And so back to Manchester. Incredibly the first time we had been permitted to go and see some of our clients based in the North-West since February 2020. It seemed a bit surreal arriving at Euston with a bag packed for a four-day compliance tour, staying in hotels, and sitting in boardrooms having face to face meetings and not the dreaded small screen meetings. That said, a big thank you to Teams and Zoom for making sure we did not lose touch with all of our clients through a very challenging year.
The train was empty and apart from having to sit down with the ubiquitous mask in place, you would not have noticed any difference. The train crew were super helpful, just as the staff were when we checked in to our first hotel of the week. The hotel was quiet, but that was not a great surprise either.
When we arrived at our first meeting, the reception we received was quite emotional. How lovely it was to be chatting to clients we have worked with for years in person. And then the questions started arriving thick and fast. The sort of questions that legal cashiers might not want to ask on video call in case it sounded unimportant. In a face-to-face situation though, anything goes and that was fascinating to witness.
So, what kind of things have been bothering COFA’s during the past 12 months. When you are working in the finance department and you can see ledgers with balances that have not moved for some time or have arrived from overseas bank accounts it is hard to ignore them. As we ran more ledger reports and started to dig in, we were surprised at what we were seeing.
The SRA has long been warning solicitors of the dangers of using their client accounts as a banking facility or breaching AML rules. It can be almost impossible for a legal cashier to stop that happening and it is the responsibility of the firm to have all the relevant systems and controls in place to prevent this. A COFA matter file review program is a really good way to pick these up if any manage to slip through the net. You should not be waiting for your reporting accountants to identify any potential issues. And the last thing you need is for the SRA to discover problems that you were unaware of. Given that the SRA are currently carrying out desktop AML checks on firms, now is the time to develop your COFA matter file review plan. This a lot more than a box-ticking exercise. It will enable you to identify problem files very quickly so that they can be remedied and processes modified.
Be very alert to monies being received from overseas. There are certain countries that are on a “red” list and could cause the firm regulatory issues if they are paid into client account and ignored. This is something that needs to be raised with the COFA the minute you become aware of it happening.
We have also seen ledgers that have been open for 15 years or more with substantial balances where there is clearly no underlying legal transaction. Balances that have been reviewed by reporting accountants and that have been overlooked year after year. Those days are over and they need to be identified and addressed immediately. As do all of those balances that were inherited following a merger and nobody knows where the file is and the fee earner has long since departed. These can no longer be ignored.
Something else common to all the legal cashiers was the lack of progress they had made with their new accounting policy document following the introduction of the slimmed-down Accounts Rules in 2019. The reason for this delay was completely understandable – the pandemic had set them a whole new list of priorities. What was wonderful was being able to sit down with them to help them finalise this document so that when we said goodbye, they had a fully compliant accounts policy.
Being able to sit in their offices also meant that they could ask questions about how their bills should look when raising interim bills for search packs so that they could explain to fee earners why this needs to happen. Or when a client asked whether they could add stamp duty to their bills what should they say to them. The sort of things that come up all the time when you work in finance and the sort of things that keep you awake at night. To be able to offer an on-site clinic to all the legal cashiers was very rewarding.
Prior to the first lock down we had been carrying out many COFA file reviews in our clients’ offices using hard copy files and printed ledgers. During the lockdowns, with so many firms adopting remote working and electronic files, we were able to move over to online reviews for a large number of our clients. So, it felt really strange to be back in their offices, but still reviewing files online from our laptops whilst sitting in their boardroom! This is real progress and another step in the right direction of paperless files, although I fear we will have to drag many fee earners over the line screaming and kicking in protest!
After our final visit we had time to sit outside a lovely bar in Manchester in the sunshine before heading back to London. It felt wonderful to be back doing we what we love best. And I don’t mean just drinking wine!