Joe Bryant is a partner at Beale & Co, a leading international insurance law firm. He specialises in the defence of professional negligence claims, acting for lawyers and insurance brokers, and their London market insurers.

Joe has recently spoken at an event organised and hosted by Lockton about this topic.

The Workplace Culture Thematic Review by the Solicitors Regulation Authority (SRA) has offered a host of potential challenges for law firms around implementation, and has raised questions about the future of sector-wide regulation.

In February 2022, the Solicitors Regulation Authority (SRA) published its Workplace Culture Thematic Review(opens a new window). Drawing on the experience of employees and firms, the document presents a set of expectations for firms, emphasising the need to create a positive culture in which employees feel supported, risks are managed, and clients are protected. This, it argues, is essential for the delivery of competent and ethical legal services.

A track-record of toxicity

The legal sector has come under increasing scrutiny in recent years when it comes to workplace culture. For decades, the sector has been defined by practices that are now widely regarded as ‘toxic’, such as pressure from clients and stakeholders, long working hours, and concerns around bullying, harassment, and mental health.

In one survey conducted in October 2021(opens a new window), 90% of lawyers indicated anonymously that there were certain firms they would never join, regardless of pay. In the same survey, more than one third of respondents admitted having considered leaving the profession within the previous 12 months.

For legal firms, the symptoms of a toxic workplace culture can be difficult to spot. Workplace culture is typically led from the top-down, in the form of partner-level engagement and broader organisational policy. The impacts of a negative culture, however, are felt predominantly by those at the bottom.

Failure to address toxicity is not without its consequences for firms. Evidence suggests that a negative company culture not only has implications for individual wellbeing but can also translate into poor ethical behaviour and a lack of competence. This can, in turn, negatively impact the standard of service received by clients.

The virtuous circle

It is in this context that the SRA published its thematic review. Within, it outlines the following characteristics of a positive workplace culture:

• inclusivity and core values such as respect that are lived by everyone
• authentic leaders that lead by example and model positive behaviours
• a no blame culture and an open, speak up environment
• reward and recognition for all aspects of work and achievements
• employers regularly engage with employees and seek their feedback
• supportive, collaborative teams and opportunities for social connection.

As noted above, a positive workplace culture is becoming of growing importance to employees. This is largely driven by those at the junior level, who are joining workplaces with different expectations from their predecessors around issues such as work-life balance and workplace benefits. The Covid-19 pandemic has further accelerated this attitude-shift.

But firms themselves also stand to benefit from the adoption of a more positive workplace culture. As the review outlines, happier employees have been shown to generate lower staff turnover, thereby reducing recruitment costs, and helping to attract new talent, fuelling business growth.

At the same time, an environment that empowers employees to come forward and admit mistakes means that any errors can be dealt with, protecting firms from claims. It can also significantly streamline the process of professional indemnity renewals, which are increasingly asking questions about culture.

Happier and more productive employees can also deliver a better client experience. This can lead to the creation of a ‘virtuous circle’, in which firms are able to reap the rewards in the form of new business.

Clients themselves are also placing a greater emphasis on culture, with underperformance in this regard increasingly viewed as a reputational risk. A positive culture can therefore prove a useful differentiator within a competitive market.

Obstacles to change

The shift to a more positive workplace culture presents several opportunities for firms but achieving this comes with challenges.

For instance, although firms may refer to a single company culture, the likely reality is more complex, with tens or hundreds of micro-cultures existing across various departments and teams. Such cultures may have a detrimental effect, creating patterns of toxicity that go unnoticed by those at the senior level. But they also hinder the ability of those firms to instigate wholescale change.

At the same time, many firms will still feel bound by the realities of legal life, including the pressure of commercial performance. Without buy-in from across the legal sector, ingrained habits may be difficult to break.

The emergence of remote working also poses a new challenge for firms, who must juggle their employees’ growing appetite for workplace freedom and flexibility, with the pressures of isolation that often typify remote work. A careful balancing act is thus required to cement company culture while also respecting employees’ preferences.

There are also questions about the review itself. It is not yet clear how far the SRA will go to enforce a positive workplace culture. By drawing a closer association between people and compliance risks, the review also asks fresh questions of firms’ working procedures. In future, this may require human resources (HR) teams to work more closely with their compliance and risk counterparts to prevent and resolve issues.

All this points to one of the biggest challenges facing firms: how to demonstrate a positive working culture? Here, one option for firms is to codify elements of their culture into a strict ethical code. This may reassure employees seeking to raise grievances that their concerns will be heard.

But even a tangible set of principles cannot guarantee engagement and uptake among employees. Mandatory training, with proper monitoring and escalation procedures, or completion linked to the receipt of workplace benefits, may offer another way forward.

The future of regulation – ethics before the law?

The Workplace Culture Thematic Review represents a significant shift in thinking with regards to workplace culture in the legal sector. However, it isn’t the only sign of movement across the regulatory landscape.

The SRA has also recently increased its fining powers against firms that do not meet professional standards(opens a new window) by more than 12 times the previous limit, in what is another reflection of increased scrutiny of legal firms. Meanwhile, the Legal Services Board (LSB) is also conducting its own review into ongoing competence and standards(opens a new window), examining whether the current approaches taken by regulators are effective in protecting consumers and the public interest.

Therefore, one key question concerns the direction of travel moving forward, and whether firms may need to consider the ethical implications of their actions.

Indeed, decisions are already being made in this regard. Many firms have cut ties with Russian-affiliated clients following the country’s invasion of Ukraine. However, doing so presents further dilemmas and concerns. At what threshold should firms decide to part company with a client? Which factors should be considered? If ties are cut, could there be repercussions, such as issues of access to justice? Firms also need to consider whether their actions are founded on evidence, or motivated by a desire to avoid reputational harm.

More broadly, fresh questions are being asked about the role of lawyers in the modern era, amid growing fears that many within the profession have become enablers on behalf of their clients rather than guardians of the rule of law. The SRA’s warning against SLAPPs(opens a new window) is indicative of these fears. Lawyers for such clients may begin to wonder if they will be required to object to clients’ requests, at risk of overstepping their role, or opening the door to an emerging market for unregulated legal services.

For further information, please contact:

Neville Miles, Partner, UK Professions

T: 0207 933 2068

E: neville.miles@lockton.com