The SRA now requires law firms to have effective systems and controls enabling firms to meet the requirements of the new Code. The nature of these systems vary according to the size of the firm, form of practice, complexity, and the activities that it conducts and its client base. There is general consensus, however, that firms conducting conveyancing are considered to be high risk and therefore need comprehensive risk management systems to support the COLP.
The SRA has been very clear that the COLP is responsible for ensuring that the firm has systems and controls in place to enable the firm, its managers and employees and anyone who has any interest in the firm to comply with Handbook requirements.
Use COMPLETIONmonitor to Assist Your COLP
For firms that undertake conveyancing, COMPLETIONmonitor is the only system that offers COLP-specific features. It therefore plays a key role in fulfilling requirements to test the adequacy of compliance policies and procedures. COMPLETIONmonitor allows the COLP to focus on analysing results and identifying potential breaches rather than performing labour-intensive, manual reviews. COMPLETIONmonitor’s COLP package is appropriate for any type and size of firm that conducts conveyancing.
When your annual compliance report is requested by the SRA, you may simply print out all the COLP reports generated by COMPLETIONmonitor for inclusion in your overall report to the SRA. The documents produced will assist in demonstrating the steps taken and the information available to help prove compliance with OFR.
Below is a sample of some of the COLP-specific reports available on COMPLETIONmontior. For a full demonstration of the system and information on all the COLP reports please contact us.
- Signed Client Care Letters
- Conflicts of Interest
- Cashflow Forecasting
- Average Fee Analysis by Fee Earner and Case Type
- Undertakings Record
- Audit and Training Record
- High Risk Case Alert Lock Down
- Disclosure Overview
- Post Completion Overview
Signed Client Care Letters
This report identifies conveyancing cases where a signed Client Care Letter is not yet held on file as well as cases where the lawyer has specified that it is not applicable (perhaps because the client has signed one previously for another matter). The COLP should spot check cases where the signed Client Care Letter is not available and examine whether the lawyer’s rationale is correct. See example report below.
Conflicts of Interest
The outcomes in chapter 3 of the Code support Principle 4, which requires a firm to act in the best interests of clients. The outcomes require effective systems and controls to help identify and assess conflicts of interests.
Depending on the firm’s interest in being retained to act for both sides of a transaction, the reports will indicate whether the lawyer has complied with the firm’s requirements such as ensuring that clients have signed the appropriate “consent letter” and that there is an estate agent involved who will handle further negotiations should they become necessary. The COLP can therefore ensure that the firm’s policy on acting for both sides is being complied with in real time. The report also highlights potential cases where the lawyer has failed to acknowledge that the firm is acting for both sides. This is achieved by matching post codes and property addresses and highlighting the potential conflict. In such circumstances, a. For larger firms, the conflict report also shows where the firm is acting for more than one prospective buyer for the same property.
A COFA is responsible for ensuring that systems are in place to actively monitor the financial stability for a firm but again the type of systems and controls is not prescribed. Regardless of the system, you cannot examine financial stability without cash flow forecasting. With COMPLETIONmonitor, in capturing the estimated fee and proposed completion date on every conveyancing transaction, the system is capable of producing a weekly cash flow forecast.
Average Fee Analysis by Fee Earner and Case Type
COMPLETIONmonitor can produce very detailed financial information and analysis of the profile of cases on the system (e.g., average fee for leasehold sale, average fee for commercial purchase etc.). The information is available on a monthly and yearly basis. A forecasting calculator is available to assist you in business plans and longer-term forecasting. Financial analysis can also be broken down to average fee and total fees per fee earner. Fee earner financial analysis will enable you to spot trends, e.g. if a lawyer’s average fee is decreasing. On the other hand, you may see a pattern of one fee earner’s charges increasing, in which case you may want to spend time identifying what changes s/he has made and then introduce those changes throughout the department.
The system allows the COLP to monitor standard undertakings in the conveyancing process as well as the more unusual undertakings that are specified by a lawyer. The reports include a centralised undertaking log. In addition to reporting and monitoring of staff for potential breaches,the system will also send e-mail alerts to the appropriate fee earner and secretary reminding them to comply with their undertakings or to enforce received undertakings.
