Tax Law Services Ottawa Section
July 2011

6. Observations – Risk and legal file management

6.1 Risk Management

File risk management in the TLS – Ottawa Section is appropriate.

Identifying and managing risk is crucial for the successful completion of legal case work. Early recognition of file risk, evaluating its potential effects, and formulating mitigation strategies help enable legal professionals to ensure successful completion of files.

The Associate ADAG (Tax Assessment), TLS Portfolio receives notices of appeals for general procedure files directly from the Tax Court of Canada and is responsible for providing an initial risk level and complexity level to the file and then assigning the file to a TLS regional section. This initial rating determination by the Associate ADAG assists in maintaining a level of uniformity in the risk rating process across the Portfolio.

Once a file is allocated to the TLS – Ottawa Section, the Director and Deputy Director are responsible for further evaluating the initial risk assessment and the related impact and assigning the file to the legal counsel. If the Director disagrees with the initial risk assessment and the related impact, he will discuss the matter with the Associate ADAG. Otherwise, the file will be allocated to the specified counsel for work to begin.

All files are given a risk rating of high, medium, or low as it relates to the potential success of the case. Potential client impact for each file is set at minor, medium, or significant. Once the risk and impact levels are confirmed and the file is assigned to a lawyer, the case is entered into iCase, which will automatically assign a numeric risk value based on a scale from one to nine. Management approval to undertake the case must be obtained for all files assigned a risk level of seven, eight, or nine. These files are closely monitored by the TLS – Ottawa Section Director, Deputy Director, and the ADAG’s office. Throughout the life cycle of each TLS file, legal counsel are required to monitor the factors impacting the initial risk levels and re-evaluate the overall risk on a continual basis. In our walkthrough of the iCase system, the audit team verified that the iCase file risk rating and impact assessment process was operating as intended.

From our interviews with TLS – Ottawa Section personnel and CRA senior management and our documentation review, the audit team found that file risk management is well addressed by TLS – Ottawa Section personnel through regularly scheduled meetings with CRA and ongoing informal discussions. The TLS – Ottawa Section continually monitors and compares risk reports with CRA and attends quarterly meetings with CRA to review high-risk files. The audit team was also advised that the Director, TLS – Ottawa Section is responsible for managing the risk associated with each file assigned to the section. However, TLS Portfolio Office guidance or assistance is available if required to mitigate certain risks. CRA also advised us that they are involved in developing any proposed mitigation strategy that TLS decides to implement on a case-by-case basis.

We determined that the TLS – Ottawa Section has an appropriate process in place for identifying, evaluating, and monitoring risk.

6.2 Legal File Management

Management and administration of legal files in the TLS – Ottawa Section is appropriate and managed in accordance with government and Department policies.

The management and administration of client legal files is fundamental to successfully operate in a legal environment. Appropriate file management allows for effective and efficient responses to client requirements and permits legal counsel to prevail in court proceedings.

The central file management system used for casework in the TLS – Ottawa Section is the iCase information system. Departmental standards require that all files dealing with TLS be entered into the iCase system with specific data input fields populated as outlined in the iCase National Business Standards Manual. There are common standards required for all portfolios within the Department and additional standards are tailored to each portfolio’s specific requirements. TLS Portfolio senior management update and customize standards when they determine a need for standardization improvement and ensure that policy manuals are revised as appropriate. These customized standards help ensure consistency across the TLS Portfolio and allow management to produce comparable reports from the various regional TLS sections across the country.

In accordance with the Department’s iCase National Business Standards Manual, all new legal files are required to be entered into iCase within one week of receipt of initial documentation. The iCase Administration group produces periodic iCase reports on files entered in the system. TLS – Ottawa Section senior management review these reports and compare the reports with the files allocated to the section to ensure that all cases are appropriately entered into the system.

Counsel and management advised that files are well managed in iCase and administered appropriately in the Ottawa Section. TLS – Ottawa Section senior management stated that the section consistently meets court-specified filing deadlines.

The audit team performed a high-level walkthrough of iCase with the Associate ADAG. We observed an appropriate audit trail including management sign-offs and corresponding dates to support the sound management of client files. From our interviews with CRA personnel and our walkthrough of iCase, the audit team verified that filing deadlines are respected and legal files appropriately managed.

CRA senior management advised the audit team that CRA is satisfied with TLS – Ottawa Section’s management of legal files. CRA senior managers indicated that TLS legal counsel are passionate about their work and consistently exceed CRA expectations in terms of managing legal files and providing legal services.

In our opinion, the TLS – Ottawa Section has appropriate measures in place to manage and administer legal files and the mechanisms in place are operating appropriately.

6.3 Forecasting of Demand for Legal Services

The TLS – Ottawa Section appropriately forecasts demand for legal work.

Forecasting future workload demand is vital to the effective management of legal operations.

The TLS – Ottawa Section primarily conducts litigation concerning tax decisions made by CRA. As this litigation is reactive, forecasting future demand for TLS legal services is challenging. Through our interviews with both TLS – Ottawa Section and CRA management and our documentation review, we found that the TLS – Ottawa Section attempts to establish future demand for legal service to the extent possible. Regular formal meetings take place between staff in CRA and the TLS – Ottawa Section to discuss current and future tax work (e.g. appeals to recent court decisions, new tax legislature, and current case files). Informal communication also takes place by telephone and email. Ottawa Section senior management confirmed that CRA regularly and consistently keeps the Ottawa Section aware of upcoming files and discusses the file risk and complexity levels of new cases.

In our opinion, the TLS – Ottawa Section appropriately and effectively manages future demand for legal services.

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