Frank Maher advocates taking a positive approach to risk management as this strategy can bring financial rewards in the long term

Risk management is usually seen as being about as exciting as a trip to the dentist.

But it does not have to be that way, since it is not just about going out to buy a diary and putting in a few systems to see that it is used.

Perhaps that is why many law firms talk about risk management, but do not actually get around to doing anything about it.

Profit is the reward for taking risk.

It is about being more successful.

Managing risk is not just about avoiding claims - it is also about establishing where you want to be tomorrow.

These are business decisions to be taken by a firm's stakeholders with a financial interest in the outcome, so it is not just a job for an internal manager.

The driver for it has to come from the top.

Senior and managing partners have key roles in all this.

The senior partner must bring vision - which markets will the firm compete in, both geographical and types of clientele? We are in changing times, with traditional work either disappearing or becoming commoditised.

Commoditisation can threaten solicitor-client relationships and damage staff morale, as the scope for individual involvement and consequently profit are driven out of work.

The client's head of purchasing tells the solicitor how much the client will pay, and the traditional contacts are lost.

It has happened to high street work, defendant insurance work, and banking work is probably next.

The senior partner's role in maintaining respect for core values is key, but it is no good paying lip service to them.

It is vital to make sure that partners all contribute to the team effort - there is no room for sole practitioners in a partnership, nor should you tolerate a 'firm within a firm'.

You have to be on the lookout for rogue partners - they may show all the signs of success, but are not part of the team - and ask yourself how your firm monitors complex work that you do not understand yourself.

Meanwhile, there is much for the managing partner to do.

That lawyer should start by looking at what the firm's corporate clients do to manage their risk.

All firms have management information to monitor financial performance, but are they using it to help avoid claims arising, for example, from underperformance, overwork or client dissatisfaction? There are also more subtle ways of picking up problem files and people.

The data is all there if only you know how to use it.

How exposed is your firm to individual partner borrowings? Private borrowing for partnership capital, or anything else, can put pressure on individuals and alter their behaviour as several firms, large and small, have discovered when a partner has made off with millions of pounds of client money.

More often than not, they are lawyers who appear successful and are admired.

And are you monitoring stress and maintaining a work-life balance for your staff? Lawyers seem to regard the European Working Time Directive as a source of fee income while forgetting that it applies to them too.

Even some medium-sized firms can make six-figure savings through their risk management.

Do you manage your risk, or do you just let it happen?

Frank Maher is the senior partner of Liverpool-based law firm Legal Risk, which was the winner of last year's Gazette centenary award for excellence in risk management