Two Types Of Legal Risk

We do not need anyone to remind us again that the Australian and the global legal landscape has changed and is still constantly evolving, but have we actively turned our minds to the fact that this means the risk a firm or an organisation faces is also changing? In many areas of law and areas of business, these risks are increasing with new or more complex regulation. There was a time when the role of lawyers was to advise on legal matters and nothing more. In those old days, lawyers, especially those who operated in-house, were viewed as a roadblock or a hurdle, preventing progress. As for legal practice managers, while they did have to manage various risks faced by running a legal practice, excellence in risk management often was not …show more content…
It is separate from, but overlaps with, other forms of risk that exist in the corporate world, such as financial risk, fraud risk, reputational risk and occupational risk. For legal practice managers, two kinds of legal risks are particularly relevant. The first of these is the legal risk that relates to a particular legal practice (which can be a law firm, an in-house legal team, or a government department) and the objectives of that legal practice. The second type of legal risk is more of an environmental-based risk. It involves the impact of the law in general, rather than the law concerned with the operations of a specific firm or organisation. Both of these legal risks pose a very real business risk. This is because legal risks have legal consequences that will impact on how the firm or the organisation runs its …show more content…
There is this one tip that may not be front of mind but is well worth taking on board. It would be wise for legal practice managers to have a good relationship with any lawyers we work with. While some of us are also lawyers, lawyers we work with (and by this I mean those employed by our legal practice to advice clients and also those whom we seek legal advice from) play a key role when it comes to managing risks relevant to our firm or our organisation. Lawyers whose role has a legal advisory focus (as opposed to a practice management focus) are better placed to identify and therefore manage risks by providing advanced warning of imminent changes in legislation and regulations that could affect (positively or adversely) the firm or organisation. Lawyers also have better visibility regarding the impact of developments in case law. Indeed, a close working relationship between legal practice managers and lawyers will result in a more efficient operation of the legal side of business.
Ideas for the new year
As contemporary legal practice managers, we have a lot to offer in the risk management space, and we should not detach ourselves from taking on the role of risk manager. Here’s one way of thinking about this – legal practice managers are not necessarily tied to a formal risk management function, and this gives us the ability to take a widened view to consider all