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Risk Management – It’s a boring topic that may just save you.

Lawyers spend considerable time and energy protecting their client’s risks.  It is their obligation as a solicitor and as an Officer of the Court. So, as a mechanic is when servicing his or her own car, lawyers can often leave themselves and their business unprotected by not adopting best practice risk management procedures.

No doubt readers will be thinking “I’m fine! I’ve got my Professional Indemnity insurance in place.” However, a firm’s risk profile far exceeds that of professional liability claims from clients.

Regulators, insurers and Law societies across the country have made lots of noise about contemporary risks such as cyber-attacks in recent years, and rightly so.  However, the age-old risks remain ever-present and in some circumstances, they are increasing. According to the Governance Institute of Australia’s Risk Management Survey 2019, professional services firms ranked Brand and Reputational Risk as their number one risk. Similarly, attraction and retention of talent ranked highly, a risk labelled as “old as risk management itself.”

In addition to cyber-crime, disruption and failure to innovate featured highly in the survey.  Though, many law firm clients saw regulatory risk as the standout in 2019, off the back of the Banking Royal Commission.

Strangely, professional liability, considered among the top risks, came in 12th in terms of highest rated risks this year.  Yet lawyers spend most of their time and money mitigating their professional liability! 

Have you considered the possibility of a claim from a staff member for adverse action as a result of discrimination or other reason? If your firm were found liable, do you have an insurance policy that may respond to the damages claim?  

To self-insure is a common approach.  However, the small cost of a policy to respond and rectify major business risks seems modest given the potential for loss.  Of course, protection through insurance is just a small part of an overall risk management strategy, and it should be your last line of defence.

Does your firm have an up to date ‘Risk Register’ that considers scenarios across the broad spectrum of strategic risks? How is your firm placed to prevent clients or staff being enticed to move to other more agile and tech-focused practices?  What IT controls do you have in place in case of a system failure? What measures are there to prevent fraud in your Trust Account or expense management?

Lawganised has extensive experience in the risk management of legal practices and professional services firms.  We can assess your current profile, develop a Risk Register and implement strategies to minimise your risk.  To find out more about how Lawganised can help your firm, get in touch for a free consultation.  

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