Smart Risk Management for Law Firms: Be Prepared – not just for boy scouts anymore

Businessman using mobile phone outside courthouseI don’t know any attorneys that want to get sued by their client.  However, not all law firms are taking the proper steps to prevent this situation from happening.  In order to protect both your firm AND your client, you should employ multiple risk management techniques.

What is risk management?

Risk management is a set of policies and procedures that a law firm should have in place to reduce or eliminate risk issues.  Not only will you be protecting yourself and your clients, but you should receive a credit from your lawyers professional liability insurance carrier for employing these techniques.

How should risk management be taught?

Frequently, firms hold seminars for their employees to review office procedures and information specific to the firm.  Outside training can also be implemented in the form of webinars or guest speakers.

Your staff may interact with your clients as much or more than you do.  Don’t forget to train everyone!  According to the latest Verizon security report, 51% of data breaches are caused by the people within a company.  Make sure that they are familiar with your policies and procedures that you have in place.

Business team in the office

Important risk management policies for law firms #1 – Take the right cases

A common cause of malpractice is taking a case that your law firm is not qualified for or does not have the resources to handle.  You have to look past the dollar signs of a case and ask yourself, “Is this the best case for me and the firm?”  Create a policy that helps you walk through the details of a case to ensure that you are well-versed in the area of law it concerns as well as having the resources that it may require.

Important risk management policies for law firms #2 –Dealing with Departing Attorneys

Redundant Businesswoman Leaving Office With Box

If an attorney is departing your firm, make sure that an exit interview is conducted and that the proper steps are taken to remove them from your firm.  Make sure that you are aware of all cases that he/she was working on and any open issues.  Create a policy that outlines the following:

  • What are the important questions to ask in the exit interview for my firm?
  • Who should be assigned any work that is not completed?
  • What materials can the departing attorney take if they are allowed to take clients with them?
  • How can they be removed from your letterhead?
  • How can their access to your computer system be eliminated?
  • How does your firm contact your professional liability insurance carrier to let them know the date of attorney departure?


Important risk management policies for law firms #3 – Hiring a New Attorney

When you hire a new attorney, make sure that they go through your complete hiring process.  Make sure that they are everything that they claim to be.  Create a policy that outlines the following:

  • Ensure the new attorney is proficient in your firm’s areas of practice.
  • Why are they leaving their current firm? Was there a performance issue, were they a product of downsizing or are they looking for more opportunity?
  • Complete a conflict of interest check with the new attorney and all of the firm’s existing clients. The last thing that you want to do is to bring on a new lawyer and find out a few months later that they have a conflict with one of your biggest clients!
  • Make sure that they are comfortable with your firm’s risk management procedures.


Important risk management policies for law firms #4 – Dealing with Unhappy Clients

Clients are the lifeblood of any business.  An unhappy client can lead to bad reviews online, refuse to pay their bill, sue you for malpractice and many other things that can negatively impact your business.

One telltale sign that a client is unhappy is if they ask for a complete copy of their file after services have been rendered.  Another is if they tell you that they are unhappy with you or with the result of their case.

If you notice signs that your client seems to be dissatisfied, sit down and have a conversation with them to try to resolve the issue.  Sometimes, it is just a matter of explaining a legal process that they may not be familiar with.  Once they know why you chose to handle a situation in a certain way, it tends to alleviate their fears.

A common source of client dissatisfaction is lack of communication from the attorney to the client.  This can be solved by the attorney and the client setting up a communication timetable and sticking with it.  If you, as the attorney cannot meet the timetable during the representation, have your assistant or paralegal contact the client with an update.

Confused businessman with a calculatorAnother source of client unhappiness may stem from billing issues.  You are much better off to bill frequently instead of sending one large bill at the end of a case.  Smaller bills with detail help explain to the client what you did and act as an update to the case.  If you wait and send one “final bill” a client may forget how much work you performed and feel the bill is unreasonable.  Additionally, sending incremental invoices will help you get paid quicker.

Important risk management policies for law firms #5 – Docket Systems are CRITICAL


If you look at claims that arise against lawyers, one of the most common alleged mistakes is a blown statute.  This is a result from your calendaring system not being used on a regular basis or not being used correctly.  Generally, LPL insurance carriers require that a firm have at least two docket systems with one of them being computerized.  Back up of this system should be on a daily basis.  Create a policy for your firm that details what type of docket systems your firm will use, how often they should be updated, how often they should be backed up, and who in the firm is responsible for maintaining the systems.

For more information on risk management or help creating/implementing these policies and procedures in your law firm, contact Donald Ivol at INtegrity First Corporation today!