By Legal Futures Associate DG Legal
A file audit (or file review) is a structured and documented review of individual client matter files whether physical or electronic, to assess whether work has been carried out in accordance with the firm’s internal procedures, regulatory requirements, and applicable professional standards.
File audits differ from system-based compliance reviews, such as Regulation 21 AML audits, in that they focus on the practical delivery of legal services. They test whether policies and procedures are being properly implemented at matter level across different practice areas.
File reviews form a key part of a firm’s overall compliance framework and are particularly relevant to demonstrating compliance with the requirements of the Solicitors Regulation Authority (SRA).
Regulatory context and SRA expectations
The SRA does not prescribe a fixed method or frequency for file audits, however, its regulatory framework places clear obligations on firms to maintain effective systems, supervision, and controls.
Relevant provisions include:
- the SRA Standards and Regulations, particularly:
- the Code of Conduct for Firms (effective governance, systems, and controls)
- the Code of Conduct for Solicitors (competence, client care, and proper standards of service).
Firms must ensure:
- proper supervision of matters
- delivery of a competent standard of service
- maintenance of adequate records to demonstrate compliance.
File audits are one of the primary ways firms can evidence that these obligations are being met in practice.
What file audits typically assess
File audits will generally assess both compliance and quality of legal work, including:
- evidence of appropriate client engagement, including terms of business and instructions
- compliance with client due diligence (CDD) and AML requirements where applicable
- adherence to the firm’s internal policies and procedures
- proper identification and management of risk factors, including those arising from the firm’s Firm-Wide Risk Assessment (FWRA)
- completeness and accuracy of key documentation, attendance notes, and correspondence
- evidence of supervision and oversight, particularly on higher-risk matters
- compliance with record-keeping obligations
- appropriate handling of client money, where relevant
- clear audit trail demonstrating decision-making and advice provided.
Reviews may also consider whether the file reflects good practice in areas such as client care, timeliness, and communication.
Frequency and scope
File audits should be conducted on a risk-based basis, taking into account:
- the nature of the work (e.g. conveyancing, probate, litigation)
- the risk profile of the client or transaction
- fee earner experience and seniority
- previous audit findings or identified weaknesses.
Best practice typically includes:
- a mix of random and targeted file selection
- increased scrutiny of high-risk matters
- periodic reviews across all departments.
Why do file audits matter
Quality Assurance – File audits help ensure that legal services are delivered to an appropriate professional standard, reducing the risk of errors, omissions, negligence claims, and complaints.
Compliance Verification – They provide tangible evidence that firm-wide policies, including AML controls, are being applied in practice at matter level, not merely documented.
Risk Management – Early identification of issues (e.g. missing CDD, inadequate advice, or poor record-keeping) allows firms to take corrective action before risks crystallise.
Training and Development – Recurring issues or trends can highlight gaps in knowledge, supervision, or processes, informing targeted training and continuous improvement.
Regulatory Defence – In the event of an SRA investigation or audit, documented file reviews demonstrate proactive compliance, effective supervision, and a strong control environment.
Cultural Impact – Embedding regular file audits promotes a culture of accountability and continuous improvement, moving compliance beyond a “tick-box” exercise to an integral part of daily practice.
Independence and Objectivity – While file audits are often conducted internally (e.g. by supervisors or compliance teams), there is clear value in independent review, particularly:
- for high-risk areas (e.g. conveyancing, AML-sensitive work)
- where previous issues have been identified
- as part of periodic compliance health checks.
Independent audits can provide greater objectivity, consistency, and credibility, particularly in demonstrating compliance to regulators and external stakeholders.
Recording and follow-up
Effective file audits should always include:
- a documented review record (file review form or report)
- a clear summary of findings
- identification of corrective actions
- evidence that actions have been implemented and followed up.
Failure to act on audit findings can undermine the purpose of the review and may itself raise regulatory concerns.
Conclusion
File audits are a fundamental component of a law firm’s compliance and risk management framework. When carried out effectively they provide assurance that regulatory requirements, including those of the SRA, are being met in practice, while also supporting quality, consistency, and continuous improvement across the firm.
How DG Legal can help
At DG Legal we provide independent, risk-based file audits that focus on real-world implementation, not just paperwork. Our approach is practical and proportionate, aligned with regulatory expectations and designed to give firms defensible assurance.
We deliver detailed written reports, clearly graded findings, prioritised action plans and commercially realistic recommendations. Where required, we also provide ongoing compliance support and preparation for SRA engagement.
To discuss your AML support requirements, please get in touch with DG Legal by emailing: consultants@dglegal.co.uk or by calling: 01509 214 999.
