Regulatory landscape
In an ever changing regulatory and business environment with increasing consumer expectations, regulation is constantly evolving and legal firms need to keep up with the changes and the new approaches adopted by their approved regulators particularly the SRA and CLC.
The changing landscape of regulation in the legal services market with increased regulatory scrutiny and focus on senior management and the appropriateness of their governance arrangements necessitate the adoption of new ways of working by legal services providers in order to maintain their competitive advantage.
However complying with new regulatory obligations whilst simultaneously pursuing the commercial aspects of running a successful and profitable business in a competitive environment remains a major issue and achieving the appropriate balance is challenging.
Culture
Changing the culture of legal firms where there is a perception of regulatory compliance as an unwelcome distraction from the more important business activities is going to be a key challenge particularly within the context of outcome focused and principles based regulation.
Likewise addressing the lack of a shared understanding and approach to regulatory compliance across teams/departments and branches is going to be critical in order to foster the right culture in legal firms.
Assurance
Achieving better regulatory compliance may be a challenge for some legal services providers. Ensuing that proper governance arrangements (including Audit/Risk Committees) are in place to oversee the effective operation of the appropriate systems and controls is important.
It is not uncommon for firms to be unaware whether they are compliant with their regulatory obligations across the organisation, particularly across a diverse portfolio of services, delivery channels and clients. The number and scale of their regulatory obligations including the uncertainty associated with proposed regulations usually exacerbate this situation. Coping with the pace of change in the regulatory landscape in a manageable way is a real and ongoing challenge.
Resources
Legal firms face the challenge of putting in place appropriate systems and processes to embed regulatory compliance. One of such processes will be how best to keep staff updated on new compliance requirements which increase the pressure and burden on those senior staff with dedicated compliance responsibilities.
It is therefore important that senior management ensure that the staff with compliance responsibilities are properly supported both in terms of corporate and personal resources (such as coaching support) to enable them to cope with the challenging requirements of their roles.