If you are starting the process into who you should assign as the COFA in your legal firm, you might not know exactly what it means to be a COFA, and who you can consider for the role. As you will, I’ve no doubt already know, your practice is required to designate a Compliance Officer for Finance and Administration by the Solicitors Regulation Authority (SRA).
This person must do all that is possible to ensure the firm is adhering to all the SRA’s rules and requirements, taking full responsibility of recording breaches and failures to comply with the rules.
The SRA says:
Compliance officers have specific responsibility for ensuring your firm, its managers and employees comply with our regulatory requirements. They are also responsible for recording any breaches and reporting those to us, where necessary (paragraphs 9.1 and 9.2 of the Code of Conduct for Firms).
I’m going to explain who a COFA can be and what that requires below.
Who can be a COFA?
Law firms are given flexibility in selecting who will serve as a COFA, however, the person that is appointed for this role doesn’t have to be a solicitor or a lawyer. This person tends to be high up in the firm, like Head of Accounts, a PM (practice manager), or a well-trusted employee of the company. The important factor to remember is that the person chosen must be approved by the COFA authorized body,
“An authorised person means an individual or a firm that is authorised to provide reserved legal services by an approved regulator. An approved regulator is a legal services regulator approved by the Legal Services Board to regulate reserved legal activities.”
Solicitor Regulations Authority
Picking an individual to be the COFA for your firm is not a decision to be made quickly. There are so many factors that have to be considered as it’s a very important role to have, keeping your firm, your colleagues, and your clients safe.
Although compliance is ultimately the responsibility of the whole firm and its managers, the COFA plays a critical role in ensuring that the appropriate systems and controls are in place by ensuring that everyone in the firm follows the rules set out by the SRA. Due to this reason the person serving as a COFA must be a good leader, trustworthy as well as being mentally and physically fit to handle the role and all its responsibilities.
Although a COFA doesn’t have to be a solicitor, there are a few requirements to be approved for the position. Whoever you consider for the job in hand needs to consent to the role of a COFA and be of sufficient seniority and responsibility to fulfil the responsibilities, i.e., don't just tell them over a coffee break that they are in charge of financial compliance for the firm!
The person appointed needs to have the confidence and authority within the firm to make a decision that others will support and agree with. After all, a COFA has to make sure that everyone is following the rules and reports any breaches to the SRA, so they need to be able to make tough decisions.
As these decisions can be extremely difficult, this is where we urge you to come to us first so we can go over the problem and guide you with the next steps, whether it is a reportable issue or if it’s something that can be dealt with in-house.
How does someone get verified to be a COFA?
Any COFA nomination will go through an automated verification process. This will include checking the information within the nomination forms against already held information about that member.
There can be problems at any stage of the process, so we’d advise making sure all transparency and full disclosure is included. For example, if a criminal conviction has not been declared then this is a big issue, even if the conviction was minor. Also, if the individual already has regulatory issues marked against their name it means that they cannot meet the requirements of being a COFA. If you have a new member of staff who has come in as a senior role, do your risk assessment of them before you put them forward for this role.
Be cautious when submitting your nominations, the SRA can act against firms that fail to engage properly or refuse to re-nominate a suitable candidate.
Responsibilities of a COFA
You need to acknowledge the responsibilities that a COFA has for you to decide who to nominate for the role. There’s so much to expect from the COFA so make sure they know what they are getting into before you send off their nomination.
One of the main responsibilities of a COFA is to report serious breaches to the SRA as quickly as possible. They must use their professional initiative about what constitutes a breach, CHECK WITH US FIRST! Some breaches just need to be logged for your own records.
Train and support their colleagues in the legal firm to understand the rules
The individual you are nominating for the role of the COFA needs to have a good level of respect amongst the firm’s employees and managers. Why? Because they have the task of sharing the rules that need to be followed and advise their colleagues to understand how to implement the requirements into their day-to-day responsibilities.
Report the firm if it is in financial difficulty
You need to trust this individual with your firm’s financial documents and be confident that they will keep all the information safe and secure. This person also needs to have the confidence to report any financial difficulties to the SRA, even if they have been asked not to do so by someone in the firm. It’s a tricky one, which is why we can help and be the COFA’s first port of call.
The person assigned to the role of COFA, unlike a COLP, does not have to be a solicitor or a lawyer, but we would recommend considering all the factors outlined above before making your final decision. It’s critical that your company is managed by a trustworthy, responsible individual that is respected in the law practice, so take your time in creating a nomination.
An individual who accepts the role should have access to all the necessary resources, time, and support that they need, in order for them to do their job properly and effectively. It’s a really interesting job, but also a very important one that can incur personal risk so make sure the individual is prepared and supported.
Quick reminder of who can be a COFA:
- is an employee or manager of the practice
- is of sufficient seniority and in a position of sufficient responsibility to fulfil the role
- is approved by the SRA for that role
- has not been disqualified from acting as a Head of Finance and Administration (HOFA)
- has consented to undertake the role
We really are there for you and your colleagues, our ILFM membership is one that is discreet, confidential and wholly supportive to any individual (either sole practitioner or legal finance related). If you need assistance or advice on who to appoint as a COFA, please contact us right away, also if you ARE already a COFA, please don’t forget we are here for you, so take full advantage of your membership.
If this is something that you are interested in, please visit our website, or contact me, or a member of the ILFM team in confidence. Our number is 020 8302 2867 or you can contact us by clicking here.