Cybercrime and its associated financial losses are a growing concern for the legal sector. Having a robust risk management process is essential if you want to protect your chambers and your clients.
The role of legal departments is ever-changing; not only do chambers need to understand the law, draft legal documents, and conduct litigation, but they need to manage legal risks strategically. In today’s digitally driven world, vulnerable services are increasingly at threat. As a result, the variety of risks is continually evolving. Risk management is not a one-off task; it’s a continuous and progressive process.
What is Legal Risk?
Legal risk is the possibility of financial or reputational loss caused by legal or regulatory action being taken against an individual or company.
Legal chambers are exposed to a wide variety of risks each day. The risks may, for example, relate to compliance, contracts, IP or assets, and can carry serious implications for a business.
The most typical types of risks include:
Modern-day chambers are dependant on a range of technologies to run their core business activities. It’s not surprising that cybersecurity is now more critical than ever before. The legal sector is especially vulnerable to cyber-attacks because of the volume of personal data and the valuable assets legal chambers hold.
Smaller firms, in particular, are highly susceptible to cybercrime as they do not have the same resources or in-house IT to protect themselves as larger firms.
Cybersecurity is, therefore, an important factor that you need to review regularly during your risk management process.
Regulations from governmental institutions and other regulatory bodies will affect your chambers. To prevent regulatory risk, you need to understand which ones apply to your business and stay abreast with changes and new requirements in the sector.
Failure to comply can result in financial penalties and reputational damage, which can take time to recover from. Developing strong relationships and communicating regularly with regulators is an excellent way to manage this risk and remain compliant.
Contractual risk is the possibility of making financial losses if a party doesn’t fulfil the terms of a contract. Or, if a firm cannot manage the obligations of the contract involved effectively.
Poor risk management of contractual processes, errors within the contract, non-compliant terms & conditions or missed deadlines can put your chambers at risk.
Automation or contract management software can help to reduce risk by streamlining contractual processes and reducing the opportunity for human error.
Legal disputes pose another risk to chambers. They can include any dispute involving a legal claim, such as accidents or employee misconduct.
Although they may not always result in litigation, they can drain both your resources and time, hinder business relationships and damage your firm’s reputation.
Maintaining a Robust Risk Management Process
Implementing and maintaining a successful risk management process requires expertise and regular monitoring.
Using technology to enable more effective management of legal risks is something you could consider for your business. Another alternative is to outsource your cybersecurity to a professional IT management service.
As part of our bespoke service, you will have access to a dedicated team of technology experts who will monitor your IT systems around the clock. They will identify any potential threats before they become problems for your business. Contact us today to see how we can help to protect your firm and reduce risk.