rblog

Updating the Risk Outlook

By Debra Malpass on 18 April 2017

April is here, and with it our spring update to the Priority Risks page for our Risk Outlook. We want to explain a little more here about why we publish quarterly updates to the Risk Outlook, and what we have updated this time. 

Why do we update the Outlook? 

The legal market has not stood still since we last published a full Risk Outlook in July 2016. The whole purpose of publishing the Outlook is to set out our position on the legal market, to show our priorities and to help solicitors and firms manage risk. With a changing market, it is therefore essential that we keep the Outlook up to date. 

We publish a fresh Risk Outlook each year. The market changes faster than that, however. As such, we produce regular updates to the Outlook, on a quarterly cycle, to ensure that the information we give to firms is as relevant and up to date as possible. 

What are the Priority Risks? 

The Risk Outlook is there to provide an overview of risks in the legal market that could affect the protection of people who use legal services, the operation of the rule of law and the proper administration of justice. The Priority Risks are the most significant of those risks. They are the areas where the evidence has shown this is where we need to focus our activity. 

There are at present seven Priority Risks identified in the Outlook: 

  • Lack of access: This covers the existence of barriers to people accessing legal services.
  • Standards of service and considering vulnerability: When a person receives a poor standard of service, this can affect their ability to find the help they need. This is particularly the case where people are already vulnerable.
  • Information security / Cybercrime: This is now the most commonly reported type of crime in the country. Firms must take reasonable steps to protect against it.
  • Independence and integrity: The great majority of solicitors act with complete integrity and independently advance their clients’ cases. Those who do not, however, can damage public confidence in legal services and the rule of law.
  • Protecting client money: The number of firms that misuse client money is low, but the impact can be very high.
  • Money laundering: There is always a risk that those who wish to launder money will target the legal sector, because the involvement of a solicitor can lend a perceive legitimacy to criminal transactions.
  • Diversity: A strong and diverse legal market encourages high standards, improves access to services and supports the effective administration of justice. 

With the Priority Risks tab on the website, we provide current information to show why we think each risk is so significant. We set out the ongoing trends so that readers can see where that risk is going. We also set out the actions we are taking and the ways in which legal services providers can act to help ensure that the risk is controlled. We also provide case studies to give practical examples of how these risks occur in real life and to show how we deal with them when they do. 

What have we updated? 

We have brought the Priority Risks page on our website up to date, so that it gives the latest facts, figures, trends and information about why each risk is a priority, what is happening with it, what firms can do about it, and what we are doing about it. As an example, we have updated the Information Security tab to give the latest information about cybercrimes and other data issues reported to us. With £7m of client money stolen through email modification scams in 2016 alone, it should be clear that this is a significant issue.

But we do not just point firms to the existence of the problem. We refer readers to best-practice guidance on cost-effective ways to manage these issues while still taking advantage of online resources to support innovations. In particular for this update, that means letting firms know what the experts are saying about ways to avoid email modification frauds, which can affect any firm that holds client money. 

We also set out the actions that we are taking to help control these risks. For information security, in addition to published papers, this has included a roundtable on cybersecurity, which we held on 5 April. The roundtable brought us together with specialists, industry experts and with other regulators and enforcement bodies to ensure that we share information as effectively as we can while acting together to protect regulated markets from cybercrime. The results of this will help us in our ongoing thematic engagement with firms on this issue, which will be beginning later this year. 

Hopefully, this gives you some insight into how the Priority Risks update can help you deal with these significant issues in the legal market, and as to why we are updating the page now. There will be more updates to come, with our next full Risk Outlook in the summer.

If you want to provide us with any feedback on the content of the Priority Risks page or anything else connected to the Risk Outlook, then please email us at SRAresearch@sra.org.uk

Debra Malpass