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A look at the Solicitors Regulation Authority’s planned changes to make law firm culture fit for purpose.
We look back at the SRA’s Workplace Culture Thematic Review and Guidance on the Workplace environment published earlier this year and forward to the rule changes on health and wellbeing which the Legal Services Board has now been asked to approve.
Workplace culture has increasingly been on the SRA’s radar in recent years: reports of bullying, discrimination and harassment have been on the up, and there have also been high-profile disciplinary cases involving solicitors who covered up problems or errors because of a workplace culture which did not encourage open dialogue, but compounded feelings of panic and anxiety when something went wrong. The SRA recognises that beyond specific allegations of bullying or harassment, a toxic workplace culture can not only impact on the wellbeing of staff, but also lead to mistakes being made and poor outcomes for clients.
In February, the SRA published Guidance on the Workplace environment alongside a Workplace Culture Thematic Review. In March, it opened a consultation on rule changes concerning health and wellbeing at work. This has now resulted in a recommendation to the Legal Services Board to make new rules relating to the unfair treatment of colleagues and to solicitors’ health and fitness to practise.
In the February Guidance, the SRA set out its expectation that firms “should do everything they reasonably can to look after their staff’s wellbeing in the workplace”, including both protecting staff from bullying, harassment, discrimination and victimisation, and supporting them so they can work safely and effectively.
Crucially, failure to do so may breach the SRA’s existing regulatory requirements – such as having in place effective systems and controls to ensure compliance with regulatory and legislative requirements (including employment, equality and health and safety legislation) (Code of Conduct for Firms, paragraph 2) and obligations around the effective supervision of work to ensure that services provided to clients are competent and delivered in a timely manner (Code of Conduct for Firms, paragraph 4). The SRA considers that, where staff are not adequately supervised and supported, or experience bullying or blame if mistakes are made, this can prevent mistakes from being disclosed, potentially leading to breaches of Principles 4 and 5 (acting with honesty and integrity). The SRA also expects firms to treat all of their employees fairly and with dignity: bullying, harassment, discrimination or victimisation may amount to breaches of Principle 6 (encouraging equality, diversity and inclusion) and Principle 2 (upholding public trust and confidence).
The Guidance points to the SRA’s focus, under the Enforcement Strategy, on serious breaches and persistent or concerning patterns of behaviour, which would include ongoing failures to address abuses of authority by senior staff, ineffective systems and controls and the imposition of wholly unreasonable workloads or targets. Senior managers have responsibility for the culture and systems within firms and will be held responsible for firms’ failures of regulatory compliance and supervision.
In its Workplace Culture Thematic Review, which was published alongside the Guidance, the SRA considered how firms can create a positive culture in the workplace “where employees feel supported, risks are managed, and clients are protected” and provided examples of policies and working practices which can effect this. The recommended strategies and actions include reviewing and defining a firm’s culture, establishing a wellbeing strategy and systems and controls, embedding values and ethics, focusing on recognition and reward and engaging with colleagues. Some themes which stand out across the Thematic Review are:
Notably, the SRA’s Code of Conduct for Solicitors, RELs and RFLs already includes specific rules relevant to supervisors and managers: paragraph 3.5 (where you supervise or manage others providing legal services: (a) you remain accountable for the work carried out through them; and (b) you effectively supervise work being done for clients) and paragraph 3.6 (you ensure that the individuals you manage are competent to carry out their role, and keep their professional knowledge and skills, as well as understanding of their legal, ethical and regulatory obligations, up to date). Thus, training supervisors and managers to provide emotional support, and encouraging them to create informal opportunities for contact, feedback and mentoring, will help them to keep an eye on the wellbeing of their team members, and therefore also (under paragraph 3.6 of the Code) their competence to carry out their role.
Paragraph 2.1 of the Code of Conduct for Firms requires that firms have governance structures, arrangements, systems and controls in place that ensure compliance with the SRA’s regulatory arrangements (including the obligation under SRA Principle 6 to act in a way that encourages equality, diversity and inclusion), and that these systems and controls are “effective”. While staff surveys, training, junior boards and focus groups will help to ensure that policies are effective and implemented, documenting these steps (e.g., by taking minutes at junior board meetings and focus groups) will ensure these steps can be evidenced – fulfilling paragraph 2.2 of the Code: keeping and maintaining records to demonstrate compliance with your obligations.
