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File Audits

FILE AUDITS/REVIEWS – a practical guide

 

 

Value of file reviews/audits

Having a system of file audits should be seen by all role players as something positive and non-negotiable. It is not micromanagement, victimisation, checking up or criticism – it is one of the most important risk management processes. Handled properly it should:

  1. Ensure that staff comply with your practice’s Minimum Operating Standards (MOS) as well as the standards set by your Law Society or Regulator;
  2. Provide a safety net for detecting errors and also detecting and deterring unethical or inappropriate behavior;
  3. Identify weaknesses and support the learning and development of staff being reviewed and even those doing the reviewing;
  4. Provide a basis for performance appraisal of the work of the individual;
  5. Provide valuable information for your practice’s risk management assessments.

 

How many and which files should be reviewed?

Clearly every single file cannot be reviewed, but it is suggested that a reasonable number would be one or two per month per staff member. Files can be chosen at random and also on the basis of particular concerns where risks are indicated. The files of staff at all levels should be reviewed – including those of senior partners or directors.

 

Tip: Ensure that you set aside sufficient time for reviews and delegate the task to some less senior staff – particularly in respect of the procedural part of the review.

 

What the audits/reviews should cover

Both qualitative and procedural issues can be covered. Peers or colleagues and even support staff can review the procedural issues, leaving only the qualitative assessment to the supervisor. An external reviewer could also be used.

For example, ensure that:

  1. The Financial Intelligence Centre Act has been complied with;
  2. The letter of engagement is complete and has been signed by the client;
  3. The mandate has progressed without unnecessary delays;
  4. There is regular communication with the client;
  5. The file is properly maintained in accordance with your practice’s MOS, with file notes on all attendances. (The file should tell the full story of the progression of the matter to someone unfamiliar with the matter.)
  6. The practice’s billing policies have been complied with;
  7. The accounting in relation to the matter is in order;
  8. Any trust deposits have been dealt with in compliance with the practice’s own rules and those of the Regulator/Law Society.
  9. The law has been correctly applied to the facts;
  10. There are no prescription issues and there have been no oversights in the handling of the matter.
  11. The appropriate checklist for the type of matter (if any) has been complied with (for example RAF claims or conveyancing).

 

A checklist should be used to ensure that all important aspects are reviewed. Any necessary remedial actions should be recorded. A core checklist can be used and modified forms can be created for different practice areas. There is no one size fits all solution and each practice will need to develop its own form. ( (click here) for a generic, precedent checklist)

 

After the audit

Immediate concerns should be addressed with the fee-earner as soon as possible. There should be a follow-up to ensure that any remedial actions have been carried out.

The results should be recorded and the records maintained. These may also then be used to improve the practice’s risk management interventions and training and also for the purposes of input in performance appraisals.

Ann Bertelsmann Legal Risk Manager

 

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