
Risk Management in Law Firms
Mitigate Risk and Enhance Firm Success
Katerina Menhennet, William Glynn, Niya Phiri, Alexia Howard, Simon Konsta, Nigel Miller, Simon Chester, Sandy Gill, Anousheh Bromfield, Charles Kuhn, Brian Rogers, Rebecca Atkinson, Frank Maher, Peter Noyce, Noah Fiedler, Tracey Calvert, Jamie Butler, Ruth Bonino, Chris Holme, Jessica Clay, Iain Miller, Lucinda Soon, Jonathon Bray
Published: 2022
Pages: 195
eBook: 9781787429185
Risk Management in Law Firms brings together lawyers, consultants and other risk and compliance professionals to provide expert and practical guidance on essential risk management topics.
Risk Management in Law Firms brings together lawyers, consultants and other risk and compliance professionals to provide expert and practical guidance on essential risk management topics. Chapters cover risks relating to clients, internal operations and law and regulation, and address recent developments including issues arising from the shift to hybrid working, the increased focus on ESG and climate change, and the extended influence of clients through outside counsel guidelines. There is also consideration of the future of risk management with coverage of the proposed changes to the SRA Codes of Conduct to address issues relating to wellbeing and unfair treatment at work, and the commercial opportunities for law firms and individual lawyers presented by the increasingly flexible principles-based regulation.
This title aims to help law firm leaders and individual lawyers understand and prepare for the risks they face – as well effectively handle them when issues do arise – whether they occur in the firm’s internal operations or its dealings with clients. In-house counsel and others will also find it useful to understand their law firm colleagues better, enhancing professional relationships. With the comprehensive coverage of key risk areas in this title, lawyers and firms can not only ensure compliance, but also maintain healthy client relationships, educated staff, a positive reputation, and continued success and growth.
Table of Contents
Cover | Cover | |
---|---|---|
Title Page | i | |
Copyright Page | ii | |
Table of Contents | iii | |
Executive summary | ix | |
About the authors | xvii | |
Chapter 1: Managing risks in the hybrid “office” | 1 | |
Introduction | 1 | |
People risks | 1 | |
Operational risks | 5 | |
Data/IT risks | 7 | |
Legal/regulatory risks | 9 | |
Conclusion | 11 | |
Chapter 2: Climate change and ESG risks for lawyers | 13 | |
Introduction | 13 | |
What is ESG? | 13 | |
Reputational risks | 14 | |
Transition and transactional risks | 16 | |
Corporate disclosure and liability risks | 17 | |
Greenwashing | 20 | |
Diversity and inclusion | 21 | |
Conclusion | 22 | |
Chapter 3: Data protection | 29 | |
Introduction | 29 | |
Overview | 29 | |
Data protection principles | 31 | |
Lawful ground for processing | 34 | |
Accountability | 35 | |
Data processors | 37 | |
Individual rights | 37 | |
Personal data breach | 39 | |
International data transfers | 39 | |
Marketing and cookies | 40 | |
Conclusion | 41 | |
Chapter 4: Cybersecurity: an existential risk for law firms | 43 | |
Regulatory requirements | 45 | |
Client pressures | 46 | |
Cloud computing | 47 | |
Remote working | 48 | |
Policies and procedures | 48 | |
Insider risks | 50 | |
Assessing precautions | 52 | |
Insurance | 54 | |
Planning for breach | 55 | |
Next steps | 58 | |
Chapter 5: Criminal finances and investigations | 63 | |
Introduction and types of financial crime | 63 | |
Investigations | 63 | |
Privilege | 66 | |
Representation | 69 | |
Jurisdiction | 69 | |
Specific considerations for certain offences in law firms – (section 330 POCA) | 70 | |
Conclusion | 71 | |
Chapter 6: Anti-money laundering – are you doing enough to protect your firm? | 73 | |
The money laundering landscape | 73 | |
Law firm sanctions | 73 | |
SRA AML thematic reviews | 74 | |
AML guidance | 75 | |
AML governance | 76 | |
Firm (practice)-wide risk assessment | 76 | |
Client/matter level risk assessment | 77 | |
AML policies, controls, and procedures | 77 | |
Conclusion | 80 | |
Chapter 7: Professional indemnity insurance | 81 | |
The requirement to have professional indemnity insurance | 81 | |
How much insurance cover to buy | 82 | |
