Old Friends or Old Enemies?

The room’s fine, but I nearly tripped over that great pile of files on the floor over there!  What on earth are all those?

 

 

How do you know they’re OK?  Some of them look as if they haven’t been touched for months, or even years.  They look to me like a pile of problems waiting to happen.

 

 

Well, for a start, let’s have a look at this one.  There we are, there’s a balance owed to the client because you retained too much at completion of the transaction, and there’s a stack of work on post-completion administrative matters that you haven’t charged for at all.  Tell me, do your accountants ever suggest you have too many small, old, credit balances on client account/

 

But you haven’t?  No, I thought not.  What you’ll find, when you come to do it, is that it is a much bigger job than you think it will be.  First of all, you’ve got to identify where the balances are.  That should be simple enough, but then you’ve got to dig out all the files to match them – and if you haven’t been rigorous about checking that all ledgers balance off before archiving files then that may mean getting them out of storage, and there’s often a charge that attaches to that.  Then you’ve got to go through the file to identify how the balance came about, and ascertain whether there is something internally that needs doing.  You might, for instance, have incurred a disbursement which hasn’t got onto the ledgers, and for which you therefore haven’t repaid yourself.  What you may find, however, is that you have to pay something back to the client.

 

Not if they realise you have been careless for some time with their money.  But that assumes you can still trace them.  What if they’ve moved, or died, or gone into liquidation?  Then you can really start racking up the time and costs, trying actively to find them.  I know there’s the ultimate fallback of making a donation to the Solicitors’ Benevolent Association, but you’ve got quite a lot of hoops to jump through before that becomes possible, and you have to show what tracing efforts you’ve made.

 

Good, but that assumes you recognise when the work does finish.  Part of the problem is that there are many instances where the file simply ticks over after what you think is completion.  For instance, think of all the post-completion work you have to do on an ordinary purchase these days, with Land Registry and the Stamp Duty Land Tax.  If you’re not careful you can end up with two problems.  One is that you can get into serious problems externally, such as with the Land Registry if you don’t get everything in to them within the relevant time period.  Nine times out of ten you may get away with it, but that’s just the sort of thing that will jump out and bite you from time to time.  The other is that you lose any chance you might have had to charge for the work.  You may think you can simply submit a bill whenever you feel like it, but the reality is that the longer you leave it the more likely you are to end up with an unhappy client and a bill which is basically an illusion, because it will never get paid.  I know you’ll say that you can’t charge anyway on fixed charge work, but there are plenty of other types of file where delay in billing, after what the client perceives as the ‘completion’, and therefore the moment when he expects to stop paying, can be fatal to the chances of recovering for perfectly legitimate work.

 

 

There certainly are.  Let’s start by thinking about reviewing the file.  We all know the feeling when you get a complaint years after a file’s closed, and you get the file out, look at it, and a simple but blinding error just leaps out at you.  By then, it may be too late to do anything to correct it, and you have to face up to meeting the complaint, and possibly shelling out for compensation if it has gone really wrong.  How much better if you identify the problem yourself, and take whatever corrective action may be appropriate.  If there is something that needs doing, you’ve probably still got the client’s goodwill, and he’ll be likely to cooperate.  He won’t see it as a cause for complaint, just that you’re doing an efficient tidying-up job.

 

 

Quite possibly.  You’ll recall that you brought in a system of attributing a risk profile to each type of work, and that when you open a file you indicate whether there is anything that you can spot at that stage which makes the matter more or less risky – whether from a negligence viewpoint or a commercial one – than a normal file of that type?  Well, not only do you have to note whether there is any variance in that assessment during the lifetime of the file, but also you have to close the loop by reporting at the end whether there was anything abnormal.  The point is that if there are a number of reports of problems with a particular type of file, you may have to re-assess your approach to that type of work, and certainly you’ll need to review its risk status.

 

Then you need to make sure that you agree with the client whose responsibility it will be to ensure that the necessary steps are taken.  This could arise if you have, for instance, acted for a client making a grant of a new commercial lease, whose job is it going to be in five years’ time to make sure that rent review notices are served at the right time.  Discuss this with the client, and record in writing what is agreed.  Frankly, unless there’s a very powerful reason to the contrary, you will be better off if you agree that the client should take the task on.  If you accept the responsibility, then you are putting your diary and reminder systems to the test, and you are accepting that it is up to you to find and contact the client.  Why add to your risk when you don’t need to?

 

 

You have to let the client know what you are doing.  You will probably have had, in your client care information when the file was opened, the information that you will retain the file for a certain period of time, and then reserve the right to destroy it, but it is a good idea to use this time to make sure the client understands this by repeating what your policy is. 

 

Beyond that, you should also consider asking a client – preferably by means of a short questionnaire – whether he has been happy with what you’ve done for him.  Some firms do this on all files, and some on a sample of them.  Generally speaking, the response is higher than you might think, and the information can be invaluable.  Frankly, it’s not the ones who say how wonderful you are which are interesting, it’s the ones who indicate that there have been problems, as that gives you an opportunity to identify what the problems are, and to do something about it.  For instance, if a fee earner has a number of responses complaining he doesn’t return calls, then you need to investigate his work levels, or, if they are acceptable, then his working practices.

 

 

No.  There are a few precautions you should take first.  For one thing, there may be items in the file which you ought to be returning to the client, if he is likely to need or want them.  Secondly, you may identify things which you feel ought to be kept elsewhere than on the file, even if you are still the ones to be keeping them.  For instance, many firms will feel that on a conveyancing file there are a number of documents, which have been created during the course of the transaction, which should properly live with the deeds rather than the file.  Also, of course, you want to remove from the file, and destroy, anything which is simply unnecessary, for instance because it’s a duplicate with no significance of its own.

 

 

Not necessarily.  You should keep them for at least the primary limitation period appropriate to each file.  That will be six years in most cases, but could be longer if the client was under some sort of disability.  So, if you were acting for a child, you should retain the file until after his twenty fourth birthday at least.  You might, depending on your storage costs and the views taken by you and your insurers as to claims under the Latent Damages Act, decide to keep them for a period of at least fifteen years from the date the limitation period starts to run. 

 

There are also statutory provisions, under the money laundering legislation.  You need to keep details of each transaction for at least five years after it finishes.  Normally that will mean your file, and so shouldn’t cause a problem as you will be keeping that for at least five years anyway.  Watch out, though, if you keep evidence of your identity checking on the matter files, and not on a separate register or file.  The problem there is that, if you form a business relationship with the client, the records have to be kept for at least five years after that relationship finishes.  So, let’s say you do the first job for a client in year one, and put the identity details on the file.  You then do lots of other jobs for him up to the end of year five, when he moves away.  In the ordinary course of events, you might want to destroy the file in year seven; but in this case you cannot do so until year eleven.

 

 

If you do, you know the problem will only get worse.  It’s really just a question of getting the systems set up n the first place.  Once everybody accepts that these steps are simply a matter of routine, and can save them a lot of time trying to sort out problems later on, then your clients, your insurers and your accountants will be happy and you will be able to see that expensive new carpet you’ve just paid out for!