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Why law firm compliance programmes often fail and how to improve them: In conversation with Amy Bell   

Category: Blog, Empowering Law Firm Leaders Interview Series, Podcast, Practice Management, Staying Compliant, Webinar / Video 1st August 2024

In this conversation, Amy Bell – founder of Teal Compliance, non-practising solicitor and chair of the Law Society’s money laundering task force – shares her valuable insights on why many law firms struggle with compliance and how they can create more effective programs. 

In episode eight of our Empowering Law Firm Leaders series, we discuss best practices for creating a firm-wide culture of compliance, how to be a successful COLP or COFA, and how to avoid SRA fines.      

In this conversation we cover:

  • Why compliance programmes fail 
  • Best practices for building a culture of compliance   
  • Impacts of tech on risk management  
  • Tips to avoid AML fines from the SRA 

Watch the interview with Amy Bell:

Listen to the episode here:

Amy’s three compliance rules that every law firm should know  

  1. Business protection, not prevention 

Amy emphasises the importance of viewing compliance as a means of protecting the business rather than a bureaucratic hurdle. “It’s business protection, not business prevention. We often get a bad rep as the ‘computer says no’ people, but we’re actually out there protecting everybody’s jobs and the business.” 

  1. Focus on psychological safety  

Without a supportive culture, even the most well-resourced and well-communicated compliance programmes will falter. Amy shares: “Back when I had claims, I wanted the ground to swallow me up – I didn’t feel worthy of the solicitor title. I felt awful.” Compliance is about protecting employees from that feeling, which is why a supportive culture and psychological safety is required to support compliance efforts.  

  1. Clarity and simplicity  

Compliance should be straightforward and easy to understand. Amy advises against overcomplicating things with jargon and convoluted procedures. “Compliance is simply a framework to protect people. It’s not rocket science. What it does have to be is clear and easy to understand.” 

Why compliance programmes fail 

Amy starts by highlighting that many current law firm leaders entered the profession, like her, when there was a thick rulebook on how to complete the required compliant processes. For years, the SRA has been “chopping away at the rule book and moving from rules to principles.” The SRA has moved away from telling firms what to do, to outlining only the expected outcome: “This can be challenging to figure out what’s the right way to do it.” 

Amy introduces her framework for creating effective compliance programmes, which is known as the Six Cs of Compliance. The biggest of the C’s is culture: “You can do the other five Cs, but if you haven’t got a culture that supports compliance, your investment in those other five steps will be wasted.” 

The Six Cs of Compliance 

The Teal Compliance Six Cs framework is: 

1. Clarity: Clear expectations are crucial, especially as regulatory frameworks shift from prescriptive rules to principles-based guidance. Law firms must navigate these changes with well-defined policies and procedures. 

2. Capacity: Adequate resourcing is essential. In many small firms, the same individuals juggle multiple roles, making it challenging to prioritise compliance. Amy stresses the need for proper allocation of responsibilities to ensure compliance is effectively managed. 

3. Communication: Engaging communication is key to compliance. Policies should be relatable and relevant, avoiding generic templates that fail to resonate with staff. Amy highlights the importance of making training and policies accessible and engaging. 

4. Commitment: Securing commitment from staff is vital. Amy explains that in the legal profession, an undertaking is a serious commitment. And so getting employees to commit to follow the firm’s agreed policies and behaviours – treating it as an undertaking – will be a crucial element in continued support and buy-in from employees and helps foster a culture of accountability. 

5. Consistency: Firms need to know if their compliance works and proactively monitoring programmes with control frameworks highlights to compliance officers where processes are, or aren’t, being followed.  

6. Culture: The cornerstone of effective compliance is a supportive culture. Without it, investments in the other Cs are wasted. Amy believes that clear leadership and incentivised programmes are required to maintain momentum and protect the firm.  

About Amy Bell 

As a solicitor since 1999, Amy Bell has navigated various roles, from practicing in small high-street firms to working in large Manchester city centre firms. Her journey led her to specialise in compliance, particularly during the nascent stages of anti-money laundering regulations. Amy’s extensive background includes heading learning and development in major firms – including the head of compliance for the Quality Solicitors group – and eventually founding Teal Compliance, a consultancy aimed at supporting law firms in managing risk and compliance. 

Reflecting on her career trajectory, Amy shares her inspiration for starting her own consultancy business, “What I realised when I was [at the large city firm] was the advantages large firms have over smaller firms  have because of the scale that they can get to and the support they can tap into like marketing and  compliance central services. I was always concerned for the smaller firm… how could they cope because we had a whole team focus on compliance.” 

