I was interviewed recently by Law Firm Ambition on my views on the most common questions I come across in respect to mergers/accounts rules. Here are my thoughts for the first five questions, with more to follow in the coming weeks. Next week I'll be answering more questions around breaches and cyber security.
The COFA must be an employee, but not necessarily a manager of the practice. They need to be approved by the SRA for the role and to have consented to the role. Additionally, they must be of sufficient seniority within the practice to carry out the role. The COFA does not need to be a lawyer.
The role is largely concerned with the Solicitors Accounts Rules, so a good understanding of those is vital. In addition, the COFA should have a good understanding of finance in general and the financials of the practice.
Ultimately, who is appointed to the role will depend on the size of your practice and what suits the needs of the firm. Many sole practitioners will also be their own COFA. In large practices, the COFA will be a full-time role held by a finance partner/director or someone who leads the finance team. Whoever you choose, the COFA does require the right level of gravitas to fulfil the role.
Lawyers have an obligation to run their business and carry out their roles in accordance with proper governance and sound financial and risk management principles, so financial non-compliance should not regularly occur. However, some examples are:
In our experience, the most common breaches are as follows:
Fee-earners have a lot to do in their everyday work, so can become over-reliant on the accounting team for compliance.
All fee-earners within the practice should have a good understanding of the rules. They should have regular training and updates on the rules to ensure ongoing compliance.
It is important to instil a firm-wide culture of financial compliance. The breach register, file reviews and health checks should be highlighted and discussed with the management of the practice to reinforce its importance to all.
All breaches, no matter how minor, should be recorded in the breach register.
If a law firm has no breaches in its register during an accounting period, I’d question if the reporting processes are working effectively.
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