Law Firm culture has become one of the biggest challenges facing the legal profession. Its significance has been magnified by the pandemic. Remote working has caused some to question whether they want to continue to work in the law and to raise concerns about their working environment. It has also led firm leaders to be concerned about how to maintain a good culture in a dispersed workplace.
Even before the pandemic there was an important debate around wellbeing in the legal profession and widespread instances of sexual harassment and bullying. Not only are these all issues for law firm leaders and their HR teams to grapple with, but they are also regulatory issues too for those firms regulated by the Solicitors Regulation Authority and are therefore equally of concern to the firm’s general counsel.
The SRA has just released its first ever guidance on workplace culture. It deserves attention. It draws together some ideas around good practice but crucially makes the point that bad practice may have regulatory consequences. It states: “we are likely to take action against a firm where, for example, there is evidence of (1) a pattern of the abuse of authority by senior staff that has been left unchecked by the firm (2) a complaint of discrimination, victimisation or harassment not dealt with by the firm in a prompt and fair manner; and (3) the imposition of wholly unreasonable workloads or targets.”
This new hard line by the SRA in relation to firms follows a number of high-profile cases it has taken against junior members of the profession who have in mitigation referred to the toxic workplace where the events took place and the fact they worked in an environment where there was a fear of speaking out. The SRA was criticised for not dealing with the root cause of such problems, namely the firms themselves.
Unlike most other jurisdictions the SRA regulates entities as well as individual lawyers so is able to bring enforcement actions against firms. These powers in their current form have existed since 2011. Until recently they have been sparingly used by the SRA and as such it is less clear where professional responsibility lies between the firm and individuals within it.
Notwithstanding the uncertainty as to the precise boundaries of firm responsibility, the SRA guidance highlights that there is an extra regulatory dimension to how firms approach internal issues. Historically misconduct by an individual within a firm was likely to mean SRA action against that individual alone. Now when misconduct arises the firm will need to consider whether anything it has done, or failed to do, could be investigated by the SRA.
This leads to two main considerations. First, the firm should ensure that it has appropriate policies, systems and processes in place that address potential risks. These should extend not only to traditional areas of legal practice but should also include things like alcohol at work policies and relationship policies. These are clearly important to discourage some behaviours but can also be relied upon by the firm to show that what the individual did was contrary to the firm’s policies.
Secondly, a firm needs to think carefully about how it reacts to incidents. Traditionally, low level incidents have been resolved informally. However, what happens if more than one similar instance is dealt with in this way. If something more serious happens this might be viewed by the SRA as the firm tolerating a pattern of conduct. As such the individual’s behaviour becomes a regulatory problem for the firm as a whole. The firm will need to be able to demonstrate that it reacted appropriately.
Of course, on the other hand, a firm that elevates every incident to a formal disciplinary investigation in order to protect itself from the SRA is not likely to have a good culture either. However those judgement calls of how best to react to incidents do now present more regulatory risk. There are no easy answers but getting it right begins by understanding how the temperature has changed and then working out how best to respond. Moreover if a firm has a culture shaped from the top with clearly articulated values, standards of behaviour and expectations of its members then that response is easier to call.
The SRA’s guidance demonstrates that fixing areas of concern and proactively nurturing a healthy working environment has taken on a new imperative.
By Iain Miller is a partner at Kingsley Napley specialising in Legal Services Regulatory