Risk management audit checklist

27 January, 2018
Download PDF

Don’t wait for the worst to happen – use this audit checklist to determine and monitor whether your practice is at risk of a negligence claim.


Introduction

This audit checklist is a risk management tool for legal practitioners to determine and monitor whether their practice is at risk of a negligence claim arising from poor management of the retainer or the matter.

The checklist does not seek to audit the technical quality of the legal work undertaken. Rather, the audit is directed at the way the work has been performed regarding issues such as retainer management, client communication, supervision, file management, cost disclosure and useable trail (i.e. record keeping).

This publication concentrates on these issues because analysis of our claims has shown failures in each of these areas is responsible for the vast majority of negligence claims brought against the practitioners insured with LPLC.

LPLC’s experience shows that practitioners are often unaware they are not managing these issues properly or these are issues that can and should be managed.

This audit is a good place to start to inform or remind yourself of problem areas, to determine the effectiveness of your current approach and to identify what steps may need to be taken to reduce the risk of a claim.


How to use this checklist and get the audit process going in your firm

• The checklist is designed to guide you through a review of a file in terms of:

A RETAINER MANAGEMENT

> includes setting up, varying and closing the retainer and managing the client’s expectations throughout and

B MATTER MANAGEMENT

> includes delegation and supervision, communication, record keeping, and file and time management.

• The checklist requires you to answer yes or no to the questions raised.

A significant number of ‘no’ answers on a file or group of files will highlight that your firm needs to review its risk management strategies as it may be at risk of claims in the future.

• To start the audit process

> Choose the area within your firm you wish to audit (e.g. by practice area, matter type, department, workgroup, practitioners according to position or level of experience).

> Decide the number of files to be audited from each practitioner in the audit area – we suggest five files per practitioner subject to time available and type of files.

> Select the files randomly and include both open and closed files.

> Fill out a checklist for each file – you may photocopy the checklist in this booklet or copy the checklists from the risk management section on our website

• Review the results

> Review the completed checklists for ‘no’ answers to identify significant issues. In particular look for any patterns of ‘no’ answers within the audit area or for each practitioner.

> Consider possible adverse consequences if these answers or patterns continue (i.e. assess the risk of a claim if nothing changes).

> Decide the actions that need to be taken by whom and by when to reduce your risk.

> Set a date to review implementation or repeat the audit if appropriate.

If you would like to discuss on a confidential basis:

> the audit process
> your results or
> your proposed risk management strategies in response to the audit

Contact us on 03 9672 3800 or email lawyersrisk@lplc.com.au