Building blocks of awareness

We referred in an earlier article to the Lexcel practice management standard requirement to appoint a risk manager and implement a risk management policy (see [2003] Gazette, 30 October, 35).

It sounds simple, but it is easy for such processes to become paper exercises with no measurable impact on the firm or reduction in risk exposure.

The most effective policy is to raise awareness of risk.

The people who know most about risk in a firm are its staff, but there is often difficulty in translating that knowledge into preventative action.

Firms frequently suffer from risk inertia, and operate on the basis that if it has not happened before, the chances are it will not happen in the future.

People know their actions are risky, but under pressure cut corners and keep their fingers crossed.

Raising awareness of risk among staff need not be a costly exercise and can be combined with in-house training that accrues CPD points.

The following is a suggestion for a simple exercise to begin the process of risk analysis at the level of the practitioners who are carrying out the work.

The first stage is for firms to gain a thorough understanding of the risks to which they are susceptible.

Few problems are unforeseeable.

It is not difficult to analyse the most vulnerable areas of work on the basis of past history in other firms and in your own.

A quick look at cases and analysis of complaints published in the legal press reveal their repetitive nature.

A review of the firm's complaints record and claims history can highlight weaknesses.

Once a general review of problems has been undertaken, each department should reflect on how vulnerable they are in the light of this information.

Risk can be analysed by looking first at generic risks to which all solicitors are susceptible.

Look then at risks that affect a particular area of work, followed by risks that are departmentally specific to your firm, perhaps because of particular types of client or specialist work.

The next step is to consider precautionary measures.

In putting these in place, the normal rules governing risk analysis will apply and staff will need to consider how likely it is that the risk event will happen and what would be the consequences if it did.

Measures should be proportionate to the risk.

Practitioners are most likely to comply with simple processes, which they have had a hand in designing; so staff themselves need to decide what to do about the risks they have identified.

This is a starting point for risk awareness, bringing to an end the fly-by-the-seat-of-your-pants approach, leaving stressed lawyers and a poor claims record.

This column was prepared by AFP Consulting, a division of Alexander Forbes Risk Services