Thursday, October 17, 2019

Are you doing too many file reviews?

We are often asked the question, “How many property files should we be reviewing?”, and when we ask what the firm is currently doing get met with, “three files per quarter per fee earner, including two purchase, one sale and one remortgage (if undertaken), or “one file per month per fee earner”.

So, where did firms get these numbers from?

It is apparent that many CQS firms got them from the Law Society’s CQS Toolkit, which states in an example file review policy, “As a minimum, three files per quarter should be reviewed for all fee earners. Two files should be for purchase matters and one for a sale matter. Where the practice undertakes remortgage work, an additional file should be reviewed for a remortgage transaction each quarter”.

When we questioned CQS on this issue, due to it being in conflict with the actual CQS Standard, we were told that it was merely a suggestion and not a requirement; we suspect many firms thought that if this was provided as an example it would be what CQS would be looking for!

In order to comply with the CQS Standard you must have a procedure for regular, independent file reviews, of both the management of the file and its substantive legal content. In relation to the file reviews you must define and explain file selection criteria and the number and frequency of reviews. This means that you can determine what needs to be reviewed based on the risks that you believe are apparent and what needs to be done to mitigate these (risk-based file reviews).

So, why do more file reviews than is appropriate for the risks that are apparent when you could focus your resources on the fee earners that really need it?

For example:

  • A 10 year PQE solicitor who has been with you for 5 years with no complaints, claims or other causes for concern may only be subject to one file being reviewed each quarter until such time as a concern(s) arises; whereas
  • A junior lawyer with less than 12 months experience/ working in a high-pressure environment such as high volume conveyancing may be subject to three files being reviewed until such time as they are considered low risk; or
  • A Legal Executive with five years with the firm but has had two complaints, one claim and has failed in the past to take corrective actions may be subject to 4-5 files being reviewed until such time as their risk profile reduces (or they are shown the door!)

So, where should you go from here if you are not currently using risk-based file reviews?

  • Risk profile each fee earner based on the risks they pose using the above examples as part of your thinking
  • Allocate a risk level to each fee earner (low, medium, high)
  • Determine how many files each risk level will require, for example, low = 1, medium = 2, high = 3
  • Implement risk-based file reviews on a quarterly basis unless the apparent risks justify monthly reviews

By taking the above risk-based approach you will focus resources where they are needed most, save management time looking at fee earners’ files that don’t warrant it, improve client care, and allow performance monitoring to be more effective.

The risk-based approach is not exclusive to Conveyancing files; we recommend it is implemented across all practice areas over time, once the necessary groundwork and risk profiling exercise have been carried out.

Here at Riliance, we offer an outsourced file auditing service which can include on-site or remote compliance audits across all areas of law. These provide firms with a view of their current level of compliance against regulatory and/or accreditation obligations. We can also undertake bespoke audits to meet a firm’s individual needs, such as COFA or AML audits or those focusing on a specific area such as compliance with data protection legislation or the new SRA Standards & Regulations post 25.11.19.

If you would like to discuss how we may be able to help you with your auditing needs, please contact us.