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Risk Management for Law Firms

Guest post by: Lawrence Atkinson

Article Overview: Have you planned an exit strategy for you?

Risk Management for Law Firms

Those of you who know me will know that most of my career has been spent in banking where risk management is just an integral part of "the way we do things around here" (particularly when I was running a retail bank in Papua New Guinea!)

I believe that Risk Management must be incorporated into your law firms everyday practices as all of our businesses are becoming more and more open to risk that we may not have considered previously. Compliance is a big issue, particularly with every practicing lawyer in Australia needing to comply with the LPA 2004, (leaving themselves open to fee reviews, reprimands etc for failing to comply) and clients becoming more aware of their rights, or just generally more savvy.

As an example, I continue to be amazed at the number of lawyers appearing on the OLSC website for various misdemeanours, but particularly for not understanding (either deliberately or erroneously) the operation of Trust Accounts, Controlled Moneys, and even Transit Accounts (which some lawyers don't even know about).

These are mostly "internal" or compliance concerns, but there are numerous others to consider, particularly, the reliance on one or two large clients. I think firms need to realise that whilst the "solid relationship" that once existed between firms/individual lawyers and their clients is still there, it should not be relied upon as there are so many other influencers that could jeopardise the relationship at any time.

Cloud computing is on the horizon (not a pun!) and we are not yet sure what risks will be associated with that, but I'm pretty sure that that is where many firms will be heading as an avenue to reduce operational costs.

One of the areas I am now targetting under the heading of risk management is that of succession planning. Not a new subject I know, but an area where many lawyers, particularly those in smaller firms (if they are around my age for example), should be putting a 5 to 10 year plan in place for exiting from the business they are in, (in whatever form that exit might look like) rather than leaving it to the very last moment and "hoping" they will get what they want.

If you need assistance with planning your successor, or recruitment generally for your law firm, please call me and we can get together for a coffee to discuss the options that are available.

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Article Tags: australia, br, compliance concerns, everyday practices, horizon, influencers, law firms, lawyer, lawyers, lpa, moneys, operational costs, papua new guinea, pun, relationship, reliance, retail bank, risk management, succession



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