The Institute of Legal Finance & Management (ILFM) membership is the first port of call for UK law firm COFAs (Compliance Officer for Finance & Administration). 

In England & Wales, law firms are required to appoint a Compliance Officer for Legal Practice (COLP) and a Compliance Officer for Finance and Administration (COFA). These officers are responsible for ensuring that the firm complies with regulatory requirements. The ILFM has a COFA resource page on our website, together with a COFA Masterclass.

The Solicitors Regulation Authority (SRA) also provides guidance for firms to make sure they understand their obligations, including a free webinar on the Government’s financial sanctions regime which applies to all firms that provide legal services.

Some ways UK law firms can stay compliant include standardising tasks to allow automation, streamlining data collection to reduce errors, digitising client onboarding to improve due diligence, centralising billing processes to save time, and gaining visibility to increase control.

The ILFM offers training in Anti-Money Laundering run by one of the Law Society’s Money Laundering Task Force members, and the author of Solicitors and Money Laundering, published by the Law Society, Amy Bell.

How do compliance officers ensure that their firm complies with regulation?

So many of our ILFM members are sole practitioners, or in small legal practices. Their roles often take on both compliance officer roles. Although the ILFM tends to focus on the financial aspects of compliance, we understand the pressures that those who take on both roles are under. Managing risk is a key part of running a law firm.

Compliance officers ultimately must ensure their law firm complies with regulations by monitoring all operational processes and procedures. This includes managing information flow, researching, recording and analysing data and information, and training and educating staff so that they are informed of any legal changes and updates to compliance guidelines.

The ILFM’s training is a valuable resource for keeping a law firm compliant. Have a look at the list of online training events we offer here.

Compliance officers help firms keep the SRA and Solicitors Disciplinary Tribunal (SDT) at bay. They do this by keeping up with new legislation and regulation changes as part of their continued development process, whilst constantly reviewing company policies and procedures.

Compliance officers may also develop and implement compliance programs, conduct risk assessments, perform regular procedures and policy reviews, hold regular staff training sessions to update them about regulation changes or new legislation, and collaborate with all departments to ensure everyone works efficiently and safely.

Examples of UK law firms that have been penalised for non-compliance

In July 2022 the Ministry of Justice increased the Solicitors Regulation Authority’s fining powers from £2,000 to £25,000 for traditional firms and the solicitors who work in them.

There have been instances where the Solicitors Regulation Authority (SRA) has fined law firms for non-compliance. For example, a law firm that did not comply with the SRA’s transparency rules was fined £3,500 and another law firm that was non-compliant with anti-money laundering rules and fined £2,000 by the SRA for showing "a disregard for statutory and regulatory obligations".

Examples:

A conveyancing firm in Oxfordshire, Ferguson Bricknell, was fined £20,000 by the SRA:

The SRA said the only AML training employees received was in the form of a “personal compliance booklet” on AML sent to them in January last year. It was dated 2016/2017 and referred to the “outdated and superseded MLRs 2007”.

The new fining powers, that allowed the fine to reach £20,000, were applied after finding the firm “reckless” in failing to comply with the anti-money laundering (AML) requirements.

Why not book yourself or your colleagues onto our AML Masterclass HERE. If you are already a member of the ILFM, the training events are heavily discounted.

A legal practice in Oxfordshire, Gillingham, Kent firm Hawkridge & Company, owned by Mark Hawkridge, was fined £15,000 by the SRA because of Accounts Rules’ breaches under his deputyship:

Mr Hawkridge allowed £17,819 of money to be withdrawn from client account for a purpose other than for which it was held. He failed to keep his staff compliant by not helping them with training and resources to adhere to the SRA Accounts Rules; and he also accepted and paid into his personal bank account a cheque for £10,000 from an elderly client for whom he held a power of attorney.

As he held the position of the COFA, Mr Hawkridge failed to take “all reasonable steps” to ensure that his firm, its managers, and employees complied with the Accounts Rules.

Are you a senior partner, law firm owner or COFA? Our membership is vital for you and your firm to manage risk and compliance. You can join ILFM membership easily here for a very affordable investment of £139 + VAT per annum.

Our COFA Masterclasses are online, live, and interactive.

Fry Law, collapsed two years ago and was placed into administration amid multiple complaints about significant administrative failings:

Mr Fry was the owner, director and COFA of Fry Law.  Accordingly, he was responsible for ensuring compliance with the Accounts Rules and ought to have overseen the financial management of the Firm.  Had he undertaken his roles competently, he would have appreciated that there were failings in the management of the Firm’s finances, such that fees due for professional disbursements were not being paid upon receipt of settlement monies. 

Four of seven allegations were found “proven” by the SDT, which imposed a £9,000 fine, and ordered Mr Fry to pay £35,000 in costs.

You can read the full SDT Judgment here.

What does it mean being part of the ILFM Professional Membership Body?

Continued training, learning and development is vital for compliance officers, and law firms in general. Being part of the ILFM offers peace of mind in this regard.

Being a member of our professional body can offer several benefits. Some of these benefits include:

• Personal growth and enhanced professional perspective
• Support for creating and implementing change
• Access to events and networking opportunities
• Meeting leaders in the legal and finance industry
• Connections and job opportunities
• Access to industry news such as surveys, reports, updates, career information, regulation updates, and details of events
• Greater access to resources and information
• Discounts on training, events, and our ILFM Member Rewards’ Partners

Being a member with the ILFM also acts as a benchmark of quality, assuring your colleagues, clients, and potential clients that you have attained a high level of knowledge, experience, as well as professional education if you have gone through our qualification studies.

If you want to join the ILFM please do so here, or if you’d like to find out more about the ILFM and how it can support your firm as a whole, please email me: elaine.pasini@ilfm.org.uk.