How to be SRA compliant part 3: The common SRA Code of Conduct pitfalls most SME law firms face and how to overcome them 

The SRA Code of Conduct is crucial to ensuring that solicitors maintain high standards of professionalism and integrity. For smaller and medium-sized law firms, compliance can sometimes feel overwhelming, especially when faced with resource constraints and limited administrative support. However, understanding the common pitfalls and how to address them proactively can make a significant difference. 

In the final instalment of this three-part guide, we explore the key challenges SME law firms encounter when trying to remain compliant with the SRA Code of Conduct and provide actionable solutions to overcome them. 

For more information on the SRA Code of Conduct, please visit here.

Common pitfalls SMEs face in SRA Code of Conduct compliance 

Compliance with the SRA Code of Conduct is essential for maintaining legal and ethical standards within law firms. However, many small and medium-sized enterprises (SMEs) encounter common pitfalls that can lead to potential risks and regulatory issues. In this section, we’ll explore these challenges in detail and provide actionable solutions to help your firm stay compliant with ease. 

2. Inadequate conflict of interest management 

The pitfall: Conflict of interest is another significant area where law firms often fall short. Failing to identify or properly manage conflicts can lead to serious breaches of the SRA Code of Conduct and potentially damage the firm’s reputation. 

How to overcome it: 

• Use conflict-checking tools: Automate conflict checks by integrating software that scans case files and identifies potential conflicts before taking on new clients or matters. 

• Develop clear conflict management procedures: Establish a formal process for identifying, documenting, and resolving conflicts of interest, ensuring that all staff know how to handle these situations effectively. 

• Regular audits and reviews: Conduct periodic audits of your firm’s conflict-checking processes to ensure that staff are following procedures and that no conflicts are overlooked. 

Proactively managing conflicts of interest helps mitigate potential risks and ensures compliance with the SRA’s rules on professional independence. 

3. Poor management of client funds

The pitfall: Improper management of client funds is a serious breach of the SRA Code of Conduct, with potentially devastating consequences, including regulatory penalties and reputational damage. Small and medium-sized law firms often struggle to implement necessary controls due to limited resources or reliance on generic accounting software not designed for legal compliance.

How to overcome it:

• Use specialist legal accounting software: Choose solutions specifically designed to support SRA compliance. Generic platforms may lack the safeguards and tracking features required to manage client funds securely and transparently.
• Adopt strict trust client account management practices: Ensure client funds are held in segregated accounts and maintain clear, detailed records of all transactions to align with SRA regulations.
• Automate fund tracking: Leverage case management software like Osprey Approach to provide real-time visibility into client fund balances and transactions, reducing administrative effort while enhancing compliance.
• Conduct regular audits: Implement a routine schedule for reviewing trust account records and conducting internal audits to identify and address potential discrepancies promptly.

By implementing robust financial controls and leveraging legal-specific technology, your firm can reduce risk, improve transparency, and ensure adherence to the SRA’s stringent client money rules.

4. Failure to maintain up-to-date policies and procedures 

The pitfall: Many SMEs overlook the importance of having current and well-documented policies and procedures. This can lead to inconsistencies in service delivery and difficulty in demonstrating compliance during regulatory audits. 

How to overcome it: 

• Centralise policy management: Store all key policies in one place, ensuring they are easily accessible to staff and regularly updated to reflect changes in the law. 

• Implement regular policy reviews: Schedule regular reviews of your firm’s policies and procedures to ensure they are in line with current regulations. This can be done through a calendar tool or internal reminder system. 

• Limit access to sensitive documents: Use your case management system to restrict access to sensitive policies and ensure that only authorised personnel can make changes. 

Keeping your policies and procedures up-to-date and easily accessible helps maintain consistency and ensures compliance with the SRA’s standards. 

5. Insufficient client identity verification and anti-money laundering (AML) procedures 

The pitfall: Failing to implement robust client identity verification and anti-money laundering (AML) procedures can result in serious consequences, including regulatory sanctions and reputational damage. 

How to overcome it: 

• Automate due diligence checks: Use software that integrates AML checks into your client intake process. This helps ensure that all necessary checks are completed before onboarding a new client. 

• Educate staff on red flags: Ensure staff are trained on how to spot signs of potential money laundering or identity fraud and how to act accordingly. 

• Document and report: Keep detailed records of all client verification processes and promptly report any suspicious activity to the authorities. 

By integrating AML checks into your systems and educating staff, you can mitigate risks associated with client identity verification and money laundering. 

Overcoming common pitfalls and ensuring compliance 

Navigating the SRA Code of Conduct can be challenging, especially for SME law firms that are juggling multiple responsibilities. However, understanding the common pitfalls and implementing effective strategies to overcome them will help ensure compliance and protect your firm’s reputation. 

By adopting technology, like a case management system such as Osprey Approach and committing to ongoing training and process improvement, your firm can streamline compliance, reduce risk, and enhance client trust. 

Compliance is not just about meeting regulations—it’s about fostering a culture of integrity, professionalism, and client care that ensures long-term success in a competitive legal market. 

Book a consultation to discover how Osprey Approach can help you effectively complete client and matter risk assessments across your teams. 

For further advice and best practices you can view parts one and two of our SRA transparency guides.

Part 1: How to be SRA compliant part 1: a guide to the SRA Code of Conduct

Part 2: How to be SRA compliant part 2: 9 ways Osprey can help law firms stay compliant with the SRA Code of Conduct

Disclaimer 

This guide is for informational purposes only and does not constitute legal advice. For detailed guidance on the SRA Transparency Rules, please visit the official Solicitors Regulation Authority website.