Management of your business

Version 18 of the Handbook was published on 1 November 2016. For more information, please click "History" above.

Chapter 7: Management of your business

This chapter is about the management and supervision of your firm or in-house practice.

Everyone has a role to play in the efficient running of a business, although of course that role will depend on the individual's position within the organisation. However, overarching responsibility for the management of the business in the broadest sense rests with the manager(s). The manager(s) should determine what arrangements are appropriate to meet the outcomes. Factors to be taken into account will include the size and complexity of the business; the number, experience and qualifications of the employees; the number of offices; and the nature of the work undertaken.

Where you are using a third party to provide services that you could provide, (often described as "outsourcing"), this chapter sets out the outcomes you need to achieve.

The outcomes in this chapter show how the Principles apply in the context of the management of your business.

Outcomes

You must achieve these outcomes:

O(7.1)

you have a clear and effective governance structure and reporting lines;

O(7.2)

you have effective systems and controls in place to achieve and comply with all the Principles, rules and outcomes and other requirements of the Handbook, where applicable;

O(7.3)

you identify, monitor and manage risks to compliance with all the Principles, rules and outcomes and other requirements of the Handbook, if applicable to you, and take steps to address issues identified;

O(7.4)

you maintain systems and controls for monitoring the financial stability of your firm and risks to money and assets entrusted to you by clients and others, and you take steps to address issues identified;

O(7.5)

you comply with legislation applicable to your business, including anti-money laundering and data protection legislation;

O(7.6)

you train individuals working in the firm to maintain a level of competence appropriate to their work and level of responsibility;

O(7.7)

you comply with the statutory requirements for the direction and supervision of reserved legal activities and immigration work;

O(7.8)

you have a system for supervising clients' matters, to include the regular checking of the quality of work by suitably competent and experienced people;

O(7.9)

you do not outsource reserved legal activities to a person who is not authorised to conduct such activities;

O(7.10)

subject to Outcome 7.9, where you outsource legal activities or any operational functions that are critical to the delivery of any legal activities, you ensure such outsourcing:

(a)

does not adversely affect your ability to comply with, or the SRA's ability to monitor your compliance with, your obligations in the Handbook;

(b)

is subject to contractual arrangements that enable the SRA or its agent to obtain information from, inspect the records (including electronic records) of, or enter the premises of, the third party, in relation to the outsourced activities or functions;

(c)

does not alter your obligations towards your clients; and

(d)

does not cause you to breach the conditions with which you must comply in order to be authorised and to remain so;

O(7.11)

you identify, monitor and manage the compliance of your overseas practices with the SRA Overseas Rules;

O(7.12)

you identify, monitor and manage all risks to your business which may arise from your connected practices;

O(7.13)

you assess and purchase the level of professional indemnity insurance cover that is appropriate for your current and past practice, taking into account potential levels of claim by your clients and others and any alternative arrangements you or your client may make.

Indicative behaviours

Acting in the following way(s) may tend to show that you have achieved these outcomes and therefore complied with the Principles:

IB(7.1)

safekeeping of documents and assets entrusted to the firm;

IB(7.2)

controlling budgets, expenditure and cash flow;

IB(7.3)

identifying and monitoring financial, operational and business continuity risks including complaints, credit risks and exposure, claims under legislation relating to matters such as data protection, IT failures and abuses, and damage to offices;

IB(7.4)

making arrangements for the continuation of your firm in the event of absences and emergencies, for example holiday or sick leave, with the minimum interruption to clients' business;

IB(7.5)

you maintain systems and controls for managing the risks posed by any financial inter-dependence which exists with your connected practices;

IB(7.6)

you take appropriate action to control the use of your brand by any body or individual outside of England and Wales which is not an overseas practice.

In-house practice

Outcomes 7.5 and 7.7 apply to your in-house practice.

Outcomes 7.1 to 7.3, and 7.6 and 7.8 to 7.10 apply to you if you have management responsibilities.

Notes

(i)

All of the chapters in the Code will be relevant to the management of your business, in particular those which require you to have systems and controls in place.

(ii)

This chapter should also be read with the SRA Authorisation Rules, the SRA Financial Services (Conduct of Business) Rules 2001 and the SRA Indemnity Insurance Rules.