The SRA's Principles are not just rules, they capture the profession's core values, says TLT's Robert Bourns 

A BBC commentator put it to the recently appointed KPMG senior partner that regulation is only required because trust in the City community has gone. This has been a developing theme in the aftermath of Libor and other failures in governance, but is a question that extends to organisations, communities and businesses well beyond the City.

Regulation does not mean that the regulated community is not trusted. Most recognise that rules provide confidence to the regulated and those dealing with them, and identify expected standards of conduct and competence. 

Recent events demonstrate that regulation does not of itself protect us from misconduct or failure. Rules can be broken or bypassed. The economic crisis of 2008/09 and ongoing malaise left policy makers floundering for a resolution, referring to 'moral hazard' and the need for a 'moral compass'. Others identify systemic failures in governance, raising questions for corporate culture and values.

There is a risk that the policy makers' imposition of further regulation intended to mitigate moral hazard and promote the interests of the consumer, justice etc, will deal with historic problems (some perceived rather than real), but not avoid the next. This may in part be fed by regulation that is inadequate or does not reflect the way in which we or the markets operate. This could encourage a response that the regulations neither promote good practice nor maintain standards of competence or conduct; are not fit for purpose and encourage practitioners to find a 'work around'. Undesirable and, no doubt, an unintended consequence.

Rules and regulations should promote (even celebrate!) excellence and the highest standards of behaviour, so that they are recognised as both fundamental and incidental to the way we work. 

Maintaining trust

The Solicitors Regulation Authority's (SRA) Principles are clear and unexceptional in describing the standards expected of those providing legal services. Outcomes focused regulation requires us to design systems that reflect the risks associated with clients of differing sophistication, the nature of the work and size and reach of our practices. However, any system or structure introduced will be informed and affected by the firm's values. 

It is crucial that clients and practitioners have confidence that the firm or other provider of legal services demonstrates a determination to live by the SRA's 10 Principles. In particular, we must act with integrity, with independence and in a manner that maintains the trust placed in us.

These are not just rules – they express our values. The culture of any firm will change over time. This is inevitable and necessary, but the underlying values can be constant.

Law firms are commercial enterprises and can only be successful if they serve client interest. Change continues at a pace, promoted by the Legal Services Act and the demands of our clients. This is encouraging a further and probably fundamental segmentation of our market and profession, with an ongoing drive for consolidation and a more 'corporate' approach. The values expressed by our professional Principles remain common and can be demonstrated just as well by a solicitor in an LLP or partnership as in an alternative business structure.

However, it is essential that leadership and management teams demonstrate that they work competently and in good faith to apply the Principles in the development and implementation of the firm's strategy, in dealing with external agencies and clients, as well as with their colleagues.

Their obligation is to exercise their authority in the interests of the firm as a whole. In most cases they will seek to promote its long-term future, to satisfy the current and anticipated needs of the clients and the ambitions of the most able members of the firm. Maintaining the trust of all members of the firm is fundamental.

External regulation will only deal with the worst and most obvious breaches of trust. Firms of all structures and sizes must demonstrate strong and consistent application of principles of integrity, maintaining the trust and confidence of all those working within the firm.

Promoting fairness 

In addition, with businesses of increasing size and complexity, where no partnership group can or should be expected to spend its time 'policing' the work of its management team, there is justification for the creation of a governance or oversight structure that does not fetter or compete with the day-to-day management and development of the business of the firm, but does hold it to account in terms of the decisions made, promoting rigour, fairness and a grounding that ensures that, although culture will change, the fundamental values that allow us all to thrive are maintained. 

As Lord Coe said, in a different context, we should be able to review our decisions and dealings with each other, whether colleagues, clients or third parties and say 'we did it right'. Others, less graciously, but correctly, ask that our conduct and decisions should pass the 'smell test'.

Robert Bourns is senior partner at TLT.