Given the increasing focus in legal services regulation on client care and risk management, it’s clear that it’s not a question of whether you audit, it’s how you do it. In this blog, we will highlight some of the considerations and decisions you will need to make to have an effective legal file auditing programme.
One of the important decisions you will need to make is whether to outsource or not but before we get to that, there are some other considerations…
One of the first things you need to think about is what purpose your legal file auditing programme is intended to achieve. This may seem simple initially but the more you think about the question, the more possibilities arise. Some of the initial basic requirements are likely to be:
- To help to measure compliance with the various regulations
- To provide evidence of compliance to the regulatory/accreditation bodies – in other words to show you are achieving the Outcomes
- To maintain consistent quality standards which will ensure high customer satisfaction
Some of the other factors which you may want to consider are:
- To help with performance management against KPIs
- To measure and assess the viability and effectiveness of systems and processes
- To act as a training tool to assist with compliance development firm-wide
When you have developed the purpose, it’s much easier to create objective criteria. The Principles and Outcomes in the Code of Conduct 2011 are vague and often subjective. For example, how do you audit principle 5 “…provide a proper standard of service to your clients” or Outcome 1.1 “you treat your clients fairly”?
The regulations in Scotland and Northern Ireland are also often subjective and vague.
One of the biggest mistakes many firms make is failing to develop robust, objective and consistent audit criteria. This is particularly the case with internal legal file auditing. As fee earners, whilst we may work within the same team on the same type of work as others, our approach is often different. This is only natural and is ultimately what makes us good lawyers. However, asking fee earners to review each other’s files without any objective and consistent criteria is a minefield as (often with the benefit of hindsight) we all think we could have done things better! Give the same file to 5 different fee-earners and ask a subjective question like “was the file well run?” and you will get 5 different responses!
Another problem with less than robust criteria is that the measurements and evidence you get will not stand up to scrutiny from the regulations. Yes, it is possible that the regulator will get different results on one of their own audits than your own. However, the point of regulation is that it is based on your evidence that you are achieving the outcomes. So therefore, if you have strong evidence of a consistent and objective approach to measuring the outcomes, then there will be little that the regulator can argue with – after all, in the SRA’s own words in the introduction to the SRA Handbook they state “We encourage firms to consider how they can best achieve the Outcomes taking into account the nature of the firm, the particular circumstances and, crucially, the needs of their particular clients.”
There are many other factors which make up a good audit programme and we would be happy to discuss these further with you – just give us a call or drop us an email to discuss.
Now to turn to the decision highlighted in the introduction:
In or Out?
There are most certainly pros and cons to both approaches, so let’s examine them…
|Can increase ‘buy in’ to compliance||May be demotivating|
|Can improve understanding of compliance||May be time-consuming|
|Can allow greater understanding of performance||Is not independent|
|Can allow greater control of compliance||May result in inconsistent evidence|
|Is independent and objective||May not increase ‘buy in’ to compliance – may be viewed as ‘being done to’ rather than ‘being involved in’|
|Can provide clear consistent useable evidence||May not improve understanding of compliance|
|Can be more cost effective||May result in ‘tick box’ compliance|
|Can give directed specific reporting information||May not give control over compliance|
The ideal solution
We believe that the ideal solution is a combination of the two approaches, a Legal File Audit Programme specifically developed for your business which allows for an element of both internal and outsourced auditing – perhaps even on a ‘rota’ basis so that each fee earner takes a turn in getting the experience and knowledge of compliance needed to make them better fee earners. Balance this with independent outside auditing and the result is a robust system which shows detailed evidence of compliance with your regulatory requirements.
If you would like to learn more in just one day on how to ease the regulatory burden why not book into one of the CPD accredited courses our MD is delivering for MBL Seminars you can find out more and book here:
London, Manchester, Birmingham, Leeds and Bristol: File Auditing for Law Firms – A Way to Ease the Regulatory Burden
Scotland: File Auditing for Law Firms in Scotland
Northern Ireland: File Auditing for Law Firms in Northern Ireland
Whichever decision you make, Beyond Compliance Limited can help ensure that you develop a clear, objective and consistent Audit Programme which ensures that you comply with all of the regulatory and accreditation requirements, whether that be the SRA, The Law Society for Scotland, The Law Society of Northern Ireland, Lexcel or CQS. If you’d like to discuss your programme and audit requirements further then please give us a call on 0121 270 8008 or email us at email@example.com