Conduct issues have been at the heart of the legal sector’s biggest reputational and regulatory issues in recent years. Everyone is familiar with a handful of #metoo incidents that went beyond the legal press to make national and international headlines. Over the same period another trend emerged, with the Solicitors Regulation Authority (SRA) prosecuting a number of junior solicitors over dishonesty for covering up mistakes.
Now in 2022 the SRA is set to broaden its focus on conduct issues beyond individuals, to look at whether bad firm or office culture is driving or facilitating bad behaviour in the profession.
“The SRA will shortly be releasing guidance on the regulatory risks to law firms from bad culture, particularly where that culture leads to sexual misconduct or other forms of discrimination,” says Iain Miller, regulatory partner at Kingsley Napley.
The guidance is also expected to address whether firms are supporting their people appropriately to ensure people can speak out about being overworked, mental health issues and other difficulties.
“The idea is that they are moving beyond individual conduct to look at whether the reason for that conduct is systemic” says Andrew Pavlovic, a partner at CM Murray specialising in SRA professional discipline and regulatory investigations. “The SRA has itself come in for criticism when taking action against junior solicitors, who in some cases said they were overworked, unsupported and did not feel they were working in an environment where they could admit any mistakes.”
Red flags might include a lack of diversity, scant support mechanisms for solicitors and staff, or a history of several conduct issues arising in the same firm, office or team. The number of firms signing up to the Mindful Business Charter, and the increasing provision of mental health days and mindfulness training show that firms are aware of and thinking about these issues. Training for partners and senior professional staff to encourage people to feel comfortable in coming forward with their concerns will also be vital. Internal communications have an enormous role to play in fostering a more open and supportive culture.
Regulatory lawyers expect that even a one-off incident will in future lead to the SRA asking questions about firm culture. But if conduct issues are mounting up the SRA will investigate if a firm itself has a broader culture problem.
“They could take the firm to the SDT if a regulatory settlement cannot be agreed” says Pavlovic. “Indeed, if the SRA identifies a pattern of behaviour it would be fair to assume they will take it to the SDT.”
As well as the regulatory and reputational risks, it is also fair to assume any such investigation would put a firm at a competitive disadvantage in attracting and retaining talent, which in the current hyper-competitive market would be a major problem.