Making Effective Use of File Audits
Auditing is a key part of compliance. There are many challenges faced by law firms when supervising client matters and risk-based file audits, for example: A lack of time to set up an effective file audit programme, trying to work out how many files should be reviewed for each case handler or even a lack of interest from staff in the file audit process.
The SRA Standards & Regulations place enormous focus on client care, competency and supervision and other areas, which need to be covered in any file audit process. Although there is no mention of file audits it is quite clear that these are necessary in order to meet the specific requirements relating to these areas.
During the session a couple of polls were carried out to establish the understanding of a well executed file audit process in law firms. The results were interesting as it showed that over a half had a good idea of what a file review looked like. From the other polls carried out, we could see that almost all the firms used their case management system to use data to support file reviews and that almost everyone inside the firms are usually happy to have their files reviewed.
So, are file reviews effective?
File reviews/audits of both current and completed matters are a means of maintaining high standards and consistency of practice over time. Reviewing files is not a purposeless exercise in fact, there are a host of benefits from carrying out file audits, such as improvements on a firm, whether a client is happy with the service provided, whether the firm is making a profit and much more.
What should file reviews cover?
Some matters can be easily dealt with by reference to a tick box; other matters, including the assessment of the legal advice given, will require a more considered approach. Some of the issues to be addressed should include:
- Is there an engagement letter clearly outlining what the firm will/will not be undertaking for the client?
- Has the client been kept up to date?
- Have all the relevant legal issues been identified/addressed correctly?
- Has the issue of costs been properly managed and communicated to the client throughout?
- Has the fee earner ventured outside their level of knowledge/area of expertise?
- Are there clear attendance notes of meetings, discussions and telephone calls with the client/other parties?
- Have instructions/advice been confirmed in writing?
- Have all critical dates been identified, recorded and acted upon in a timely manner?
- Does the work undertaken comply with the engagement letter?
Regular file reviews, in the context of an open and supportive environment, can be an effective means of identifying difficulties with specific individuals, or firm-wide issues that need attention, before they become a major problem. They can also encourage a culture of accountability and dialogue, which is essential to effective supervision and risk management.
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