Although many law firms advise corporate clients on compliance, not all firms have compliance programs in place.
Legal ethics rules don’t address risks common to corporate organizations and a code of professional responsibility is not the same as a code of conduct.
A robust compliance program is more than just legal compliance, and in connection to a code of conduct, when implemented in a law firm:
Compliance enables an organization to manage and avoid risks, and to comply with applicable laws and regulations.
Law firms may have protocols in place that cover risks associated with professional ethics. However, there are some measures that are not properly covered, such as segregation of client funds, management of conflicts, and billing.
A compliance program encompasses workplace harassment, discrimination, retaliation, privacy, fraud, theft, social media, cyber-security, insider trading, money laundering, bribery, kickbacks, methods of reporting problems anonymously, investigation protocols, and non-retaliation program. Many law firms do not create compliance programs that address these issues.
A code of conduct requires all employees adhere to the firm’s culture.
Training law firm employees on applicable rules, regulations and laws, combined with corporate ethics, helps to achieve an environment where all members of the organization can effectively follow compliance procedures and adhere to the firm’s culture.
For example, the “know your client” procedure when opening a file is key. Not every law firm has such procedure established, but there are affordable resources available to verify its individual and corporate clients. This saves time collecting paperwork from clients and provides valuable information about a law firms potential new client.
It is imperative for a law firm to appoint compliance ambassadors, or compliance officers, or compliance specialists within their organization. The appointed individual is in charge of risk management and compliance within the firm, as well as its internal systems and controls.
Making certain individuals, including partners, directly responsible is certainly an important way of focusing attention on compliance, and making all lawyers responsible for their own conduct.
Law firms worldwide are facing increasing regulation in the area of compliance.
A law firm with an effective compliance program has a competitive advantage. Law firms are like vendors and their clients need to know that their vendors are serious about compliance.