The Legal Services Commission may conduct three types of compliance audits.
The Legal Services Commission will require legal practitioner directors to review their firm’s management systems and supervisory arrangements shortly after they give the Queensland Law Society (QLS) notice of the firm’s intention to start engaging in legal practice as an incorporated legal practice.
The Commission provides the legal practitioner directors with a pro forma self-assessment form asking them to review the effectiveness of their management systems and address ten key objectives of sound law firm management.
- Competent work practices to avoid negligence.
- Effective, timely and courteous communication.
- Timely delivery, review and follow up of legal services to avoid delay.
- Acceptable processes for liens and file transfers.
- Shared understandings and appropriate documentation covering cost disclosure, billing practices and termination of retainer.
- Timely identification and resolution of conflicts of interests.
- Appropriate records management.
- Well understood procedures for authorising and monitoring compliance with undertakings.
- Effective supervision of the practice and its staff.
- Compliance with trust account regulations and accounting procedures.
Legal practitioner directors use an ILP Self-Assessment Form to rate their firms’ management systems against each of the ten objectives on a sliding scale of 1 to 5. Each objective is provided an overall rating. The form sets out key concepts to take into account when rating their systems. The form also suggests criteria to consider when rating their firm's management systems to assist improvement where needed.
The ILP Self-Assessment Form should note the systems in place when the form is completed and returned. The self assessment audit process a success if it causes improvements to be made in the firm's existing management and supervisory systems.
The purpose of the self-assessment audit exercise is to assist law firms develop and maintain management systems and workplace cultures that nurture and sustain best practice. It is hoped legal practitioner directors will approach the self-assessment audit as a positive opportunity to candidly review their firm’s systems and make improvements where necessary.
Practice reviews are audits of incorporated legal practices that comprehensively review the management systems, or review discrete aspects of the management systems (e.g. the supervisory arrangements or their billing practices) against the professional obligations owed by the firm and/or its staff.
Practice reviews are a resource intensive exercise and the Legal Services Commission conducts these audits on an ‘as needs’ basis. This may include for example, where the Commissioner receives information, or has made a risk-assessment justifying a reasonable suspicion the firm or some aspects of its practice, falls short of expectation.
Practice audits or reviews comprise a tailor-made combination of some or all the following kinds of activities:
- Web-based surveys (ethics checks for law firms).
- Traditional desk-top policy and procedure reviews.
- Detailed analyses of the firms’ complaints history, including detailed analyses of the investigation files held by the Legal Services Commission.
- Interviews with legal practitioner directors, supervisors and managers.
- Interviews with and/or focus groups of individual employees ‘down the line’.
- Interviews with and/or focus groups of clients, including but not only clients who have lodged complaints with the Legal Services Commission.
- Interviews with third parties including, for example, practitioners from other law firms that have regular dealings with the law firm subject to audit.
- Reviews of in-house complaints registers and selected or randomly selected client files and bills.
- Client satisfaction surveys.
- Mystery or ‘shadow’ shopping and complaints i.e. having real or pretend consumers deal with the firm and asking them to report their experience.
A practice review may take several days to complete or take longer depending on the size of the firm and the nature and complexity of the matters under review.
Once the practice review is completed, the Legal Services Commission will prepare a draft audit report detailing the review findings. The draft report will include recommendations for what further action, if any, the legal practitioner directors should take to remedy an improve any of the ILPs systems. The Legal Services Commission will require the firm’s legal practitioner directors to respond to the draft report. The response will then be reviewed prior to the Commission completing the final audit report.