Pursuing a legal action is a complicated and convoluted affair. It is complex enough without even considering the risks involved in each stage of proceedings. The list of potential hazards is eye-watering, but the methods that can be employed to minimise that risk are also significant. Some techniques are thankfully simple enough that even the layman can easily understand them and put them into practice. Nonetheless, it is critical for Law firms that they maintain an active awareness of the risks involved in their work, especially given how dimly firms without a poor track record are viewed by regulatory bodies, and how often they can open themselves up to malpractice.
The best solutions to complex issues are sometimes the simplest and most obvious, but it is nevertheless important to state that one of the best ways to minimise legal risk is to create as solid and well-evidenced a Case as possible before even considering pursuing the Claim in the courts. Not only will this drastically reduce any risks arising from the litigation process but in some Cases, it can bring about a much earlier resolution to proceedings. ‘Waterproofing’ a Case before bringing legal action can save both Law firms and their clients a lot of time (and money) by bringing forward a decision. In many Cases it can deliver a pre-trial settlement to a Claim. The process of procuring the proper evidence from a client can feel like pulling teeth but getting bogged down in lengthy proceedings with a Case that needs tinkering whenever something new comes to light will feel much worse.
Another risk that Litigants – be they Consumers or Businesses - regularly contend with is the escalating costs associated with pursuing a Case against a Defendant. A tried and tested method of managing this risk is the use of Legal Expenses Insurance, wherein cover is taken after the incident involved in the proceedings has occurred. Insurers are usually hesitant to extend terms for a Case where there is not at least a 60% chance of success, so it is incumbent on law firms to be transparent and open with Claimants while deciding whether to pursue a Claim, specifically as regards the chances of achieving an economical success. It is important to remember the impact on the prospective Claimant too, as any decision made regarding their Claim will not only affect them financially but could also impact them personally. Legal professionals run the risk of becoming numb to the feeling of losing a Case, but for the Claimant each Case can feel like a life-changing moment. It is important not to lose sight of what each Case means for the people involved. This can also encourage a firm to minimise their risk, as the personal impact on the Claimant will be kept in mind.
The risk in pursuing litigation extends to the Law Firm acting for the Claimant as they become financially invested in the Claim itself, something that is particularly burdensome when they work under a Contingent Fee Arrangement (as is often the Case when working with Consumers). These fee arrangements can very much act as a double-edged sword for litigators. They can encourage a Claimant to pursue a Case by reducing their financial risk, but the firm must keep their own interests in mind and ensure the financial risk to themselves is manageable.
Reputation in the legal field is incredibly important, and nothing can do more damage to that reputation than falling foul of regulatory bodies. The damage that a poor reputation can do makes the relationship with organisations like the SRA a large source of risk for firms across the legal field. Minimising this risk comes through transparency with regulatory bodies and proper care when handling the interests of clients. Especially in a field where a bad reputation can scare potential customers away, firms must be very careful to avoid even a whisper of professional negligence to minimise any risk to their bottom line.
That same reputational risk carries over when ensuring proper Case management controls. It may be easier to imagine the situation from a prospective Claimant’s position. If they hear that a firm had lost an easy Case like theirs through simple mismanagement of the Case, they will avoid the firm like the plague.
Finally, it is critical that Companies do their best to not become a Defendant. Any commercial organisation must act transparently as relates to commissions, works carried out, etc. The FCA and other regulatory entities have no patience for firms that do not adequately protect their own customers’ interests, and although a Case may be won in the Courts, gaining a reputation for professional negligence can be a death sentence for any business. Firms can once again put themselves in the shoes of the prospective Claimant. In any field of work, the reputation of malpractice will scare away a prospective Client. The legal world is no different.
In a world full of numbers and statistics, it does us good to remember sometimes that the emotional side of risk is still alive and that firms across all sectors should be doing their best to maintain a stellar reputation.