What does risk management mean and what do its practitioners do? 

Across our legal practice, risk management consists of identifying, assessing and dealing with the potential legal risks relating to matters as diverse as the content of a contract, the execution of corporate restructuring, or the establishment of a financial structure. It involves considering legal risks before they arise, assessing the likelihood of their occurrence, and minimising the impact if they do by anticipating remedies. The ability to understand and manage risks gives clients greater confidence in their business decisions and in assessing whether they are willing to take those risks, depending on their risk appetite. To give the clients informed and pragmatic advice, it is essential to have an excellent knowledge and understanding of their business. This implies maintaining a close relationship with the clients and almost becoming a business partner, sharing their commitment and success.  

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"Through a solid risk management practice, business law firms can meet the demands of clients that increasingly realise the needs for contract risk management strategies."

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Why is risk management an essential practice in a business law firm? 

 Every area of business law is concerned by risk management – nothing is free from it. Identifying and managing risk throughout the lifecycle of a contract is critical for any company. A contract of any nature, from shareholders’ and share purchase agreements to  commercial and financial contracts, includes fundamental clauses that must be considered carefully and negotiated by the parties to reach a provision that satisfies them both. Risk management arises not only when a contract is drafted but also in the negotiation phase, in which litigation lawyers that deal daily with court decisions have the experience to identify the risks to which their clients are exposed. An acute risk scrutiny from a litigation lawyer brings a new perspective to the review of contracts that are customarily negotiated by transactional lawyers. The experience acquired in handling complex cases in court also reinforces the prudential and critical approach of a business structure. Through a solid risk management practice, business law firms can meet the demands of clients that increasingly realise the needs for contract risk management strategies. 

 

How do you see risk management practices evolving in the coming years? 

With an increase in litigation relating to the performance of contracts and the fulfilment of commitments by business partners, clients have realised the strategic importance of contract management in achieving their business objectives. They want to avoid long and expensive legal proceedings and their hazards they can entail and to control risks at all costs. Whereas in the past litigation lawyers were consulted only when things went wrong, today the trend is to request their advice pre-emptively to anticipate risk and manage it better. In recent years we have seen a significant increase in preventive consultations by clients before establishing a partnership or concluding a contract, and we are convinced this trend will intensify in the future, making risk management more than ever an essential facet of any project. Litigation lawyers will then be in the position of Chinese healers offering preventive remedies to their customers. Clients are more ready to pay for pre-emptive advice that protects the health of their business than for court expenses and damages that could affect their viability.