Kristine Scott, a partner and head of education at HCR Law, offers a 360-degree perspective of legal risk

 

An organisation’s culture is widely recognised as a fantastic way to recruit and retain staff, as well as pupils. The culture of a school can also bring influence in a number of other ways including managing parent expectations and the leadership of the school.

Whether a school is part of a group, a charity, or a for-profit organisation, culture plays a role in ensuring that the values and ethos of the setting run through the school and are visible on a day-to-day basis.

Although often led by the head or principal, culture is a crucial part of the governance structure and should form a part of the school’s approach to risk management, including legal risk. The composition of the governing body or executive board will set the benchmark as to how a school manages risk, particularly in a legal sense.

A 360-degree perspective

If asked about legal risk and what this means to a school, an obvious answer often focuses on health and safety, and the physical aspects of the school. In my view, schools should approach and consider legal risk in a far wider sense. Implementing a 360-degree perspective, encompassing all their activities, as well as the risk of events which sit outside the school’s control as a risk.

Although an external risk will be more difficult to manage and control, identifying its existence can be helpful in broadening the school’s approach to risk overall, and may better prepare the school for responding to any risk in due course.

Governing bodies of a school that is also a charity will have trustee duties as well as director duties. They will need to ensure they are adequately equipped to perform their duties and legal responsibilities as trustees.

Schools are also subject to statutory (and non-statutory) guidance and regulation that other organisations don’t have to consider. Safeguarding and child protection is a key example. Schools must consider numerous stakeholders and how they may be affected by decisions (or a failure to make a decision) of the governing body. These stakeholders include pupils, parents, staff (and any trade union), organisations or others who are associated with the school, as well as the wider community.

Reputational risk alongside legal risk

The reputation of a school is key and considering the different stakeholders should be part of the thought process when trustees (or an executive board) are considering both legal and reputational risk. The importance of education places an additional expectation on schools to be seen to be doing the ‘right thing’ and always to have the interests of children at the forefront of their decision-making. This can be difficult in an ever-changing political and societal landscape.

Schools are subject to influence and the effect of societal change. This creates legal risk in itself. Whatever is happening in the world at large will probably pop up (in a major or minor way) in our schools. Clear examples of this are the anti-rape organisation Everyone’s Invited, day-to-day questions around gender-questioning children, and the current debate around mobile phones in schools.

Although the impact of this can be attributed to society at large, it has a clear link to the culture of a school, and it also creates risk. It requires schools to have a constant weather-eye on what’s happening.

Where might a school find legal risk?

The simple answer is everywhere. In addition to the more obvious legal risk mentioned above that may appear in a risk assessment (from a health and safety perspective), there is potential legal risk in most activities carried out by a school. Some simple examples include:

Safeguarding

We are increasingly carrying out safeguarding due diligence for schools both in the UK and overseas on a global basis as it is recognised by schools, and those investing in schools, as a key area of risk.

There is no one-size-fits-all for safeguarding worldwide, but we are seeing international child protection standards emerge and each school must of course consider local regulatory requirements as well as societal norms. Schools in the UK must comply with statutory guidance (led by Keeping Children Safe in Education) but should also consider a myriad of non-statutory guidance as well as a number of other key regulatory requirements.

Ensuring safeguarding policies and procedures are up to date, published, and that staff are trained, is key. It is understood that the reputational risk of ‘it could happen here’ in relation to safeguarding should be actively managed and assessed. This is often intertwined with the culture of a school and can influence parental behaviour and expectations.

Staff

Staff are key to culture. Staff costs usually form the greatest part (often up to 70%) of a school’s budget. This cost can be far higher in a school that caters for children with SEND where the staff-to-pupil ratio is often higher.

Employing staff is essential for delivering the education parents expect but naturally carries legal risk. As well as training and development requirements, the forthcoming changes under the Employment Rights Bill will create greater risk for schools. The removal of the current two-year qualifying period for unfair dismissal being an obvious example.

Schools that have a large workforce will need to consider the legal risk of managing (or failing to manage) their workforce proactively. Governing bodies or executive boards must ensure staff recruitment, training, as well as the other functions of HR, are resourced adequately. Even a task such as reviewing the contracts of employment for staff to ensure they are current can be mammoth in a school that has employed staff over several decades.

The legal risk of an employment tribunal claim shouldn’t be underestimated. We have also seen an increase in trade union activity over the past two years and expect to see more in the months and years ahead. This presents new challenges and risk for a school to consider.

Contracts

A school will have multiple contractual arrangements, whether for carrying out functions for the day-to-day running of the school, or for external providers or activities. Contracts – whether for letting a part of the school, carrying out a function or even a shared services agreement – need to be fit for purpose and subject to regular review in order to manage legal risk.

The risk to the school often sits around reputation and the ‘what if’ when something goes wrong, or if the school wishes to end a contract but is uncertain of the risk of doing so. Regular contract reviews can help manage those risks and will also support governing boards to ensure their activities are compliant and in line with the latest guidance.

Strategic risk

The past 18 months have, in our team, seen a fourfold increase in strategic mergers and acquisitions as well as several school closures.

There is an element of legal risk in conducting any sort of merger but there’s also risk in doing nothing. Governing bodies or executive boards will need to manage risks created by external factors such as demographic changes that result in fewer pupils. This could mean the difference between a school continuing to flourish and a solvent (or insolvent) closure.

It is key that boards manage that risk, understand their structure and culture, and their approach to risk. Understanding a school’s unique selling proposition and offering, are key to identifying any opportunities for merger or acquisition. Finding a good cultural fit is a key part to making this a success.

Summary

This article started with a focus on the importance of an organisation’s culture. It is my view that a school that has a strong culture may be more open to exploring the wide-ranging concept of legal risk. Schools operate in a highly regulated environment and have a higher level of legal risk than many other organisations. This stems from the potential impact of reputational risk, as well as the number of diverse stakeholders, including parents, who understandably expect greater levels of transparency and accountability from school leaders.

Although a school is unable to eliminate legal risk, my view is that schools may become more adept at both identifying legal risk and managing it. Good governance is a crucial starting point.