Document management can be complicated for every industry, but lawyers have unique issues to consider. Not only do they need to ensure that their clients’ highly confidential information is kept secure, but they must also ensure regulatory compliance. Let’s dig a little deeper to look at the ways in which lawyers can keep both paper and electronic files secure, and how they can prepare for the possibility of future legal issues, including an IRS audit.
Steps Attorneys Can Take to Protect the Confidentiality of Their Client’s Files
Not all staff members at law offices understand just how easily their firm can be at risk of compromising their client’s confidentiality. Having files stacked on counters and desktops is not just inefficient, it’s risky. Attorneys should stick to the following tips to protect the confidentiality of every client:
- Physical files should be refiled on a daily basis.
- Electronic files should be saved and closed whenever they’re not in use. Physical files should be put away in a filing cabinet when they’re not being worked on.
- Files or documents should never be left in conference rooms or other public areas.
- Before allowing people not associated with the firm to use offices or conference rooms, those spaces should be checked for physical files, which should be removed, and all computers should be checked to ensure a law firm user is not still signed into confidential accounts.
- A client’s written consent must always be received before any of their information is released to a third party.
Storing Files with Auditing in Mind
Whether you’re dealing with an internal audit or an IRS audit, the process of ensuring you’re covering your bases is the same. First, let’s cover the steps you’ll take to prepare for an audit.
Gather the materials you need for the audit
Depending on your particular practice these items will vary, but most law offices will need:
- Copies of itemized bills that should include descriptions of activities, who worked on the files, and the hours billed each day.
- Copies of invoices and the cover letters that accompanied the bills
- Copies of retainer agreements or billing policy guidelines firms use with outside vendors or other firms.
Check for compliance with your billing guidelines and retainer agreements
Don’t be shocked if you discover some that don’t have written contracts. If you discover you don’t have a written billing policy with clients or vendors, now is the time to create one. If you do have one, make sure the terms were complied with.
Check bills for accuracy
There are many types of billing inaccuracies but they generally fall under one of these types of issues:
- Undisclosed bonuses.
- Billing errors including duplicate charges or double entries.
- Delayed billing.
- Mysterious entries. Anything that can’t be explained easily should be researched.
- Excessive rate increases. These are typically errors.
- Billing to several clients within a single file. For example, the total cost of a single trip to court can’t be billed to more than one client, even if the work was done for numerous clients. Instead, it must either be billed entirely to one client or the cost should be split amongst the clients in question.
Take a close look at record-keeping practices
Clients are entitled to accurate billings. Time records must be kept by every attorney and all paralegals, all of whom need to specify the date on which they worked on a particular file. Some examples of poor record keeping include:
- Vague billing descriptions.
- Formulaic descriptions.
- Formulaic time entries.
- Use of large billing increments.
- Patterns of long days.
- Inconsistent time records.
Check your metadata indexing on electronic documents
The purpose of metadata is to make it easy to retrieve information from any given database. When it comes to regulatory compliance, it’s important to understand that document management indexes can make it simple for law firms to find exactly the data they’re looking for, but there are ways to make it easier. For example, file and cabinet titles, both of which are examples of metadata, should be accurate depicters of what’s inside those cabinets and files. When the time comes to look for data, it makes it much easier to search and/or browse your cabinets and files to find exactly what is needed.
The Most Important Piece of the Puzzle: Moving to Electronic Records
Any company doing business today, law firm or otherwise, needs to have electronic records. The need for paper files is obsolete, thanks to document management software (DMS) that can not only handle the functions paper files served, but far exceed them. Security is far superior, audit trails are automatically created, including who made each modification to every file, when they made it, and what change was made.
When companies move to totally paperless offices, they have less to fear in an IRS audit, enjoy more confidence in their regulatory compliance, and can significantly reduce their overhead. Moving to DMS like eFileCabinet gives you the convenience of being able to access every single document in every single file from anywhere an internet connection is available.