Law firms and corporations are both driven by a need to manage risks. When the General Counsel at a major corporation is faced with new and disparate challenges that create risk, they can draw on their organization’s resilience, their robust experience in managing risk, and the findings of experts in corporate governance.
Corporations have dealt with these challenges for decades and have built a wealth of knowledge about what works best. However, law practice management groups need more experience managing risk beyond a financial and professional context. However, this experience is what firms must draw on to manage risk in the legal field successfully.
10 Management Best Practices Law Firms Need to Borrow from Corporations
1. Be Proactive
Corporations are aware of the need to address looming issues proactively. In the legal field, firms have been much more reactive. The first step to managing risk is viewing it as a planned activity.
2. Create an Actionable Risk Analysis
Incorporating a risk analysis method into the corporate culture will help firms determine the relative risks in their business models and ensure they mitigate risks that pose the greatest threat to their profitability and survival. In corporations, this information can be used to create an actionable plan. It should make recommendations for actions to effectively mitigate each risk area and allow for future growth opportunities.
3. Create A Risk Management Plan
The risk management plan is a document that outlines the most significant risks facing the law firm, not just legal risks. The program should be able to address a wide range of issues, such as strategic and business plans, including technology and workforce planning. It should also identify processes for dealing with each identified risk. The program will also need to guide how to communicate the plan and educate employees on what it means for them and their work environment.
4. Implement the Risk Management Plan
The implementation of the risk management plan is where the rubber meets the road. The plan’s success will be determined by its implementation within the firm. First, the risk management culture must be created and reinforced through communication, training, and ongoing review and assessment of the effectiveness of that communication and training.
5. Compile Information on the Management of Risk
Organizations must also educate their staff about what it means for them as employees and managers. It includes understanding what it means to manage risks in a legal context and how these differ from those in other industries.
6. Empower and Train Managers
Law firms must utilize corporate best practices in management styles, staffing, and talent. Management styles and software must be integrated into the firm’s culture from the earliest stages of its growth. The best-performing law firms focus on developing leaders within their organizations and actively encourage their employees to become better leaders.
7. Change the Law Firm’s Mindset
Incorporating risk management into any law firm is a significant matter and one that will require a change in mindset from senior partners and associates. Anytime an organization operates with this sense of security, it is in danger of encountering risk issues that it may need to prepare for. A more effective way for law firms to manage risk is outsourcing some of their workloads to other, smaller firms.
8. Hire Experts
Firms need to employ staff specialized in risk management, which can help them develop the required risk management culture. These individuals must demonstrate a high level of competency in risk analysis, manage data and Information effectively, and communicate strategic plans across the organization.
9. Create an Integrated Risk Management Information System
Law firms must create a system that allows them to track information on every stakeholder within their organization and current and potential risks. It will provide a comprehensive view of all the risks facing the firm and allow the firm to better direct its resources toward mitigating them.
10. Empower Risk Management Professionals
To ensure that law firms can manage risk effectively, they must create a culture that values risk management in their operations. It is also why law firms must empower their risk professionals by ensuring they have enough autonomy within the organization to work independently on special projects or initiatives related to managing risk.
Risk management is more than a one-step process. It is arduous and complex. Nevertheless, the top law firms have all adopted the above ten steps despite the difficulty encountered on their path to success. Firms undertaking the process must be prepared for the same complexity and long duration level to succeed.