If you can’t afford it, don’t buy it! - .PDF file.
This is a time of significant change for the profession’s regulatory framework, with economic pressures affecting large and small law firms. Failing firms can sometimes be saved by merger, acquisition or sale, but the regulatory framework is a disincentive. This can lead to messy interventions. Faced with these financial pressures, it remains to be seen whether all compliance officers will live up to the Solicitors Regulation Authority’s expectations.
A mandatory principle of the SRA Handbook requires solicitors’ firms to practice sound financial risk management. Compliance officers for legal practice (COLPs) and finance and administration (COFAs) need to notify the SRA if they believe their firm is in serious financial difficulty. This is an onerous task. Will some officers face internal pressure to keep silent in the hope that their firm can trade its way back to health without SRA supervision? Insurers should encourage firms to properly manage their exposure to risks and to notify the SRA of any concerns. No insurer wants to be left with run-off cover after a firm collapses after burying its head in the sand…
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