Who’s responsible for upholding the legal code of ethics?

The legal profession is well known for its rigorous route to entry. As well as intensive training, solicitors applying to the Roll must undergo a character and suitability assessment. Financial conduct is a key component of this assessment. It requires lawyers to consider the state of their personal finances and the potential for their financial arrangements to bring the profession into disrepute. 

While major financial issues such as bankruptcy or a county court judgment are well known to be black-list events, few lawyers pay attention to the less familiar requirement to “satisfactorily manage their finances”. 

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So what happens post-admission and who is responsible for ensuring continued compliance with the financial conduct rules? 

Financial management and the legal code of conduct

The Solicitors Regulatory Authority (SRA) makes it clear that the character and suitability assessment is not a one-off test; it’s an ongoing code of ethics to which solicitors must adhere. What’s more, firms have a corollary duty to ensure compliance by all of their people, including those who are non-authorised persons.  

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No lawyer wants to find themselves on the wrong side of the SRA, yet research shows an astonishing lack of financial confidence and indicators of poor financial behaviours in the legal sector, even amongst those at the start of their careers. 

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While many young lawyers may find themselves in the top 5% of UK earners, 71% of juniors feel pressure to spend beyond their means.

42% of juniors profess to have less than £1,000 in cash savings for an emergency, while 51% admit to relying on credit to pay for essentials because they have run out of money. The signs of poor financial competencies are there, so at what point do firms step in to support their people and ensure compliance with regulatory standards?

Why law firms should care about financial education

Ignoring the warning signs can be costly and damaging. Employees with problematic financial behaviours pose risks, including increased absence, reduced performance and at worst financial misconduct, jeopardising a firm and its reputation. 

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Law firms that want to stay ahead of these risks can start by integrating financial training into their compliance standards, providing resources and tools to build financial competency. 
Training coupled with a culture where lawyers can ask for help with their finances when they need to acts as a protective shield against the risk of financial misconduct.

Can your firm afford to ignore the risk?