Audit and Training Record
The COMPLETIONmonitor system can (if the COLP opts for such a feature) randomly asks the COLP, based on parameters set (e.g. five cases per lawyer per quarter), to cross check the answers a lawyer has given on the system. This will result in a scoring for each fee earner within the firm and highlight potential training issues. The System thus ensures that the COLP adopts the maxim that some insurers describe as ‘The Three R’s’ – Regular Random Reviews.
Accuracy of lawyer data is also cross checked by the system automatically against 3rd party data such as Local Search and (soon) Land Registry Data.
You can also set COMPLETIONmonitor to require all files for a particular fee earner to be checked on the system prior to completion. This might be appropriate for unqualified fee earners or new lawyers within their probation period.
High Risk Case Alert Lock Down
Firms with a healthy appetite for risk management have already asked for their version of COMPLETIONmonitor to be configured to lock down cases based on risk tolerances. The system has alerting capabilities via email and an intuitive work flow that allow for cases to be quickly and effectively reviewed. For example, a senior partner in a three partner firm in Leeds asked if it was possible to lockdown cases where the lawyer answered a high risk question in a certain way. For this firm, a case where the lawyer specified via the pre-completion checklist that the full purchase price was not going through the firm’s account was deemed to be enough of a risk to require the senior partner to be alerted by e-mail and the case to be put on hold. The file could only be unlocked by the senior partner after a review of the file.
Before OFR, it was well-established wisdom that when a regulator audited conveyancing files one of the first things they looked for was the level of disclosures or notifications to lenders. A lawyer or firm that regularly enters into correspondence with lenders about disclosable matters such as the incorrect assumptions with the valuation or whether the seller has owned the property for less than six months clearly show themselves to be aware of their obligations to their lender client. Disclosures are therefore indicative of an appreciation for the potential for conflict of interest, even in a standard mortgage situation.
Disclosure analysis is now so important that the CQS application has a specific question on “Does your practice have documented procedures for reporting matters to lenders?” And It does not stop there– if you require proof that regulators take this issue seriously you need look no further than north of the border, Scotland. In a recent case, the Scottish Solicitor Disciplinary Tribunal found a firm in breach of professional conduct in failing to make disclosures in breach on the CML Lenders Handbook. The same logic should apply to the SRA for solicitors in England and Wales. Would persistent failure to comply with CML requirements be a material reportable issue? Most experts would suggest that it is.
The COMPLETIONmonitor Lender Disclosure Reports reveal regarding what percentage of cases each lawyer in the firm makes disclosures to lenders. This can be reviewed on a monthly basis. The report even provides granular information as to the types of disclosures made.
This type of report is one of a number of reports which show trends in specific lawyer performance. For example, if a COLP identified through the reports that a specific lawyer’s disclosure percentage changed dramatically or differed significantly from the rest of the firm’s lawyers they may wish to investigate further.
Post Completion Overview
Approximately 25% of claims against property lawyers are based on post-completion issues such as missed priority dates or missed second charges. There are a number of factors that contribute to this common area of claim:
Pre- completion work is often driven forward by 3rd parties including clients, estate agents, brokers, the other sides lawyers etc. There are no such drivers when it comes to post-completion work.
The lawyer has been paid.
There is often a disconnect between the knowledge of the lawyer who handled the case all the way to completion and then the post-completion work, which is often regarded as “admin”.
COMPLETIONmonitor not only acts as a work-flow manager for the lawyer and assistant’s post completion tasks by sending e-mail alerts and operating a traffic light system on a dashboard highlighting priority cases, it also produces overview reports for the COLP. These reports evidence the following areas of performance:
- Post completion overview – shows a detailed table of all live cases and whether they have any warning of critical tasks due.
- Average time frames for registration of title (per lawyer and across the firm).
- Average time frames for sending deeds to lenders.
- Current and historic missed priority dates.
- Missed retention release dates.