Sunday, May 12, 2013

Compliance: How many files should you audit?

The introduction of OFR and the new SRA handbook has left the legal industry in a rather confused state. Firms are now being forced to interpret rules and hope that they’ve got it right.

One key area which seems to be very ‘grey’ at present is around file reviews. It seems that most COLPs and COFAs are unclear how much file reviewing they should be completing on an ongoing basis.

I am sorry but I confess that there is no definitive answer.

At the end of the day, the SRA will expect firms to have appropriate systems and controls in place to ensure they are compliant. Therefore the level of file reviews completed really does depend on each firm’s structure and what areas they advise upon and what experience their advisers have.

The best example I can give relates to a new firm, who don't have much industry experience. They should be having 100% of their files checked.Once the solicitor has shown that his/her files are indeed competent, then that figure should naturally be reduced to say 50% and documented within a training plan, then again after an agreed period of time, reduced to 25% and then finally set at a minimum of 10% with ongoing reviews to ensure this figure is sufficient.

The 10% figure is a very sensible approach to file reviewing and the financial services industry (upon which the new SRA regime is based) seems to have settled on that figure as a minimum.

Another way you can look at file reviewing is by checking cases that pose a higher level of risk (to the firm and the client). Therefore areas such as conveyancing or probate may result in a higher percentage of cases being reviewed. After all, the SRA have highlighted conveyancing as a high risk area.

What about sole practitioners? Clearly file reviewing your own files smacks of a lack of objectivity. The alternative is for sole practitioner to adopt a buddy system where they can each review an agreed percentage of files

If you have the internal resource available be sure to check at least 10% of all cases and as stated above concentrate more checks on riskier areas or lawyers. However if you are maxed out with time and would prefer a third party with no ties to your firm to complete a review then make sure that you implement it. I am happy to recommend some 3rd party compliance experts who can conduct file reviews.  

No comments:

Post a Comment