Leave a trail
By Susan Humble
Susan Humble explains why you should keep a consistent paper trail demonstrating careful due diligence
“Do not go where the path may lead, go instead where there is no path and leave a trail” (Ralph Waldo Emerson).
Lawyers relish going where there is no path. It makes our work exciting, creative and strategic.
Leaving a paper trail is less invigorating but has never been more important.
That trail may be electronic rather than printed. There will be metadata underpinning the trail and existing until the end of days.
Evidence-based decision-making is critical in the world of the Solicitors Regulation Authority (SRA) Standards and Regulations 2019.
Rationally, we understand the importance of making a detailed note of what we do as soon as practical.
Emotionally, it can be a different matter when up against the clock and the demands of clients.
My experience as the Solicitors Disciplinary Tribunal (SDT) clerk demonstrated to me the essential nature of the paper trail.
The outcome of most disciplinary hearings turns on the papers. Many cases are solely paper based.
The absence of significant documents shouts out at tribunals when preparing for hearings.
If your files contain breadcrumbs, expect to end up like Hansel and Gretel – a happy ending is not guaranteed.
An example from the SRA’s website involved solicitor A instructed by Z on the purchase of buy-to-let properties.
They became friends and Z told A about cash flow difficulties, so A agreed to provide a short-term, interest-bearing loan, and wrote a cheque on his personal account.
The transaction proceeded and Z settled the loan in cash.
This approach continued in relation to further properties funded similarly or by payments from unconnected third parties.
The police became involved, A was suspended and the firm self-reported to the SRA – not a good outcome.
The SRA says an inspection of Z's file reveals very little – no identification documents and no information about the source of funds.
The improper transactions on the client account come to light, although no shortages are identified.
Paper trails can seem over-the-top, an additional burden when working from home, struggling with technology, with limited practical support on hand and cats walking on our keyboards.
But remember, we are regulated and our regulators are following us, examining our path for clues when something goes wrong.
Covid-19 makes no difference here.
A documented workflow at the start of a job helps us and others to retrace our path.
It assists with continuous improvement, as we reflect on what worked and what was lacking.
If documents exist, audit is easier and reassuring. Nowadays, file inspection should not reveal ‘very little’ (as in the above case).
Making a contemporaneous note is straightforward. If an expected document isn’t there when a forensic investigator looks at a file, you and your firm are open to attack.
The way the file (electronic or otherwise) is presented creates an impression of methodical action or disorganised inaction.
The words, ‘it’s in my head’ are unlikely to cut the mustard.
Show your workings. How often were we told in maths lessons that we would get marks for showing our thought-processes.
The same rule applies in adult professional life. It’s no good in your head – note it down.
Anti-money laundering is a hot topic and it’s going to get hotter; client due diligence is your superpower in the fight to protect yourself and your firm.
Everyone at the firm must be aware of your system for onboarding client matters, regardless of whether the client is new or repeat business.
Use of the system must be consistently and transparently documented; this is not knowledge for the select few only.
Fraudsters get to know their victims by testing their weak spots, such as flattery and friendships, using them as points of entry.
A consistent trail demonstrating careful, inquisitorial due diligence with follow-up on each instruction may not be the only answer, but it’s the best place to start.
Solicitor A made many mistakes when dealing with client Z, but a complete file showing client due diligence and evidence of the decision-making behind the transactions, and why he acted as he did, might have made a difference.
Sadly for A, hindsight is a wonderful thing.
Susan Humble is a senior partner at RIAA Barker Gillette riaabarkergillette.com She is former CEO of the Solicitors Disciplinary Tribunal