Paragraph 4 of the Code of Conduct for Firms requires firms to have an effective system for supervising client matters – including in the hybrid environment. This extends to an effective supervisory system where team members may be working remotely. Technology provides both opportunities for effective supervision, through video calling, live chat functions and the use of collaborative platforms, and challenges in that it is harder to monitor the work of team members (particularly junior staff), and the times at which they are working.
Principle 7 (acting in the best interests of each client), and paragraph 3.2 of the Code of Conduct for Solicitors, RELs and RFLs requires that the services provided to clients are competent and delivered in a timely manner. Paragraph 3.4 requires that the client’s attributes, needs and circumstances are taken into account. The SRA has now made clear that these regulatory requirements need to be balanced with employee wellbeing. Managing client expectations at an early stage, and supporting employees to meet client demands, may help commercial requirements to be met without compromising employees’ health. In addition, there should not be a disconnect between the actions of senior leaders and the culture they promote.
Between March and May this year, the SRA also consulted on explicit rule changes relating to health and wellbeing at work. This has resulted in the publication of an SRA board paper recommending a number of changes intended to strengthen the SRA’s regulatory position and ability to take action on these issues.
As regards unfair treatment at work, the Code of Conduct for Solicitors, RELs and RFLs will include a new standard:
“1.5 You treat colleagues fairly and with respect. You do not bully or harass them or discriminate unfairly against them. If you are a manager you challenge behaviour that does not meet this standard.”
Similarly, the Code of Conduct for Firms will include this new standard:
“1.6 You treat those who work for and with you fairly and with respect, and do not bully or harass them or discriminate unfairly against them. You require your employees to meet this standard.”
While the SRA proposed in the consultation earlier this year that solicitors who are not managers would be covered by the requirement to challenge unfair behaviour, junior lawyers will now simply be encouraged (rather than obliged) to challenge where they feel confident to do so. The SRA has acknowledged that to make this a requirement for junior staff and/or for those who are themselves being treated unfairly risked causing them undue anxiety. It therefore intends to use guidance to encourage non-managers to speak up.
Further, it appears from the consultation, which refers to the Enforcement Strategy, that the SRA intends to investigate allegations only about “behaviours that seem likely to present a serious risk to clients, colleagues or the wider public interest”. It does not expect to get involved in “disagreements about targets or allocation of work, or routine employment law matters”.
However, it is now proposed that the Introductions to both Codes of Conduct are to be amended to clarify that “Conduct does not need to take place in a workplace in order to relate to your practice – these requirements capture conduct which touches realistically upon your practice of the profession, in a way that is demonstrably relevant.” This reflects the SRA’s reading of the Beckwith judgment, and its position that the new rules should apply to behaviour away from the workplace, including in private life, where that behaviour is “in the context of a relationship between colleagues” rather than a purely personal relationship. The SRA has indicated that it will be issuing guidance in relation to the new rules which should help clarify how the regulator would identify that boundary in practice – and also how they will interpret the somewhat amorphous concepts of fairness and respect.
The SRA also wishes to take action where necessary to deal with concerns over solicitors’ health affecting their fitness to practise. Regulation 7.2 (determination of applications) of the Authorisation of Individuals Regulations will be amended such that conditions on a practising certificate may be imposed under regulation 7.1(b), including if the SRA is satisfied “for any reason, including health issues, lack of competence or misconduct”, that you “will not comply, or are unable to comply, with the SRA’s regulatory arrangements (which includes your ability to engage with your regulator on any matter that may require investigation and take part in any regulatory or disciplinary process) or require monitoring or compliance with the SRA’s regulatory arrangements.”
In the future, “fitness to practise” may expressly include the ability to comply with the SRA’s rules, and to cooperate with regulatory investigations and participate in disciplinary proceedings. This amendment is intended to avoid a repetition of recent cases where SDT proceedings have been stayed indefinitely for health reasons whilst the respondent solicitor has carried on working.
Scrutiny of law firm workplace culture, health and wellbeing is set to continue, with additional changes in the pipeline. Law firms will need to have active and agile policies and procedures in place to address and demonstrate compliance in this area, both at an entity level and at an individual level for those operating as managers. In addition, as fitness to practise itself is now likely to encompass the ability to comply with regulatory obligations, firms and individuals who fail to comply with the new rules are likely to attract regulatory censure, and the unwanted publicity that goes with it.
 See paragraphs 26 and 27 of the SRA’s 18 October 2022 Board Paper on Rule changes on health and wellbeing in the profession; see also the SRA’s Guidance on Health issues and medical evidence in SRA investigations, and the SDT’s Guidance Note on Health Issues.