Regulatory Compliance – The Virus – Latest from the Law Society
Summary
The SRA has stated it “expects solicitors and firms to continue to meet the high standards the public expect. This means they must do everything they reasonably can to comply with our rules, and follow our Principles. This includes serving […]
The SRA has stated it “expects solicitors and firms to continue to meet the high standards the public expect. This means they must do everything they reasonably can to comply with our rules, and follow our Principles. This includes serving the best interests of their clients and upholding the rule of law.”
It expects firms to have appropriate contingency plans in place but recognises the exceptional circumstances firms are operating under now as well as in the coming months.
The SRA says it will be pragmatic and take a proportionate approach to regulating the profession, including in its approach to enforcement. If it receives complaints, it would take into account mitigating circumstances, as set out in its enforcement strategy. It states that “This includes focusing on serious misconduct, and clearly distinguishing between people who are trying to do the right thing, and those who are not.”
The SRA recommends that if you face compliance difficulties linked to the coronavirus crisis, you should clearly record the approach you have taken.
Absence of the COLP/MLRO due to illness
Short-term absence
If the COLP or MLRO has coronavirus but the symptoms are relatively mild, the period of time off work, whether due to self-isolating or illness, will be similar to a holiday, so no action should be necessary.
It’s good practice to make sure that other senior solicitors are aware of any issues. It may be useful to have an informal deputy, given that the compliance officer for legal practice (COLP) role is person specific and no formal deputies can be registered with the SRA.
If you can, you should discuss with a colleague absence planning measures and nominate someone to fill in, maintain records and update the MLRO or COLP on their return.
Long-term absence
If the absence is going to be long-term and remote working is unlikely, firms have 28 days to apply to the SRA to:
- replace the COLP
- get an emergency COLP
When the original COLP returns, you’ll have to apply to the SRA to return them to their role.
If you're a sole practitioner, you should consider setting up an arrangement with another solicitor who can be available in these situations. Clients should not be left without a response. You should also ensure that your out of office response for emails has the latest information.
The SRA has more guidance on compliance issues.
Client confidentiality when working remotely
See the SRA’s information on compliance queries
We have published guidance on cybersecurity when working from home.
The SRA has published cybersecurity Q&As.
Deadlines for company accounts and accountants’ reports
Companies House announced that from 25 March 2020 companies will be able to apply for a three-month extension for filing their accounts.
This joint initiative between the government and Companies House will mean businesses can prioritise managing the impact of coronavirus.
See the Companies House press release
See coronavirus guidance for Companies House customers, employees and suppliers
The SRA expects law firms and solicitors to do everything reasonably possible to comply with its Accounts Rules and to keep client money safe. Due to the current exceptional circumstances the SRA has said it will take a pragmatic and proportionate approach to any delay in the preparation of an accountant’s report.
See the SRA’s information on compliance queries
Regulatory obligations for firms in financial distress
Solicitors and firms should act in compliance with the SRA Standards and Regulations even if they encounter financial difficulty.
That means, among other things, that solicitors and firms must always act with integrity and they must inform the SRA personally if they are in an actual or potential insolvency situation.
Read the SRA guidance on this issue
Handling complaints
The Legal Ombudsman (LeO) has published guidance for legal service providers on its approach when considering complaints during the COVID 19 pandemic.
Firms may have difficulty responding to first-tier complaints from clients within the usual eight-week timeframe. For example, there may be delays if staff cannot access files or are on sick leave.
If a complaint is at the first-tier stage, and you cannot respond within the timeframe, it’s important to let the complainant know so that they do not think you are ignoring their complaint.
If possible, give a timeframe for when you may be able to respond. If not, then try to keep the complainant informed at reasonable intervals. You should document any communications. You should also comply with your firm’s existing contingency plans, if any, as far as reasonably possible.
If the complainant escalates the matter to LeO then you can demonstrate that you took reasonable steps to communicate the circumstances and to keep the complainant informed of the situation.
LeO has said that it will work to be as flexible as possible with service providers impacted by the crisis and would take your actions into account.
If the complaint is already with LeO and you’re having difficulty responding to LeO. For example, this may because of the COVID 19 crisis your archive service provider cannot send the files to you.
It will be important for LeO to keep the complainant updated about the delay in progressing their complaint. It’s important that you inform LeO about the circumstances as soon as possible and co-operate in keeping LeO updated. It may help to show LeO copies of any relevant correspondence you have with your archive service provider.
It’s also important that you inform LeO about the circumstances as soon as possible and co-operate in keeping LeO updated. It may help to show copies of any relevant correspondence you have with your archive service provider.
Prospective clients can raise complaints with LeO for ‘unreasonable refusal of service’. You may decline to take instructions from a prospective client if your firm is unable to take on a new retainer due to the current difficult circumstance. We would recommend that you document the conversation and the reasons for refusal; in case a complaint is later raised.
Read the SRA guidance on this issue
In addition to the SRA’s guidance we would also suggest putting your operating arrangements on your website, so that potential customers are informed.