Tax Law Services Prairie Region
July 2011

6. Observations – Risk and legal file management

6.1 Risk Management

File risk management in the TLS – Prairie Region 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 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 office. 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 regional office, the TLS – Prairie Regional Director holds regularly scheduled meetings (twice weekly) with the Deputy Regional Director and team leaders to determine which legal counsel should be assigned to each file. The assignment of large complex files often involves direct consultation with the senior counsel cadre. These meetings focus on the general procedure files, but will also address informal procedure files. Informal procedure files, originating from the Alberta region, are generally allocated to junior lawyers. These files are assigned by the TLS – Prairie Region Deputy Regional Director who receives them directly from the CRA and assigns the files accordingly. The TLS – Prairie Regional Director and Deputy Regional Director assign general procedure files received from the ADAG’s office at the weekly meetings.

The audit team determined that files allocated to the Winnipeg office from the TLS – Prairie Regional Director are initially assessed by the Director (Acting). The Director (Acting) stated he allocates files based on his knowledge of his legal counsel’s experience, abilities, and capacity to take on new files. The Director (Acting) further stated that he considers the training/development needs of his staff during his decision making process for file assignment.

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 counsel, the case is entered into iCase, which will automatically assign a numeric risk value based on a scale from one to nine. Consultation between the TLS – Prairie Regional Director and the Prairie Region’s General Counsel Cadre Legal Risk Management (LRM) subcommittee must take place in regard to all files that are ascribed a risk level of six, seven, eight, or nine. The subcommittee provides advice on, among other things, risk level assessments, resource queries, contingency planning, early warning notes, and legal positions. 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 – Prairie Region personnel and CRA senior management and our documentation review, the audit team found that file risk management is well addressed by TLS – Prairie Region personnel through regularly scheduled meetings with CRA and ongoing informal discussions. The information gathered from these meetings and informal discussions are rolled up by CRA Prairie Region personnel into quarterly reports provided to CRA headquarters located in the National Capital Region. The TLS – Prairie Region continually monitors and reviews litigation risk reports with CRA and holds quarterly meetings with CRA to review high-risk files. The audit team was also advised that the TLS - Prairie Regional Director is responsible for managing the risk associated with each file assigned to it. 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 – Prairie region 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 – Prairie Region 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 – Prairie Region 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 within 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. Senior management update and customize standards when they determine a need for standardization improvement. Senior management also 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 Department iCase National Business Standards Manual, all new legal files are required to be entered into iCase within one week of receiving initial documentation. To ensure cases are entered in the system, periodic iCase reports are produced by the iCase Administration group with results provided to senior management. TLS – Prairie Region senior management review these reports and compare the reports entered into iCase with those 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 TLS – Prairie Region. 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. Through 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 – Prairie Region’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 – Prairie Region 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 – Prairie Region appropriately forecasts demand for legal work.

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

Senior management in the TLS – Prairie Region stated that forecasting demand for future tax work is difficult as tax law services are generally reactive. The audit found that there is no formal forecasting process in place in the Prairie Region to address future work demands. The TLS – Prairie Regional Director stated that information relating to future work is generally obtained through the numerous meetings held between TLS and CRA management.

Through our interviews with TLS – Prairie Region management and CRA personnel in both the Prairie Region and the National Capital Region, we found that the TLS – Prairie Region attempts to establish future demand for legal service to the extent possible. CRA staff and the TLS – Prairie Region have regular formal meetings 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. TLS – Prairie Region senior management confirmed that CRA regularly and consistently keeps the Prairie Region aware of upcoming files and discusses the file risk and complexity levels of new cases.

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

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