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How legal technology and practice management software helps compliance officers (COLPs & COFAs) at SME law firms manage their workload easier

Category: Blog, Build a Digital-First Culture, Practice Management, Staying Compliant 10th September 2024

Compliance Officers for Legal Practice (COLPs) and Compliance Officers for Finance and Administration (COFAs) play crucial roles in ensuring SME law firms adhere to legal and regulatory standards. Not only do these positions require a keen understanding of both legal and financial regulations, but also the ability to implement policies and procedures that maintain compliance across teams, proactively monitor risk, and effectively communicate change to employees.

Legal technology and practice management software provides invaluable tools to assist compliance officers proactively manage risk. This article explores the challenges faced by COLPs and COFAs in SME law firms and how legal software and digital tools can streamline their work.

Key responsibilities for compliance officers 

COLPs are primarily responsible for ensuring that the firm’s legal practices comply with regulatory standards. Their duties include:

1. Monitoring compliance: Regularly reviewing the firm’s operations to ensure adherence to legal and ethical standards.

2. Reporting: Preparing and submitting compliance reports to regulatory bodies like the Solicitors Regulation Authority (SRA).

3. Policy implementation: Developing and enforcing policies that promote compliance within the firm.

4. Training and awareness: Educating staff about compliance issues and best practices.

COFAs focus on the financial aspects of compliance, including:

1. Financial management: Ensuring accurate financial reporting and adherence to financial regulations.

2. Handling client funds: Overseeing the management of client funds to prevent misuse or mishandling.

3. Audit preparation: Preparing for internal and external audits by ensuring financial records are accurate and compliant.

4. Risk management: Identifying and mitigating financial risks within the firm.

Key challenges faced by compliance officers

Compliance officers in SME law firms are faced with numerous challenges including:

Regulatory complexity: Navigating the intricate web of regulations from multiple bodies, such as the SRA and Legal Services Board (LSB), can be challenging.

Data management: Managing and securing large volumes of sensitive data, including client information and financial records.

Time constraints: Balancing the need for thorough compliance checks with the operational demands of the firm.

Training and awareness: Keeping the entire firm updated on compliance standards and changes in regulations.

Compliance experts from ILFM, Teal Compliance, and The Law Factory shared the common compliance pitfalls they often see and how compliance officers can avoid them. 

“It’s the basics that are the biggest problems.” Alex Simons, new business manager at The Law Factory, shared how it’s the basics throughout the accounting processes that cause SME firms the most compliance issues. “Firstly, when you have a hybrid team, a paper-based system no longer works. Especially when you’re dealing with thousands in a conveyancing processes, a scribbled on piece of paper isn’t good enough.

“The firm needs to stay on system and ensure all data and actions are kept on your CMS as that will provide an audit trail to keep you compliant.”

Karen Edwards, head of professional development at ILFM, agreed that staying on system is important for managing compliance risks as well as security and data breaches: “Everyone needs to be using the systems consistently. Make sure everything is documented in a policy, people are trained on the processes, and everyone knows where to find the right data.” Engineer your policies into your legal software to standardise operations and utilise your system to store all your data in a single source of truth.

Amy Bell, founder of Teal Compliance, highlighted six of the common pitfalls she regularly observes in SMEs:

  • Not analysing why things go wrong
  • Data is siloed
  • Employees are at maximum capacity
  • Ignoring the data
  • Responding to non-compliance too late
  • Not leveraging client due diligence (CDD) technology

“The biggest pitfall I see is assuming that when things go wrong it’s a one-off and firms put it down to human-error. But that’s not the data you need: you want to know why it went wrong and what policy needs to change to stop it happening again.

“Technology can help with doing a root cause analysis. I like the Five Whys model. For example, the issue is we missed a key date, you then to ask at least five whys. Why? Because it wasn’t put in the court diary – why? Because it was supposed to be done by this person – why? That part of the process wasn’t followed – why? The training hadn’t been completed – why? Because that particular person was too busy.

“That’s when you start to uncover the real root cause of the issue. Behind a lot of the analysis – when it’s done – it typically uncovers that no one has enough resource. Poor capacity management is a massive contributing factor to mistakes being made.”

How legal technology and case management software benefits compliance officers 

Efficient workload management is vital for COLPs and COFAs to maintain a high standard of compliance. The complexity and volume of regulatory requirements requires meticulous record-keeping and regular monitoring. Without streamlined processes, the risk of non-compliance increases, potentially leading to legal penalties and reputational damage.

