Six Questions About Risk Management in Legal Practice
What is a "legal risk"? Defining a "legal" risk is far trickier than it seems. After having spent hours on it, I realised that having a formal definition of legal risk is actually useless. I know this may be intriguing, and don't misunderstand me: I am convinced that the concept of risk management is of a huge value for legal practice, but I think that limiting lawyers to managing only "legal" risks - whatever that may mean, if anything at all - is a big mistake.
Is the concept of risk management really adding some value to legal practice, or is it just a trendy name to call what lawyers have done for years? Is there anything new to be learned here? My experience is that the methodology and tools of risk management really open new perspectives for the legal practitioner.
Is risk management an important topic only for in-house lawyers? No! Lawyers in law firms should definitey be aware of what risk management is about. Clients increasingly expect their external advisors to assist them in managing (legal) risks. If, as an outside counsel, you have no clue as to what that really means, how can you be in the loop?
As a methodology, how does risk management work? What are the models and tools? What do lawyers do differently when they adopt the risk management methodology? No time to get into the details here. But there is indeed a methodology, there are concepts, models, and tools, and they can (should) be learned.
Is risk management the same as compliance? When once concept is heard, the other usually is not far behind. Although there may be related, these two concepts are different.
Is risk management all about reporting? Again, two different issues. Some reporting may be needed in the risk management process, but the risk management method and tools go far beyond reporting.