Do you take risk seriously in order to protect your firm’s future health?
A survey carried out by ManagingPartner.com has found that partners need to take greater responsibility for risk management to better protect their firms. This was the overwhelming stance taken by those surveyed for Managing Partner’s inaugural risk management survey. The details of the survey and full results will be published online next month.
In the meantime it is clear that there is a key issue that needs addressing; there currently appears to be a failure by senior partners and management members to properly prioritise and address the ever increasing risk that every day legal work carries. Client work and fee earning tops the bill and pays the overheads, but what of the risks that present themselves every day to the jobbing lawyer? Client money and the protection of it ought to be at the forefront of any senior management member who then rolls out the risk management of this to the rest of the firm.
Yes, we may have the COLPs and COFAs now who are ensuring guidelines and Outcomes Focussed Regulations are adhered to, but without the leader at the helm banging the drum it just falls apart.
There are two quotes which stand out from the survey, the first being that of general counsel at one international law firm; “Too many partners see risk management as something which is a responsibility of others”; the second coming from a risk director of a UK firm: “All partners have a part to play in supporting the risk director with the implementation and continual development of the risk management programme.”
Client risk goes hand in hand with firm risk. You lose client money and losses to the firm will follow. One of the biggest risks out there is to conveyancing firms. Handling substantial transactions weekly, a large conveyancing firm could even lose its panel status should it become a victim of the criminal conveyancer. In turn a firm’s professional indemnity premiums go up, the moral of staff becomes low and there could be potential damage to both your brand and reputation.
Within the survey it was revealed that 71% of respondents stated that partners need to take greater responsibility for risk management in their firms. Ask yourself what do you do to ensure that there is a strategic defence line against such criminality? Does your staff have a ‘safe list’ of firms that they transact on a regular basis with? What happens when the vendors firm is not on this list or one your conveyancing team are familiar with? What checks do you currently carry out on a recipient firm? The Find A Solicitor list is no longer enough as was demonstrated by the SRA when they released this warning http://www.sra.org.uk/identitytheft/ back in 2012.
A similar amount, 73 per cent, said all lawyers should be measured and rewarded on how well they manage risks to the firm. However, for 61 per cent, their lawyers are not currently measured and rewarded on this basis.
Commented the managing partner of one regional practice: “It is measured but does not attract reward.”
Among the respondents that are working on introducing this, various approaches are taken.
“We currently deduct profit costs from those lawyers who have notifications or complaints because they are the ones who just want to bill well but do not see the downside,” said the risk director at a local firm.
The biggest risks that lawyers are currently incentivised to manage are: billing (76 per cent); client due diligence (55 per cent); fee collection (50 per cent); client communications (47 per cent); and case/matter management (47 per cent).
Less than a quarter of firms (24 per cent) incentivise data security in their lawyers. This therefore begs the question – why?????
There has been wide publicity within the legal sector on the inherent risks within conveyancing transactions which inevitably attract the criminals. £600 million in transactions up for grabs is far too tempting to ignore if you are a clever criminal and cyber savvy.
The implementation of risk management processes is there to protect your firm, your staff and most importantly your client. Lawyer Checker offers a quick, easy and reliable search for your conveyancing team offering them the information that they require to be able to make an informed decision about the safety and security of client funds.
Associate News is provided by Legal Futures Associates.
Find out about becoming an Associate