RISK MANAGEMENT

• Risk is the process of an unforeseen event occurring that may affect

the achievement of a firm’s objectives.
• Risk management involves identifying, analyzing, and taking steps to
reduce or eliminate the exposures to loss faced by an organization or
individual (e.g. to claims and complaints in the conduct of the firm’s
practice).
• The firm : should set up a risk management policy, to prevent the risk
from occurring and or reduce the impact of the risk should it happen
• Key features of risk management policy
• Details of risk management responsibilities
• A definition of risk
• The process of identifying and/ or reporting of risk
• Evaluation of risk
• How it is managed
• How to Manage Risk
• 1. Mitigate the risk
• Mitigation involves putting contingency plans in place so that if the risky
situation does materialize, you can implement your Plan B.
• Example plan to ask for postponement of a case, but not sure whether
the Court will allow it or otherwise. Possible ways to mitigate the risk: be
prepared for the case, although you have intention to ask for next H date.
• 2. Avoid the risk
• In a situation where you have an outstation case that is in Penang and
your firm is in Melaka- so you have to plan and go at least one day
earlier, to avoid any unnecessary incidents that will make you be late to
the Court.
• 3. Transfer the risk
• In this case, you pass the risk on to someone else. Liability is shared
amongst partners, however in some situation where you are operating a
branch firm but the financial management is being managed separately, you
have to show it clearly in the agreement and /or to defence yourself when
situation involving breach of trust occurs.
• 4. Accept the risk
• Of course, you can always do nothing. You should, though, make a
conscious, informed choice to accept the risk. This strategy works best for
small risks where the impact isn’t that big, or for risks that are unlikely to
happen- e.g. did not comply with the size of your nameplate, accept the
offer without consulting client- so you have to convince the parties that
questions you.
• Benefits of an effective Risk Management Policy
• Loss prevention
• Cost savings
• Quality of working environment
• Reputation
Human Resource Management
• A good firm is built on the strength and talent of its lawyers but a
great firm relies also on the strength and talent of its staff
• The purpose of recruiting staff is to able lawyers to delegate some of
their work to reliable staff, so that they can have more time to read/
do research and to equip themselves with more knowledge
• The inefficiency of the clerk will affect the performance of everyone in
the firm/ within his workflow chain
• This means that the good performance are always overworked and
the poor performers are relatively relaxed.
• Therefore, consider putting into place a better reward system in your
firm to retain and motivate good staff as well as to attract better
candidates as recruits.
• Better to lose the unperformed / bad staff
• Training
• To increase their proficiency in writing, understanding, instructions, and legal
knowledge
• To develop work methods and standards procedures for your firm
• Develop soft skills: time management
• To ensure their continued effectiveness, it is important that the HR in
firms:
• Plans what they ‘need to do’ at all three levels of strategic, managerial and
operational;

• Organises their diaries to contain activities in all three;

• Invests ‘chunks’ of time to the strategic;
• Invests regular time in the managerial; and
• Delegates, does quickly or ignores the operational.

• Experience has shown that if more time is invested in activities at the strategic and
managerial level, there should be less to do at the operational level.
To help cultivate and maintain a positive work environment, and avoid liability to the firm:

• Plan Your Recruiting Strategically

Identifying and retaining the best talent is a top priority. 

• Build Engagement and Recognition Programs

Staff recognition, open communication, and valuing input are the keys to generating stronger employee engagement and
creating a positive work environment.

• Develop an Employee Handbook

HR specialists create and implement comprehensive manuals that ensure the formal communication of all policies and
procedures regarding employee engagement, retention and termination; compensation and promotions; workplace conduct;
vacation, personal and sick days; firm hierarchy, and performance reviews, as well as disciplinary, grievance and conflict
resolution processes.

• Establish Career Development Paths

HR professionals can provide valuable training and development programs to help employees succeed in their current and
future roles within the firm.
• Protect the Firm

Being proactive about documenting performance issues and warnings

protects firms against potential actions by disgruntled workers.

• Protect Confidential Information

With all the sensitive information handled by law firms, ethical

considerations mandate clear confidentiality policies to address the
ramifications of discussing cases or clients outside the office, as well as the
proper handling of sensitive information. HR specialists can create and
maintain policies that communicate clear and appropriate guidelines for
the handling of confidential data.
FINANCIAL MANAGEMENT
• Running a profitable practice is all about managing cash flow
• Many legal practices pay little attention to expenditure( spending/
disbursements) controls
• Expenditures must be tracked, controlled and monitored
• By this the firm can detect the unnecessary spending and it is a good
early warning of the possibility of wastage or even theft.
• In terms of bills, law firms always have problems collecting fees
• It is advisable that at least some portion of the fee be collected upfront
• It is not always necessary to wait until a significant milestone has been
reached before issuing a bill- common errors amongst lawyers
• A good and honest client will pay the fees as long as you have done
your fair share of work
• The bills also can be issued in stages- discuss and get agreement with
client at the retainer stage
• If they still did not pay, stop work, before you invest so much time,
skill and effort- once you decided not to carry on, they will pay. In a
worse scenario, at least you cut your losses at relatively early stage
• Client want to know what they are paying for- so detailed your bill
• Discount clamouring/ demand
• Disbursement control
• Billing targets
• Tax planning