduced.
For firms formulating and applying their own procedures in line with the “reasonableness” rule, you need your systems to be adaptable to you.
Law firms can benefit highly from tools which relieve some of the pressures of maintaining compliance when performing complex case and practice management - it is fundamentally about finding a system that works for you.
While the responsibility of abiding by regulations ultimately falls on managers and those completing the work, providing the team with software which offer task reminders and prompts will reduce the potential for missed deadlines and prevent necessary processes from falling through the gaps.
The new SRA accounts rules, for example, give firms more flexibility over their accounting processes, which puts the responsibility firmly on managers to refine these procedures and ensure standards are upheld across the firm.
In addition to valuable prompts, a good case management system should provide the flexibility to assist with each firm’s individual processes and needs - working as an extension of your day to day business.
Finding a supportive IT system will enable managers to track progress across the business, while freeing up further valuable time for staff to manage cases effectively and in line with both internal and external guidelines.
In an industry full of regulation, it is infinitely challenging for legal practice managers to stay informed with any changes and ensure their firm and staff are operating both efficiently and above board.
However, those who dedicate regular time to compliance matters and use modern tools to their advantage will ultimately be best placed to guide their organisation through periods of change and beyond.