File Reviews - Riliance Assist

File Reviews
Creating a File Review Policy
Introduction
Contents
File reviews (audits) will be appropriate for most law firms although some, mainly
larger international firms, will have other ways of supervising and managing client
matters, fee earners and meeting the Outcomes laid out in the SRA Handbook.
Introduction
1
Regulatory Considerations
2
Accreditation and Quality Assurance Considerations
3
File Review Procedures
4
File Review Considerations
5
The File Review
6
File Review Reports 6
Conclusion 6
Example File Review Policy
7
For the majority of firms, file reviews should form an integral part of their risk
management strategies, as if used effectively, they can help reduce the risk of harm
to clients by identifying system failures, behavioural issues, and other threats to both
clients and practices.
What should practices consider when drawing up a file review policy?
File Reviews
Creating a File Review Policy
Regulatory Considerations
Principle 8 of the SRA Handbook states that those covered by it must run their
business or carry out their role in the business effectively and in accordance with
proper governance and sound financial and risk management principles.
Chapter 7 states that firms must have effective systems and controls in place
to achieve and comply with all the Principles, rules and outcomes and other
requirements of the Handbook, where applicable O(7.2); it also states that firms
must identify, monitor and manage risks to compliance with all the Principles, rules
and outcomes and other requirements of the Handbook, if applicable to them, and
take steps to address issues identified.
Rule 8.2 of the Authorisation Rules state that an authorised body must at all times
have suitable arrangements in place to ensure that (i) the body, its managers and
employees, comply with the SRA’s regulatory arrangements as they apply to them,
as required under section 176 of the LSA and Rule 8.1 above; (ii) the body and its
managers and employees, who are authorised persons, maintain the professional
principles. A licensed body must at all times have suitable arrangements in place to
ensure that, as required under section 90 of the LSA, the employees and managers
and interest holders of that body who are non-authorised persons do nothing which
causes or substantially contributes to a breach by the licensed body or its employees
or managers of the SRA’s regulatory arrangements.
File Reviews
Creating a File Review Policy
Accreditation and Quality Assurance Considerations
Practices with Lexcel, CQS, SQM, etc. will need to comply with the requirements of
the schemes, for example, Lexcel Standard 6.11, CQS Core Practice Management
Standards 3.4, and SQM Requirement E2
File Reviews
Creating a File Review Policy
File Review Procedures
The SRA does not issue a prescribed file review procedure, as this would not be
appropriate within an outcomes focused regulatory environment, therefore firms
may want to consider the procedures laid down within the Lexcel standard:
•
Define the file selection criteria;
•
Define the number and frequency of reviews;
•
Retain a record of the file review on the matter file and on a centralised system;
•
Ensure any corrective action which is identified in a file review is acted upon
within 28 days and verified by the reviewer;
•
Ensure that the designated supervisor reviews and monitors the data generated
by file reviews;
•
Conduct a review at least annually of the data generated by file reviews
File Reviews
Creating a File Review Policy
File Review Considerations
Practices need to consider what they want to achieve from carrying out file reviews, for
example:
•
The protection of clients;
•
Compliance with the Code of Conduct and/or accreditation schemes;
•
The commercial benefits that might be obtained when tendering for work;
•
Assisting compliance officers with their obligations in identifying failures with systems
and processes;
therefore reduce the number of reviews for the partner to 2 per month, whereas it may
want to increase the number to 6 for the paralegal. File selection should be random, and
where necessary, based on risk issues that may have been identified.
Depending on the risks identified by the practice, and the resources available, file reviews
can be carried out by a variety of people, for example:
•
COLP/COFAs (reviewing files as appropriate/necessary)
•
Supervisors (reviewing fee earner and peer files)
•
Identifying development issues relating to those involved in the reviews;
•
Fee earners (reviewing their colleagues’ files)
•
Detecting inappropriate behaviour of staff;
•
Risk teams (reviewing all selected files)
•
Assisting the firm with embedding an effective compliance culture and deterring noncompliance.
