risk management

Risk Management In Law Firms

It’s Time to Take a Centralized Approach

While law firms have built cultures based on risk avoidance, relatively few have embraced the idea of a centralized approach to risk management. It is strategic for a firm to systematically assess the risks their clients and attorneys are most vulnerable to and take formal steps to minimize those risks. A lack of uniform procedures across business teams and even office locations can result in increased monetary and reputational risks for the firm.

Law firm administrators and general counsel face potential risk pitfalls related to inconsistent procedures regarding client file transfers, lateral onboarding, client-issued guidelines and conflicts of interest search strategies. By bringing together the largest areas of risk, firms can enact significant protocols and measures to protect their clients and operations.

Taking the First Steps to Centralized Risk Management

Some firms may not be ready to sponsor a distinct risk management department/officer role. However, there are several smaller steps you can take to establish risk management procedures that align with the firm’s current risk threshold and culture.

First, form a risk management task group. There are numerous risk management topics that concern multiple teams such as lateral onboarding and integration, contract attorney hires, departing attorney processes and reviewing and ensuring adherence to outside counsel guidelines. Assemble interested participants from firm administrative teams to discuss risk trends, areas of vulnerability and how to address them. Commit to a monthly meeting schedule.

Next, catalog the firm’s current risk management procedures. Collaborate with the task group to compile a list of risk mitigation procedures in all departments. You may be surprised to learn that the firm’s administrative departments independently manage risk in a variety of ways. Why not tout these accomplishments? Make an effort to update the list quarterly and use the document for talking points to relay information to your malpractice insurer for renewal discussions or to prospective clients for pitches and other business development activities.

Finally, identify areas that need improvement. Use the catalog you created to identify any perceived gaps in your risk management process. For example, you may learn that the Conflicts team has established a protocol to implement ethical walls. However, the process doesn’t specifically address paper files. The task group can work with the records team to refine the workflow and establish needed protocols without increasing the burden on any one team.

Accountability and Communication

Accountability and communication play critical roles for gaining buy-in from stakeholders and expanding the firm’s risk management program. Here are some proven and practical steps your firm can take to enhance these efforts.

Share Information With Firm Leadership

Firms can be apprehensive about forming new committees and groups that take time away from day-to-day activities. Ease concerns by providing leadership with a precise goal statement for the task force and a list of achievable short-term and long-term initiatives. Depending on your firm’s culture, you may want to engage leadership in the planning process. For example, seek guidance from executive team members on prioritizing initiatives.

Share the risk procedures catalog with firm leadership to arm them with information they may need at their fingertips during negotiations with clients or insurers. This will eliminate a last-minute scramble to compile the information.

Support Your Narrative With Numbers

Data is invaluable when making a case to bolster your risk management program and resources. Whether you are seeking approval for technology, resources or the continuation of the task group, the effort you expend to track your progress will be worthwhile. Canvassing other, similar-sized firms regarding specific topics is an effective way of drawing comparisons as well. Firm leadership values knowing how the firm stacks up to others.

Monitor Compliance

Communicate any new protocols promptly and ensure personnel follow protocols after they’ve been established. Create a process for quarterly check-ins to ensure each department is adhering to the new protocols as they apply them. It can be easy to lose sight of common objectives if there has been turnover or an increase in workload among administrative staff. All of your hard work will be diminished if you don’t have a mechanism to gauge internal compliance.

Offer Regular Training

Consider implementing annual risk management refresher sessions for firm staff and attorneys. New employees receive the benefit of up-to-date formal training and orientation sessions. The same should be offered to existing employees. Ask task group members to assist with the presentation. Use this format as an opportunity to remind staff of existing firm procedures and alert them to any new procedures. Keep the sessions brief and interesting, using relatable examples for context.

Law firms approach risk management in a variety of ways. Using the approach outlined above is a good way to gauge the firm’s risk tolerance level and its willingness to support a more formal centralized program.

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