Features & AnalysisLaw Firms

How law firm philosophy presents a growing regulatory risk

There are many different elements to a law firm’s culture: It is not just about having high ethical standards in client work; it is also about the way staff interact with one another; and whether people feel that they are treated equally, for example

If a trainee lawyer you are supervising realises that they have made a mistake, what would they do? Would they feel frightened to admit what they have done, and try to cover it up to avoid being blamed and admonished? Or would they come to you to explain what has happened, knowing that they will be treated fairly and helped to resolve the situation?

If a major client is pushing a colleague to stretch the boundaries of the law, how would they react? Would they comply with the client’s request, fearing the impact on their career if they were to lose such an important client? Or will they have the confidence to push back, safe in the knowledge that the firm’s partners value high ethical standards above billing targets?

Questions such as these essentially boil down to one thing: a law firm’s culture. As such, they are firmly on the radar of the Solicitors Regulation Authority (SRA), which included a new focus on cultural issues in the Standards and Regulations that it introduced in November 2019. The regulator has said that it wants to “promote a culture in which ethical values and behaviours are embedded”.

According to its Code of Conduct for Firms, law firms are expected to have effective standards and controls to “create and maintain the right culture and environment” for delivering “competent and ethical legal services”.
Firms are also under a duty to promote inclusivity, and SRA Principle 6 specifies that a solicitor should act “in a way that encourages equality, diversity and inclusion.” This is one of the fundamental tenets of ethical behaviour.

Ethical values

There are many different elements to a law firm’s culture. It is not just about having high ethical standards in client work; it is also about the way staff interact with one another; and whether people feel that they are treated equally, for example.

So does the evidence suggest that the legal profession has a culture problem? Research published by the International Bar Association (IBA) in May 2019 certainly gave pause for thought. The IBA conducted the biggest ever global survey into bullying and harassment in the legal profession, with nearly 7,000 responses from people in 135 different countries. Shockingly, around half of women lawyers surveyed, and a third of male lawyers, said they had been bullied in connection with their employment. The UK-specific results were even worse. Out of 715 UK lawyers who took part in the survey, 62% of the women, and 42% of the men, said they had endured work-related bullying.

What data has the SRA published on this issue? In its Upholding Professional Standards Report 2019/20, published in July this year, the regulator revealed that it is dealing with a growing number of cases where individuals cited workplace bullying and harassment as a factor in them breaching standards; with 140 such cases currently being investigated. Breaches include concealing mistakes by misleading clients; falsifying time recording; and covering up missed deadlines.

The cultural problems are not confined to bullying, however. Sexual harassment was a key feature of the SRA’s upholding standards report for the third year running; with more than 130 open investigations as of February 2021. Behaviour being scrutinised by the regulator includes sending inappropriate messages, making inappropriate comments, non-consensual physical contact and sexual assault.

An intersectional approach

Recently there has been a growing understanding of the fact that equality, diversity and inclusion (EDI), bullying and harassment, and mental health in the legal profession are not standalone issues – they are often connected, and should be addressed in the round.

More than 1,700 legal professionals provided input into a recent report, Life in the Law 20/21, by the charity LawCare. The report looked at the mental health problems experienced by lawyers, and how these intersected with factors such as gender, ethnicity and disability.

Some 69% of the study participants had some kind of mental ill-health in the 12 months before completing the survey; most commonly anxiety, low mood and depression. However, only 56.5% of these lawyers had talked about their mental ill health at work. Those who had stayed silent had mainly done so due to worries about stigma, negative career implications, or financial and reputational consequences.

The LawCare research highlighted how a law firm’s culture can impact the wellbeing of its staff. For example, it showed that the level of autonomy that an individual lawyer has – the extent to which they can control what work they do, where and how – has a big impact on their mental health; with lower autonomy leading to higher levels of burnout. “Psychological safety” was also a big factor – with lawyers who did not feel safe to speak up with ideas or questions, or raise concerns or mistakes, feeling more burnt out.

Examining the intersectional nature of wellbeing, the report highlighted that mental health is shaped by a number of factors. It found that women lawyers – who reported lower autonomy, and lower psychological safety at work compared to their male counterparts – also had higher levels of burnout than male lawyers. Women lawyers aged between 26 and 35 reported the lowest autonomy, lowest psychological safety, highest work intensity and highest level of burnout.

Higher burnout was also experienced by lawyers from ethnic minorities, lawyers with disabilities, and lawyers who had experienced bullying, harassment or discrimination in the workplace.

Meanwhile on 8 November, a report on Career Progression in the Legal Sector, published by the Interlaw Diversity Forum and sponsored by the SRA, also took an intersectional approach to inequalities within the profession. When looking at pay, for example, it highlights that gender differences are exacerbated when crossed with membership of a minority racial group. The report finds that the top 10% of white British men in the profession earn £600k to £700k on average. Yet the top 10% of white British women earn £200k to £300k on average; and the top 10% of black women earn just £50k to £100k on average. Meanwhile, at £300,000 to £400,000 on average, gay men earn substantially less than straight men, but more than women.
The existence of such inequalities suggests there is still much to be done in achieving a more open, fair and inclusive culture across the profession.

Where next?

It is clear that the SRA is adopting a much broader lens in terms of risk factors, and issues of law firm culture are now firmly in its sights.

As to what policies, systems and controls the SRA thinks law firms should be adopting in order to achieve the right approach, we should not have to wait too long for some clues. In July’s professional standards report, the regulator said it was “developing guidance on a workplace culture and a healthy working environment for firms”, which is due to be published this year.

Once published, the guidance will be essential reading for all firms looking to improve staff wellbeing, and avoid the unwanted attention of the regulator.

Julie Norris, regulatory partner, Legal Services at London based law firm Kingsley Napley

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