•
External consultants (reviewing all selected files) – this can be a solution for sole
practitioners who do not have others working with them
The number of file reviews undertaken will depend on the practice’s size, the experience of
staff, and the risks associated with its work. For example, a practice carrying out property
and employment work may set an initial target of 3 files per fee earner per month (this
appears to be a benchmark many firms use), and then look at the risks involved in each
area; most practice will see property work as a higher risk than employment and therefore
want to increase the supervision levels in that area, so may set a benchmark of 5 reviews.
A practice may see the need to supervise a partner as a lower priority to a paralegal and
Practices need to ensure that those carrying out file reviews have the appropriate
experience, knowledge and training to ensure they are done effectively.
Outcome O(1.16) requires firms to inform current clients if they discover any act or omission
which could give rise to a claim by them against the firm, so this needs to be considered
when carrying out file reviews.
File Reviews
Creating a File Review Policy
The File Review
It is for practices to determine what they want to cover during a file review, for example,
some will see the review merely as a “tick-box” exercise to see whether a client care letter
has been sent out, or costs information has been updated, others will carry out the “tickbox” exercise but then do a more thorough review looking at the legal advice given. Some
practices will carry out both of these reviews and then subject each file to a review by the
accounts department, COLP, COFA, etc.
Practices wanting to review files in relation to legal advice, COLP/COFA issues or legal aid
matters, need to draft appropriate questions to cover these areas, for example, a COLP
may want to assess a file for potential complaints/claims, whereas a COFA may want
to look for potential issues with secret profits, commissions, breaches of the accounts
rules.
A standard file review should cover areas such as:
Any remedial action identified during a file review should be addressed as soon as possible,
or in line with accreditation standards (Lexcel specifies 28 days).
•
Client care information;
File Review Reports
•
Money laundering and client due diligence checks;
•
File opening procedures and risk assessments;
•
Conflict checks;
•
Key dates;
•
Instruction of counsel and experts;
•
File administration and note keeping;
•
Matter supervision;
•
Client updates (costs, case plans, etc.);
•
Timely communication.
File review reports can take several forms, including checklists (“tick-lists”), detailed reports
identifying material failures and training needs, periodic reviews of file review data, etc.; it
will be for practices to assess what type of reports will be appropriate for them and their
business.
Conclusion
An effective file review strategy can assist firms identify and manage risks, and identify
compliance failures. Practices that choose not to implement one need to seriously consider
why it would be appropriate for them to implement a file review policy.
File Reviews
Creating a File Review Policy
Example File Review Policy
[Edit as appropriate]
1. The firm operates a system of occasional, independent file reviews. The frequency of
file reviews is [two/three files per month for nought to three years admitted and legal
executives, and one file per month/quarter for all partners, senior executives and fee
earners over three years admitted]. Files are selected [at random, from the monthly
activity reports [specify other]].
corrective action has been performed and then confirmed within Riliance.
4. It will be the responsibility of the [COLP/COFA/Partners] to monitor the process and to
ensure that issues emerging from file reviews are addressed.
5. It is the responsibility of [name or title] to review all file review data at least annually and
include an analysis and recommendations based on the data that emerges from such
review into the annual review of the firm’s risk management strategy.
2. This is a task that will usually be undertaken within the department in order that
substantive issues can also be discussed. The selection of files should be generated
by the monthly matter print-out and it is likely that files with high WIP (work in progress)
value or long periods of inactivity will be selected. Where the fee earner undertakes a
range of different work type matters the selection should be representative of the fee
earner’s work spread.
3. A file review entry on Riliance will be completed when any such independent file
review occurs. A copy of the entry will be put on to the matter file and held within
Riliance to verify that reviews are occurring as planned, and that any corrective action
identified as being necessary is being taken. When corrective action is specified as
being required it is the responsibility of the matter handler to undertake the corrective
action specified within the time specified, and in no case will this be longer than 28
days. The reviewer must then verify to his or her reasonable satisfaction that the

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