"Why worry? We’re insured." This was the reply I received when asking a senior partner if he didn’t think that keeping files for only three years before destroying them was a bit risky.
But that was in 1996, and there were probably many solicitors as blasé about risk in those days. Without doubt they contributed to the present situation where being insured is at best expensive and at worst unobtainable.
Risk and how to manage it is now one of the hot topics of management. Be it risks to the environment, risks to health and safety, risk of negligence claims or the risk of hurting somebody’s feelings!
And what about the ticking bombs that may be in the filing cabinets or in the cellar? Is there any chance that some past failure to give correct advice will blow up into a claim without warning?
It’s enough to pose a serious risk to a solicitor’s health and peace of mind!
So what can we do about it? We can’t eliminate risk altogether. Business is all about risk. We accept greater risk when we set up and run our own practices or become equity partners. But we can do a lot to minimise the level of risk by simply being in adequate control of what’s going on.
Now I know that sounds like stating the obvious but most solicitors I’ve worked with over the years have initially not been in full control. They may have thought they were but their approach was largely based on trust in the people they’ve chosen as partners or employees to ‘do the job properly’. Precautions such as reviewing colleagues’ files or periodically appraising their performance was considered an embarrassing waste of good fee-earning time. Better to just hope they’ve not been taking on work they can’t handle or giving undertakings they can’t discharge.
As for the clients, well, it’s not long ago that it was unheard of to actually give them an estimate of costs and timescale before starting work on a matter. Is it any wonder they were surprised and challenged their bills?
The fact is, these simple techniques and many others, increase control and can prevent problems and negligence claims occurring. Saving far more time, in the long run, than you would waste dealing with problems.
So, to limit your firm’s exposure to risk, start looking at how you can improve control over all its activities. How you can make sure everybody is ‘doing the job properly’ all the time.
Years ago this typically meant a lengthy consultancy study. It would be part of a business efficiency or quality assurance project and such recommendations would fill reports and the whole exercise would cost a fortune. It would, however, significantly reduce the firm’s exposure to risk, increase its profitability and put it seriously ahead of its competitors.Now, all the work is done for you. The lessons learned over the years from such studies and the experiences of the Solicitors Indemnity Fund and successful practices have been compiled as the Lexcel Practice Management Standard. All you have to do is adopt them in your own firm.
You will have a much better understanding of what being in control is all about. All the recommended measures in Lexcel help to reduce exposure to risk and assist with the firm’s survival, for example:
- have one person in the role of ‘risk manager’ to deal with all aspects of risk;
- write down what the risks are of each work type undertaken by the firm and the common causes of claims and making sure all fee-earners are aware of them;
- have a simple way of reporting risk situations to ensure that fee-earners are constantly aware of risk issues and can monitor, report and consult on how to manage them;
- establish procedures for dealing with matters that have a higher than normal level of risk attached to them – if you want to take them on;
- consider risks attached to every matter before it is accepted and re-appraise the situation if the risk level increases;
- consider client satisfaction at the end of every matter and the risk of complaint in the future;
- review and analyse applicable records periodically to maintain awareness of levels and types of risk the firm is exposed to.
Common sense really, but organised common sense.
Yes, you will need to invest a bit of time and effort. Some members of the firm may take a little convincing as change always unsettles people but the alternative is far more stressful and expensive.
Insurers recognise the risk lowering advantages of Lexcel. Some even have their own quality systems that they encourage their clients to adopt which incorporate the same measures. The fact that a third party assesses your Lexcel system and verifies that it is implemented and operated correctly, also provides a significant confidence boost to insurers, banks and clients.
Lexcel is the foundation for risk management and should not be underestimated. If you haven’t yet adopted the Lexcel requirements, you’re not yet controlling your exposure to risk.
Tony Lister is a quality management consultant, a Lexcel consultant for Connect2Law and a Lexcel assessor for Centre For Assessment Ltd
