An Introduction to Legal Risk Management

Risk is a natural part of the legal profession, and lawyers are usually adept at assessing and mitigating those risks for their clients. Many lawyers, though, are not as skillful when it comes to analyzing and responding to risks inherent in their own practices. That is where a risk manager steps in to provide the guidance necessary to protect law firms from ethics complaints, malpractice lawsuits, fee disputes, and more.

At a legal malpractice insurance company, a risk manager works with insured attorneys to set up appropriate firm procedures to prevent the insured attorney from committing unintentional errors or inadvertently violating the Model Rules of Professional Conduct. For example, the surest way for an attorney to get hit with a legal malpractice lawsuit is to miss a statute of limitations deadline. Risk managers are experts in precisely the calendaring and docket-control procedures that law firms should implement to ensure no one in the firm misses the deadline to file a client’s case. This work is related to adjusting legal malpractice claims but is still distinct from that process. While legal risk managers may work with attorneys who face claims, the risk manager’s duty is to provide guidance to avoid making the situation worse (or prevent it from happening again in the future), not to defend against the client’s claims in the underlying matter.

While some lawyers may think their professional responsibility class was a snooze, being a risk manager is seldom boring. Every attorney who seeks risk management guidance provides a unique opportunity to delve into interesting details relating to law practice management and client management issues. Lawyers love to tell war stories, and legal risk management is practically an anthology. Many risk management phone calls are also a chance to lend an ear and sometimes a shoulder to cry on to a professional colleague. For these reasons, risk management is a natural fit for attorneys who are detail-oriented and good listeners.

Legal ethics knowledge is essential to the job, and legal risk managers are also frequent speakers at ethics CLEs. Many become involved in local, state, and national bar associations to assist with reviewing and developing ethics standards for attorneys. These risk managers regularly write articles in legal media with ethics and malpractice avoidance tips.

Not all legal malpractice insurers require their risk managers to have law degrees, but every legal risk management department should have at least one lawyer on staff. Given the entire job is guiding legal professionals about the nuances of appropriate law practice management, lawyers are better suited for this job than nonlawyers. It is also beneficial to have experience in private practice before entering risk management. Lawyers always appreciate receiving guidance from someone who is speaking from personal experience. For that reason, some lawyers are hostile to risk management guidance from nonlawyers. Therefore, attorney-led legal risk management is an essential part of a legal malpractice insurance company.

If you are contemplating a career in legal risk management, consider becoming involved with the ABA Center for Professional Responsibility. Involvement in the center will allow you to learn from and network with other legal ethics professionals across the country. The Standing Committee on Lawyers’ Professional Liability has also put together a fantastic website with tons of risk management information. This resource is a great place to start to familiarize yourself with important legal risk management issues. Local and state bar associations may also have committees dedicated to ethics, law practice management, well-being, and other topics directly related to legal risk management.