Why Risk Management

Calling all COLPs and COFAs

Why good risk management should be at the top of your "to do" list

I’m sure you don’t need reminding that on the 6th October 2011 the regulation of “providers of legal services” changed dramatically. We now have an outcomes focused and risk based approach as set out in the SRA Handbook. Our regulatory body will focus on your firm’s own risk management policies and procedures and whether you are achieving the right outcomes for your clients rather than following prescriptive rules - a complete transformation from the way the profession has been regulated in the past.

The identification and management of risk is at the heart of the SRA’s approach. For Outcome Focused Regulation to work, both the SRA and all those it regulates will need to understand risk within the context of their own individual firm – its identification, causes and management and will need to work together in a spirit of mutual trust and respect.

You, as Compliance Officers (individually and as a team) will need to oversee and embed adherence to the Principles, Rules and Outcomes of the Handbook and the Accounts Rules. Both roles are integral to your firm’s compliance with these regulatory requirements.

But good risk management is much more than ensuring professional compliance.

Good risk management will

Help reduce your indemnity premiums and renewal on more favourable terms
Improve client care, ensure fewer complaints and increase client retention
Develop management efficiency – Risk management is in reality knowledge management: - the two are inseparable. If management does not know what is happening in every part of the business, your firm is at risk
Identify areas of vulnerability and ways to improve.
Lay the foundation for an effective supervision process throughout your firm, providing that all important dialogue that will encourage and promote a healthy “risk culture” essential for managing your firm’s risks.
Increase profitability
Enable your firm to stay ahead of the game: - to proactively create, maintain and enhance the service culture and reputation that will be required to differentiate your firm from the rest.

What benefits has your firm seen?

H. W. Wood Limited says: “Good risk management is about increasing your efficiency and ensuring you are compliant which will add to your bottom line. The rewards are rarely instant which can be off-putting but firms often don’t need to wait too long to reap the benefits.

From a PII perspective you will gain the advantage of being able to present your ‘risk’ in an improved light to insurers. You will also both prevent and mitigate claims which are not only stressful and time consuming to deal with, but have an adverse effect on what premium you pay each year.”

The author

Adèle Warchester is an independent Quality Management Consultant advising firms on quality, professional compliance and risk management. She is a Consultant to the Law Society’s Risk and Compliance Service and is also a Lexcel accredited Consultant.

Contact details
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