Varying attitudes to regulatory compliance within law firms are highlighted in a new survey of small and medium-sized practices. The survey also also shows how fear of fraud is rapidly climbing the management agenda.
The research by legal network LawNet found junior fee-earners and administrative staff were most worried about the regulatory repercussions of poor risk management. Many cited fear of the SRA as a key factor behind improving risk handling.
Senior fee-earners and managers, however, were more focused on the effect on finances and reputation of the firm.
The LawNet report said regulatory compliance should be the ‘beating heart’ of a well-managed firm, with staff needing to understand and embrace processes and procedures and why they are in place.
‘Establishing a culture that drives improvements is essential,’ said the report. ‘It’s important to avoid creating a box-ticking mentality because if staff instincts are not finely tuned then risks may well be missed.’
The biggest risk challenge, law firms confirmed, was stemming the growing wave of potential fraud that is fast becoming a regular occurrence.
According to the survey, which had responses from almost 600 people, cybercrime and fraud was ranked as the biggest threat for 2017 by 40% of firms, closely followed by client data protection and maintaining robust IT systems.
Almost half of respondents were aware of a fraud attack to their firm in the last 12 months, of which the majority were email phishing attacks.
Firms appear to have responded positively, with 95% of those surveyed saying they understood the firm’s policies in the key areas of banking and clients payments, and of managing files and equipment away from the office. Residential conveyancing is perceived as being the highest risk work, followed by commercial property.
Chris Marston, chief executive of LawNet, added: ‘Fraud is top of the radar for most firms, and rightly so, looking at the figures. But firms need to look at the bigger picture if we are going to tackle this across the sector.
‘Embedding the right culture, so every member of staff is clued up and signed up, is how we’ll achieve this, while bringing real business benefits through better customer service and increased competitiveness.’
Cyber-attacks and scams are a threat to all businesses today, including law firms. Click here to read the Law Society guidance to help you understand and mitigate cybersecurity risks.