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Law Firm Risk for Compliance Officers

View profile for Karen Edwards FCILEx ILFM(Dip)
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How legal tech helps modern law firms to mitigate risk and stay compliant

I was delighted to take part in the second series of Osprey Approach’s Build Better Habits webinars. I was joined by fellow panellists Amy Bell, owner of Teal Compliance and ILFM’s AML Training Course leader, and Alex Simons, new business manager at The Law Factory. The webinar, which was hosted by Amy Bruce, head of marketing at Osprey Approach, provided a great opportunity to share practical guidance and tips on how modern law firms can mitigate risk and make compliance easy by adopting legal technology.  

Why being data-driven and using the right digital tools are key to mitigating risk

Having come from my position as a director in a forward thinking and tech savvy Oxfordshire law firm, where I researched and implemented legal tech in my operations role, I understand the need for law firms to use the right tools to offer compliant and time saving tech to manage risk. The panellists and I all agreed that having access to the right technology tools and data is vital if firms are to take a proactive stance with compliance, rather than firefighting issues.  

I agreed with Amy that data should be used proactively to mitigate risk, which is why it’s important that it’s reliable. Having accurate data in place helps you understand what the risks are to your firm. Once you understand the risks, you can adapt your tools effectively.

Many risks to your firm can be measured, and monitored with tech, but systems and processes have to be used and followed properly with the right data being captured.

Avoiding common compliance pitfalls

Alex highlighted that it’s the basics that often catch law firms out, and that practices need to stay on system and ensure all data and actions are kept on their CMS for that all-important audit trail.

Staying on system is important for managing compliance risks as well as security and data breaches; everyone across the firm needs to be using the systems consistently. Make sure everything is documented in a policy; people are trained on the processes; and everyone knows where to find the right data. Engineer your policies into your legal software to standardise operations and utilise your system to store all your data in a single source of truth.

Seven habits law firms should adopt to ensure staying compliant  

Amy, Alex and I agreed that modern law firms should focus on the following digital habits to mitigate risk and stay compliant:

Implement control mechanisms

I recommended the use of workflows to standardise operations across individuals and teams, which enables controls to be put in place to monitor file management behaviours.

Be disciplined with your data

Capture all data digitally on a file including key dates, client details and communications so that anyone can pick up the file and progress it.

Stay curious

Amy suggested that firms “be curious as to why people are not doing what they were told to do. I’ve seen many cases where people simply don’t like something, so they find workarounds. That’s frustrating but no one tends to ask why and there’s probably a sensible reason. Analyse the tech usage and get a feedback loop so you know why.”

Update little and often

Alex suggested that firms update their files little and often to avoid compliance errors.

“If something goes wrong and you’ve not updated your files, then that’ll be picked up on an audit. If you’re in the habit of leaving things late, that habit will get picked up in an audit and they’ll highlight it as a systematic problem.”

Review and report regularly

Alex stressed the importance of individuals having access to the data they need to proactively monitor compliance.

“An issue I see regularly is residual client balances and the SRA are hot on this at the moment. You can report every week and send the data to fee earners to action. Tech makes that a lot easier; I know Osprey has automated reports.”

Set up before you start

For any new software project, Alex recommended ensuring your firm is set up properly before rolling out the system to the wider team.

“If you want to be compliant and use the tech effectively, you have to set it up properly…If you provide a blank template to employees they will find workarounds and get into their own bad habits.”

Prioritise continuous training

I highlighted the importance of continuous training and ensuring that firms are using the digital system effectively as well as inputting the right data. Offer continual training to ensure processes are effective. Ongoing training on the system will not only improve confidence of users but enable them to better use the tools to their advantage.

Implement digital habits to build a solid foundation for effective compliance and risk management

Implementing the right digital tools, adopting effective habits, and capturing the right data is crucial to proactively mitigating risk across your business. Being proactive will help you stay one step ahead of detrimental financial or reputational damage that is linked to compliance breaches.

If you’d like further advice and guidance on mitigating risk with legal tech, I’d suggest watching the full episode, which is free and on-demand. In this episode Amy, Alex and I share more of our experiences and knowledge in building a successful modern law firm, including the connection between compliance and your client experience, and how to ensure your culture prioritises compliance.

Thanks to Osprey Approach for inviting me to talk!