New Role in Managing Law Firm Risk Exposure: the CRO
Once upon a time, the possibility of a malpractice suit being filed against them was pretty much the only risk that law firms had to worry about, and, since lawyers were reluctant to sue other lawyers, they were a rarity.
Today, facing a panoply of potential pitfalls, including the Sarbanes-Oxley Act, increasingly complex securities and tax regulation, and massive discovery obligations in the age of electronic communications, a majority of large law firms have at least a part-time in-house general counsel overseeing risk management, reports Risk Management magazine.
Among the critical functions that they routinely oversee are acting as a gatekeeper who not only ensures that conflicts checks are made but helps weed out poor quality clients; watching that lawyers comply with continuing legal education requirements and are trained in new developments in their practice areas; and centralizing risk management, so that policies are uniform throughout the firm’s offices and anyone who has an issue knows where to take it.
Now, at the cutting edge, some large law firms are also starting to retain full-time chief risk officers. Megafirm DLA Piper was one of the first to do so, hiring CRO Julia Graham away from a 25-year United Kingdom insurance career to oversee its offices in Asia, Europe and Middle East. She directs a 50-person staff, which is comprised of three departments.
“The first is a corporate team that develops risk policy, such as principles for client engagement letters,” the magazine explains. “A regional team interacts with DLA Piper offices on a one-on-one basis, troubleshoots potential risks that arise during the course of business and provides training. Finally, there is a central services team that performs back-office functions, such as client identification and conflicts of interest.”
There are many obvious advantages of having a centralized group overseeing risk management, but at least one might not immediately come to mind: Graham’s staff, which is comprised both of lawyers and nonlawyers, has helped the firm retain female attorneys who want a family-friendly alternative to traditional law practice. “It’s a great way of delivering diversity to the firm—and providing an avenue for keeping exceptional talent,” she says.
