The CMA’s Annual Report and digital markets - a time of change
Failing to promote a good workplace culture based upon a firm’s core values is a potential regulatory issue.
Law firms are notorious for having high expectations when it comes to the output of their fee earners – for juniors in particular working late nights and weekends in the office is de rigueur in order to meet the ambitious chargeable-hours target set by many firms. This long-hours culture is by no means a new phenomenon, but the potential risks for those firms that continue to permit its perpetuation are changing, and managers of firms - of all sizes - now need to assess how they seek to achieve that elusive, work-life balance for those in their formative years in the profession.
The pandemic and the changes to the way we have needed to work, has given some their first glimpse of what a more balanced existence looks like. Others have found the extreme hours required to support the recent deal boom intolerable under pandemic conditions. Some are asking if the trade-off is less remuneration. Law firms will need to adapt to these changing perspectives if they are to retain the talent in which they have invested and the clients who are drawn in by the firm’s fee earners providing a high-quality legal service. Those firms unwilling to flex their approach run the risk of damaging their hard-earned reputations.
But there is also another risk. Failing to promote a good workplace culture based upon a firm’s core values is a potential regulatory issue. Since the introduction of the SRA Standards and Regulations in November 2019 – underpinned by the earlier published revised Enforcement Strategy - the SRA’s regulatory focus has without doubt shifted, to now include a more nuanced scrutiny of law firms themselves. And significantly there has been a change in emphasis of that scrutiny - a law firm’s compliance with its regulatory obligations is no longer a simple tick-box exercise which can be completed by a firm seemingly having adequate systems and processes in place to foresee and prevent systems-based failings. While having robust systems and processes clearly remains of fundamental importance, the need for law firms to promote and embed a good workplace culture is moving more centre stage as far as the SRA is concerned.
This will include it looking more closely at “poor culture”, such as a failure to promote equality, diversity and inclusion and maintaining the physical and mental wellbeing of employees.
While the SRA certainly now has more effective mechanisms in place to investigate and take action against firms, we hope that this will not just take the form of enforcement action, but will also include early and constructive engagement with firms to help put matters right in the first instance. For obvious and well versed reasons, there will always be types of professional misconduct which will lead to the behaviour of individuals being investigated and sanctions being imposed. Nonetheless, the role of firms in permitting work environments to thrive in which solicitors are pushed to their limits or where poor workplace culture becomes embedded and the norm, is likely to be examined. And further achieving a good workplace culture, arguably one which is built upon a good deal more than just billable hours, is an area where law firms can expect to be held to account.
Given this and the prominence of the long hours issue at the moment and the desire of many firms to effect change, it is to be hoped that the SRA will do more to guide firms on what the SRA expects and what a good culture looks like rather than us having to wait for an enforcement example. In our view, this is a journey on which the regulator and those it regulates need to travel together.
This article originally appeared in Legal Week on the 13 May 2021, view the article here.
Julie Norris is a partner in the Regulatory Team. She predominantly acts in the professional services sector, advising lawyers, accountants and built environment professionals on regulatory compliance, investigations, adjudication, enforcement and prosecutions. Julie is top ranked in both major legal directories for her work in this field. She is recognised as a leader in her field.
Jessica Clay is a Senior Associate with over a decade’s worth of experience specialising in legal services regulation. Jessica’s work in this sector focuses on advising her clients in relation to complying with regulatory obligations, better understanding the importance of legal ethics within regulation, regulatory investigations and public law matters, including reviewing regulatory frameworks and decision making processes. Outside the legal services sector, she acts both for and against the regulators of the accountancy and actuarial professionals.
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