What a circumstance is, when and how to notify possible claims to insurers, and who will handle the claim | 83 | |
Should you rectify mistakes? Beware own interest conflict | 85 | |
PI insurance renewal – what happens each year and top tips for renewal: how to present your firm well | 86 | |
Possible PI insurance exclusions for sanctioned entities and certain types of work | 88 | |
A short note about cybercrime insurance | 88 | |
Limiting liability clauses | 88 | |
Conclusion | 89 | |
Chapter 8: Protecting partner assets | 91 | |
Introduction | 91 | |
Professional indemnity insurance and the exclusions | 92 | |
Retirement and professional indemnity insurance | 95 | |
Defensive practice | 96 | |
Insurance options | 98 | |
Conclusion | 98 | |
Chapter 9: SRA compliance | 101 | |
What is the SRA and when do you need to be authorized by it? | 101 | |
How to get authorized | 104 | |
The annual reauthorization process | 104 | |
The SRA Standards and Regulations | 106 | |
SRA Enforcement Strategy | 112 | |
The COLP and COFA role and reporting requirements | 113 | |
Ethics and how to approach | 115 | |
SRA warning notices and guidance | 115 | |
Chapter 10: Mitigating risk through your client journeys and practices | 119 | |
Take on process | 119 | |
Throughout the transaction | 120 | |
Completion | 120 | |
Financial disciplines and controls should also be part of the toolkit | 121 | |
Conclusion | 123 | |
Chapter 11: Outside counsel guidelines | 125 | |
Comprehensive outside counsel guidelines become standard | 125 | |
Indemnity provisions | 126 | |
Defining conflicts of interest | 127 | |
Managing the risk of OCGs | 129 | |
OCGs are here to stay | 130 | |
Chapter 12: Conflicts of interest and confidentiality duties – effective risk management | 133 | |
Own interest conflict | 133 | |
Conflicts of interests when acting for clients | 134 | |
Confidentiality and disclosure | 135 | |
Risk management | 136 | |
Risk compliance objectives | 137 | |
Risk management pinch points | 138 | |
Compliance solutions | 140 | |
The bigger picture | 141 | |
Chapter 13: Complaints | 143 | |
The requirements regarding complaints | 143 | |
What should the complaints handling process be and who should undertake complaint handling in the firm? | 144 | |
How to effectively handle complaints | 146 | |
Complaints made by non-clients | 149 | |
How to handle online reviews – good or bad | 149 | |
The Legal Ombudsman Scheme Rules, publication, and case fee | 150 | |
Further guidance | 152 | |
Chapter 14: Effective supervision in remote and hybrid teams | 155 | |
Why is good supervision important? | 155 | |
Risks, challenges, and opportunities of remote supervision | 156 | |
Core skills and characteristics of an effective remote supervisor | 156 | |
Setting “ground rules” to establish responsibility and build trust | 157 | |
Communicating for effectiveness and productivity | 158 | |
Maximizing engagement, inclusion, and wellbeing | 158 | |
Hybrid working – developing approaches | 160 | |
Hybrid working and supervision – opportunities and challenges | 161 | |
“Supervisor as coach” skills – managing from a distance | 162 | |
Chapter 15: Lateral hiring in law firms – risks and reward | 165 | |
Introduction | 165 | |
Basic legal, ethical, and regulatory obligations of partners in UK law firms | 165 | |
Setting the scene | 167 | |
The due diligence process – how to avoid overstepping the mark | 168 | |
Pre-employment vetting | 169 | |
Conflict checks – how to avoid breaching confidentiality obligations | 170 | |
Integration issues | 170 | |
Key rules of the road | 172 | |
Chapter 16: Culture matters – a new era for law firm risk management | 173 | |
Ethical culture under the spotlight | 174 | |
Assessments of unfair treatment | 177 | |
Concurrent employment claims | 178 | |
Challenging behavior that does not meet the standard | 179 | |
Personal and professional boundaries | 180 | |
Conclusion | 181 | |
Chapter 17: Innovation and the opportunities in flexible regulation | 185 | |
Regulation-led innovation | 185 | |
CMA report | 186 | |
Deregulation-led innovation | 187 | |
Other external factors | 189 | |
Ten years of ABSs – evolution rather than revolution? | 190 | |
Innovation is easier said than done | 192 | |
About Globe Law and Business | 195 |