Five ways to win new business through better regulatory compliance
The traditional approach to regulatory compliance by some legal firms is to focus their risk and compliance efforts on keeping the regulator happy or avoiding the regulator getting angry. Whilst this approach will deliver some benefits, it is unlikely that it would result in the benefits of regulatory compliance exceeding the costs. Better regulatory compliance on the other hand primarily focuses on the key drivers of the regulator’s activities, which is usually the protection and promotion of the best interests of consumers.
In other words, better regulatory compliance is looking through the regulator’s lens to see more clearly the pain points of consumers in order to develop and embed a risk and compliance program that supports the acquisition and retention of profitable new business. Better regulatory compliance is an approach that recognises that being compliant offers no competitive advantage unless its leverages the flexibility that outcomes focused regulation (OFR) offers in order to meet its regulatory obligations in ways that maintain and/or enhance its competitive advantage.
So how should legal firms leverage better regulatory compliance to win new business? Although there are a number of ways that legal firms can adopt the better regulatory compliance approach to secure new business, this article will focus on five key elements.
Firstly, the mandatory compliance officers should not only be perceived as the ‘in house regulator’ but also as the ‘internal champion’ of customers. The compliance officers should act as leading advocates of the customer internally in order to foster a customer centric organisation. Positioning compliance officers as internal champions of the customer also fosters effective collaboration internally with other departments such as marketing particularly in the development of the customer experience and appropriate new services. A customer centric legal firm is more likely to adopt ways of working that foster a high culture of compliance with regulatory obligations whilst simultaneously delivering a positive customer experience to underpin strong brand loyalty and repeat business.
Secondly, legal firms should utilise new regulatory obligations to uncover potential customer pain points in order to identify opportunities to improve the customer experience and/or to develop new products and services. The Legal Services Act 2007 ushered a new regulatory framework with the Legal Services Board as the oversight regulator of the Approved Regulators and/ or Licensing Authorities. In addition, the new framework has encouraged a more evidence-based approach to regulation, which means that there is more research on legal consumers to underpin the development of regulatory approaches. Whilst the cost of the new regulatory approach is of increasing concern to some stakeholders, the range of available regulatory intelligence on the potential pain points of consumers is a valuable resource for firms of all sizes to support them to develop their market research and new products and services as appropriate.
Thirdly, legal firms should believe that it is possible to serve customers safely and profitably. Adopting such a corporate mindset is likely to result in increased transparency and a regulatory compliance approach that is focused on building trust with existing and prospective customers. Increased transparency empowers customers to participate more actively in the legal services process. The legal firms that recognise that the old model of ‘information asymmetry’ breeds distrust between the legal provider and customer will therefore be best placed to adopt approaches to empower customers and thereby enhance their ability to properly value the services of those legal firms. Creating and maintaining a safer customer experience through good customer service involves anticipating likely potholes/risks in the customer journey and addressing them proactively.
Fourthly, legal firms should ensure that their approach to regulatory compliance is informed by accurate framing of the issues arising from regulatory obligations. Rather than legal firms asking the following question – How can we comply without affecting revenue? They should consider reframing the question as follows – How can we increase revenues by being complaint? Reframing the issues as suggested would ensure that legal firms adopt a sales approach that is more focused on meeting the needs of prospective customers rather than a narrow focus on the achievement of sales/fee earning targets. A consequence of adopting this approach is the likely reduction of the risk of mis-selling and ensuring that services sold are appropriately matched to the needs of customers.
Finally, legal firms should ensure that their approach to regulatory compliance includes the provision of relevant and helpful content to customers to enable them to have greater confidence to make informed choices including choosing the right legal firm and/or legal solution. In the increasing digital age and the growing connection economy, legal firms would be able to generate new business consistently if they can move beyond a transactional relationship with customers to an ongoing value based relationship. A conveyancing customer happy with their move to a new home may require legal advice in the future on contractual issues with regard to the appointment and/or termination of a contract with builders on a home improvement project. The conveyancing firms that recognise the likely pain points between the last purchase and the next purchase and provide regular useful content to address those issues will be best placed to secure additional business.
In conclusion, better regulatory compliance makes the best interests of customers aligned with the rule of the law the focus of its risk and compliance activities and a valuable contributor to its revenues.