Characteristics of a successful compliance officer 

  1. Alignment of risk appetite 

“One of the most common reasons I see that people move on from compliance officer jobs…is because there’s a misalignment between the risk appetite of the compliance person and the risk appetite of the firm.” She advises that firms need to test this alignment during the recruitment process to ensure that the compliance officer can make decisions independently, without having to escalate every issue to the management team. 

  1. Self-awareness 

A thorough understanding of one’s own risk appetite is crucial for compliance officers. Amy suggests, “Give yourself some scenarios and go, what would I do about this?” This self-assessment helps compliance officers ensure they align with the firm’s risk culture. Amy adds that compliance officers should be able to navigate varying risk appetites within the firm and understand where they stand on the spectrum from risk-averse to risk-tolerant. 

  1. Approachability and trustworthiness 

“If you’re not trustworthy or employees aren’t confident that you’re not going to go-off-on-one at them, they’re not going to tell you anything and you’re just making your job even harder.” She points out that being calm under pressure and consistent in demeanour are crucial for building trust. This approachability encourages open communication, which is essential for effective compliance.  

The behaviour of leadership ultimately impacts the culture and Amy believes the values of the business need to be role-modelled by compliance officers. She recalls her own experiences, noting, “I am very open and honest, even as a boss now. I’ll tell [the team] I’m really sorry I made this mistake.” This openness helps foster a culture where employees feel safe to admit errors, which is critical for effective compliance management.  

  1. Proactive problem-solving 

Amy underscores the need for compliance officers to be proactive in addressing potential issues and creating peer support networks. She shares an example from her career: “When I was a fee earner, I used to have a pile of files – we all did – that we were struggling to progress. One day I said, ‘why don’t we have a meeting at lunchtime and everyone can just bring their pile of files and instead of losing sleep over them at three in the morning, we bring it to the team meeting and help each other.” Such initiatives can significantly reduce stress and improve problem-solving within the team. 

The impact of using technology to stay compliant   

Amy highlights the transformative power of technology in managing compliance within law firms. She recalls an early observation: “I used to share the office with the lady who had to do all of the data for our professional negligence claim renewal… she had complaints in one filing cabinet, claims in a different one.” This disorganised approach led to inefficiencies and missed opportunities for holistic risk management. 

Amy notes that many compliance officers still face similar challenges today, receiving notifications through emails that get lost in overstuffed inboxes. To address this, she emphasises the need for integrated systems: “Once we’ve got it all in one place, we can start to analyse it and start to bring out trends.” By consolidating data from various registers, firms can identify recurring issues and address them more effectively. For instance, she explains, “If you’ve got two complaints about failing to call a client back, and data breaches because they didn’t ring the client… you would know that’s the thing to fix.” 

The development of the Teal Compliance tracker tool is Amy’s solution to these problems. This tool automates incident reporting and integrates a root cause analysis process. By using techniques like the “Five Whys,”, and embedding that thinking into tech, helps firms dig deeper into issues beyond superficial explanations like “human error.” Furthermore, the collected data is not just for resolving immediate issues but also for strategic improvements. This data-driven approach ensures that resources are allocated to areas that will have the most significant impact on compliance. 

Amy also highlights the use of artificial intelligence to enhance this process, stating, “We’ve actually incorporated AI into that to help drill down onto what the actual causes are and then analyse it and reflect back to the firm where the problems are.” This advanced analysis helps firms avoid blind spots and ensures compliance efforts are both effective and efficient. 

Strategies for building a resilient compliance culture in SME law firm 

Building a resilient compliance culture in SME law firms demands a proactive approach to navigating regulatory landscapes and fostering a supportive environment. Today, compliance isn’t just about adhering to rules but ingraining a culture where every team member understands their role in safeguarding the firm’s integrity.  

Strategies must prioritise clear communication, robust training, and consistent monitoring to ensure compliance efforts are not only effective but integrated into the firm’s daily operations. By championing transparency and accountability, firms can mitigate risks, enhance client trust, and foster a workplace where compliance is a shared responsibility.  

Discover more insights and practical guidance on cultivating a resilient compliance culture in SME law firms to enhance long-term success. 

Watch the full interview with Amy Bell now to discover more advice and guidance on cultivating a resilient compliance culture in SME law firms to enhance long-term success. You’ll also hear Amy’s exclusive advice on how to avoid AML fines from the SRA.