Legal technology, including case and practice management software, has become integral to modern law firm operations. For COLPs and COFAs, these tools are essential in managing compliance-related tasks efficiently. They offer capabilities such as automated reporting, real-time monitoring, and centralised data management, which are crucial for maintaining compliance across various regulatory frameworks.

The benefits of legal technology and practice management software for compliance officers include:

  • Centralised data management: Provides a single source of truth and a centralised platform for storing and accessing not only compliance-related documents and records, but connecting the firm’s data to avoid data errors and risks across departments. 
  • Digital conflict of interest check: When your data is stored digitally, completing a conflict of interest check is quicker and more accurate, ensuring all your records are searched and reviewed. 
  • Real-time reporting: Offers insights into the firm’s compliance status, allowing for timely interventions. Visualised data in dashboards also helps teams spot trends and mitigate potential risks before it’s too late. 
  • Streamlined workflows: Reduces manual workload, minimises errors, and enhances overall efficiency. Embed compliance tasks within your standardised workflows to ensure all teams are following the same requirements and are consistent with their compliance procedures. 
  • SRA compliant accounting: Reduces potential errors and provides guidance to ensure requirements are met. An SRA accounting solution helps to set limits, communicate warnings, set you up for success to manage client monies. 
  • Client due diligence: Improves the accuracy and scope of client due diligence checks to ensure you’re compliant. Onboarding clients is easier, more convenient, and more secure when completed online. Digital ID checks, AML checks, VoF, and digital signatures provides a modern client service that is protected and compliant. 
  • Automatic population of data: Data can be entered once and then used for future communications, documents, and forms without needing to re-key information. This avoids data errors, mistakes, and inconsistencies in client data. 
  • User permissions and controls: Robust security features to protect sensitive information, with user permissions to control access to different features, functionality, and data sets. 

These features address the key challenges faced by compliance officers, enabling them to manage their workload more effectively and ensure that the firm remains compliant with all relevant regulations. For more information on these features in Osprey, and how we assist compliance officers to mitigate risk, book a consultation meeting with our experts.

Automated workflows enhance client service and aid compliance for Pavilion Row 

“One of the features we really appreciate is the workflows and it’s another reason why we chose Osprey. The workflows allow us to easily monitor the work we’re doing and from a management point of view, it allows us to oversee processes and ensure we’re delivering the right level of service.

“Workflows also ensure we’re being consistent and so in all areas of the business we use workflows for the key compliance tasks during the file opening process to ensure that we’re doing all the appropriate checks and we’re not missing anything.”

Speaking to Head of Legal and Probate at Pavilion Row, Dawn Plant explains, “the workflows are really handy for me…. We know exactly when a document needs to be sent out or an ID check needs completing. Rather than relying on remembering to tell someone to complete a task, it’s all there and know where we’re at in any case. It’s easier then to report on too, so in our weekly meetings we can clearly see where we’re at with matters. Workflows just help – a lot”

Automated workflows not only help improve efficiencies, profitability, and visibility for the firm, but they also help to improve the client service Pavilion Row can provide. “From the client point of view, one of the benefits of workflows, and Osprey generally, is that everyone is working to the same consistent process, so we’re very much a team. This means when a client calls in, they can speak to any of the team and we can go into Osprey and easily understand the file and what’s happening because we’re all working from the same data, using the same processes.”

Reduce errors, ensure consistency, and mitigate risk with legal tech that eases the pressure for compliance officers

Compliance officers in SME law firms face a complex array of challenges, from managing regulatory compliance to overseeing financial practices. Legal technology and practice management software, like Osprey Approach, offer powerful tools to simplify these tasks and reduce the manual efforts needed to be proactive. By automating routine processes, centralising data management, and providing robust reporting capabilities, these technologies enable COLPs and COFAs to manage their workload more efficiently.

For more information and a free consultation, on how Osprey can assist compliance officers in their day-to-day tasks, please contact our expert – Book a consultation

References

1. The Law Society. (n.d.). *Compliance for law firms*. Retrieved from [The Law Society](https://www.lawsociety.org.uk/topics/regulation/compliance-for-law-firms)

2. Solicitors Regulation Authority. (2020). *SRA Standards and Regulations*. Retrieved from [SRA](https://www.sra.org.uk/solicitors/standards-regulations/)

3. Legal Services Board. (2021). *Regulatory performance assessment*. Retrieved from [LSB](https://www.legalservicesboard.org.uk/our-work/regulatory-performance)