Moving to Compliance from Legal: How to Transition into Compliance from a Legal Background in the Financial Services Sector
Over the last twenty years, compliance has become a core business function within the financial services sector, expanding and diversifying to become a standalone department. Simultaneously, the regulatory landscape continues to evolve generating a demand for skilled compliance professionals amid a limited candidate pool. The burgeoning compliance arena combined with a shortage of talent means that there are plenty of opportunities for experienced and skilled legal professionals to transition into the space.
Despite the compliance function diverging away from in-house legal, individuals from a legal background may still have valuable knowledge of complex regulatory and compliance matters. A legal education can provide essential experience or at least a familiarity with reading, interpreting and applying rules, regulations and statutes which can save a firm time and money. Moving to compliance from legal can therefore seem like a natural career choice, and one that can be both intellectually stimulating and lucrative. However, it is important to be aware of the different skills and alternative approach needed in the compliance space.
Challenges to Consider when Moving to Compliance from Legal
1. Taking on a broader remit
In recent years, the positioning of compliance within financial organisations has changed dramatically. The function, once seen as a mundane box-ticking exercise, has moved to the forefront of business processes, with compliance professionals enjoying a level of prestige. At the same time, the remit of a Compliance Officer has significantly expanded, with the department now expected to provide instruction and insight on strategic decision-making within financial institutions. While a lawyer will typically report directly to a firm's respective General Counsel or Head of Legal, a role within compliance will involve communicating with internal departments as well as business clients. A legal professional entering compliance will need to leverage their expertise while driving cultural change, rather than simply managing an institution's approach to regulation and risk.
2. Proactive Approach
Both lawyers and compliance professionals are required to act on legal issues to prevent, detect and remediate risks. However, compliance is additionally tasked with anticipating the effect of forthcoming regulatory changes and proactively monitoring business processes. Today, Compliance Officers are expected to educate in addition to enforcing rules regarding regulatory risks across the business spectrum, in order to foster and maintain an ethical working environment. A good compliance function will strive to create proactive strategies that nurture the company's culture, its code of conduct and overall compliance with the law - inspiring people to act with integrity.
3. Adopting a new frame of reference
Joining a compliance function will entail viewing the world not simply through a legal lens, but a commercial one. A good compliance professional will carry out the practical application of legal expertise to enforce compliance, while being mindful of profitability and client relationships. Gaining a holistic understanding of how the business operates and its clientele will be beneficial in building an effective compliance program. As Denis Jacob, Vice President and Deputy Chief Compliance Officer, says 'if you are joining a compliance organisation from an outside law practice or from the internal legal department, make sure you take time to truly learn the business. Ask lots of questions. Understand the products or services your company develops. Know what makes the company profitable. Research the process the company uses when it's entering new markets or new geographies.'
The Benefits of Moving to the Compliance Function
Variety: a compliance career can offer a diverse and expansive remit within a financial organisation, operating at the intersection of business and legal oversight; as well as making strategic decisions within the company
Monetary: compliance can be a financially beneficial career option due to the amount of personal risk involved, with the average pay of a junior compliance officer working in financial services varying from 35-45K depending on the size of the firm, and rising steeply in senior positions
Career progression: compliance has become an appealing option for legal professionals looking for a faster track to the top. As financial institutions expand their compliance departments, compliance positions are being given a much higher profile
Visibility: compliance has become an integral part of the structure of a firm, with professionals working in the space operating across multiple departments and enjoying a good level of visibility within the company
Lawyers or those with a legal education will have a strong foundational knowledge needed for a compliance position and will discover significant crossovers between legal and compliance mandates. Commonly, the most senior compliance figures in the financial services industry will be qualified lawyers or have legal training, with 35% of CCO's holding a J.D. the compliance function relies on individuals who are able to interpret, understand and apply laws to mitigate risk, meaning there is ample opportunity for lawyers seeking a career change to move into the regulatory space.