Implementing an effective risk management strategy in a law firm

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Implementing an effective risk management
strategy in a law firm

• Peter Scott
• Peter Scott Consulting
• www.peterscottconsult.co.uk

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Who has a risk manager?
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Law Firm Risks
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Is your management in control of your risks
Management
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Operational Risks negligent advice
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Examples of Operational Risks

• Negligent advice
• Lack of management commitment to best practice
  and risk management
• Lack of knowledge by management
• Lack of supervision
• High risk work
• Client vetting / fraud
• Client care / matter care
• Resource capability
• Lack of knowledge/expertise/experience
• Precedents / multiple use of advice
• International work / overseas offices

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Why manage operational risks?

• The pursuit of excellence, with the aim of doing
  things better for the clients
• Director of Risk of a top ten UK law firm

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Which common factors are necessary if risks are
to be adequately managed?

• Top level buy in to management of risk
• Knowledge by management of its
• Business
• A no guilt culture to encourage disclosure

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Risk Management / KM

• Risks are inter-related
• Failure to manage knowledge involves widespread
  risk
• KM is an essential part of an integrated risk
  management strategy

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Your Risk Areas?

• Where does the knowledge in your risk areas
  reside?
• Can you access it?
• Do you have systems to maintain and
• upgrade your knowledge?

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Risk/KM
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A Risk Management / KMintegrated approach

• Approach risk from a KM viewpoint and vice versa
• Need to manage the risks relating to knowledge in
  any event
• Managing the risks
• Quality assurance
• Greater competitiveness

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Implementing a Risk Management Strategy
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Risk Identification Involves

• Being management driven
• Top down / bottom up
• Brainstorming sessions
• Facilitated discussions

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Risk Assessment

• Incidence - probability
• Impact - severity

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Risk Diagnosis
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Risk Mapping
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Some key factors in identifying and assessing
risks

• Areas of law
• Claims record
• Number and location of offices
• Fee income / size of firm
• Commitment to best practice
• Knowledge management
• Are risk management procedures in place?
• Supervision levels

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Risk Mitigation

• Designed to-
• Avoid
• Reduce
• Transfer
• Accept

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Risk mitigation
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Monitoring involves

• Auditing, tracking and reporting
• Comparing actual outturns to preset indicators
• Confirming effectiveness of risk responses
• Reporting compliance and exceptions

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Risk monitoring
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Limitation involves

• Risk crystalisation scenarios
• Contingency plans
• Limitation procedures
• Post event assessment

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Use of risk management tools?

• Use an integrated risk management system to
  quantify, assess and control risk by
• streamlining diagnosis, mitigation and monitoring
• embedding common risk management procedures
• providing information access to all who need it
• creating and maintaining one central, up to date
  risk database

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Advantages of a formal risk management process?

• Structured approach focuses on key risks
• Elimination of redundant procedures
• Comfort / assurance to PI insurers
• Universal application to all risk areas
• Continuous monitoring ensures management of risk
  is lived day to day

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Is your management in control of your risks
Management
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Any questions?