On the risk management of law firms.

Abstract: Law firm is an integral part of the service industry. There is fierce competition, even unfair competition, in the legal service market. Legal service agencies are subject to the survival of the fittest mechanism. It is absolutely necessary for law firms to take a place in the legal service market and withstand the storm.

Keywords: market risk prevention reasonable positioning risk management

1.Risks to Law Firms

It is an unquestionable objective fact that law firms are at risk. Specifically, the risks faced by law firms are mainly in the following areas:

(I) market risk

The legal services market is immature. The field of lawyers' services is relatively small. In many cases, the work that should be undertaken by lawyers is undertaken by administrative departments, institutions, and specialized agencies. For example, on June 9, 2011, the legal advisory service center for small and medium-sized enterprises in Jinan was inaugurated. After the establishment of the center, it will provide free legal training for small and medium-sized enterprises, free standard contract templates, free legal advice, and free solutions to difficult legal problems. This is a much narrower range of services for lawyers who act as legal advisers to small and medium-sized enterprises.

At the same time, the legal service market is still divided, which is mainly manifested in legal service offices and even units of various natures engaging in legal consultation, using industry advantages and even administrative power to take over the legal service business of the industry that should be undertaken by lawyers.

2, the competition rules are not standardized. Between law firms, between lawyers in different regions, contracting business does not depend entirely on the professional standards of lawyers, but on some special relationships. And through the introduction of fees, "price war" and other ways to carry out vicious competition phenomenon is also frequent. Legal workers in legal services also contract business in the name of lawyers.

(II) industry risk

1. Access to non-local lawyers. Opening up the legal services market brings not only new opportunities, but also challenges and risks to local lawyers. First of all, the local lawyer legal service market is bound to be divided into a piece; secondly, according to the law of "survival of the fittest, survival of the fittest", it is difficult for local relatively weak lawyer organizations to compete with big law firms. "Foreign monks are good at reciting sutras", this sentence is still deeply rooted in the hearts of the people. In many major criminal cases in Shandong, corporate listings and other businesses, the parties are more willing to choose several large institutions in Beijing.

2, the degree of specialization of legal service products is low. China's lawyer system has only been restored for more than 20 years. China's lawyer industry is in a juvenile period, and the degree of specialization of lawyer legal services is generally low. This affects the comprehensive strength and overall advantages of law firms.

3, the business structure is relatively single. Different from the low degree of specialization of legal service "products", a small number of law firms have a single legal service business structure. When the national economic regulation or economic conditions change, the legal service market of this single business has dropped sharply or even not., Its survival and development situation becomes very severe.

4, small scale, lack of team spirit. Of course, it cannot be said that small law firms are risky, but small scale and lack of team spirit are difficult to withstand big storms after all. The lack of team spirit is a common problem, which affects the development of human potential and the overall strength of the firm.

(III) Practice Liability Risk

After the promulgation and implementation of lawyer's fees, the risk of lawyer's practice liability has been paid attention to by the lawyer's peers. The emergence of lawyers' practice responsibility from the existing examples, mainly includes: first, a small number of lawyers do not have a strong sense of responsibility in handling cases and lack of professional ethics; second, lawyers' practice is not standardized and there are procedural errors; improper handling of the relationship between the parties, especially the "avoidance" of clients with conflicts of interest; third, the professional standard of individual lawyers is low. If the legal relationship is wrong, the parties should be informed, losing the party's time limit for recourse, etc.

(IV) accidents and other risks

1, was wrongly held accountable. For example, in criminal proceedings, incidents of blaming defense lawyers occur from time to time because criminal suspects withdraw their confessions and witnesses change their testimony. This not only greatly dampens the enthusiasm of lawyers to undertake criminal cases and serve as defenders to fulfill the mission entrusted to lawyers by the Constitution and the law, but also brings great risks to the protection of lawyers' practice.

2. Accidental casualties and malignant diseases. A lawyer's practice is characterized by serving unspecified clients, with many opportunities for travel and mobility. To prevent accidental casualties, but also in the law firm risk prevention. Practicing lawyers work hard and hard, working very long hours every day. A lawyer has a serious illness, which has plagued the entire firm from time to time.

3, the disorderly flow of lawyers. From a young college student to a well-known young lawyer, it takes 5 to 10 years of training and training. The firm brought in an individual, trained them, and faced the loss of talent when it spent a huge amount of investment to train them. The disorderly flow of lawyers is a risk to law firms.

Risk prevention of 2. law firms

At present, some law firms not only lack risk prevention awareness, let alone risk management measures and related systems. According to reports, some foreign law firms not only have executive partners who specialize in lawyers' risk prevention business, but also formulate lawyers' risk management rules and organizational regulations. This has considerable reference significance for us.

(I) reasonable positioning

Law firms should formulate short-term and long-term development plans according to their own human resources and business conditions, determine short-term, medium-term and long-term development goals, correctly position themselves, make their work plans, development goals and practice behaviors in line with objectivity, and avoid and reduce risks.

1, the legal service product structure is appropriate. Law firms are good at non-litigation or litigation based on existing personnel and their legal service products. If you are good at non-litigation, then you are focusing on financial business, securities business, or corporate law business.

2. Reasonable business structure. A single business structure is certainly a greater risk to the firm. Individual lawyers can become "Junior College" and become discipline leaders in a certain field, but a firm is not just a "Junior College", but a professional service and comprehensive service at the same time. There should be several characteristic products, not only Junior College There are also comprehensive departments to meet the needs of the legal service market.

3, the size of personnel, knowledge structure is reasonable. Law firms and lawyers, there are litigation-based and non-litigation-based, all non-litigation-based lawyers and law firms, its scale should be larger. In particular, to act as legal counsel for large clients, to do legal service business for large projects, it is necessary to have lawyers involved in different legal service fields, and to change a single lawyer into several lawyers to serve together.

4, to work together to play the overall advantage. No matter what the size of the law firm, only a limited number of lawyers into a team, collaborative services, in order to reflect the overall advantage. This step cannot be taken. The number of law firms has increased. Dozens or hundreds of people are still fighting on their own. This is not the original intention of the scale. Only by huddling together and twisting into teams can the law firms be competitive. Greatly improved.

(II) sound system

The risk prevention of law firms must establish corresponding systems. The current situation is more common for individual lawyers in the firm to influence and determine the development direction of the firm. This mechanism is very risky for the firm. Only by using the system to manage the firm and establishing a sound working system can we avoid the ups and downs of the firm. From the point of view of risk prevention, the firm should improve the following systems.

1, the conflict of interest handling system. When a lawyer accepts a client's entrustment to undertake a legal service, the first step should be to examine and evaluate whether there is a conflict of interest with the client previously represented, whether there is a conflict of interest with the modern agent or other clients employed? If there is a conflict of interest between the client to be represented and the former client who has been represented in the past, no matter whether the agency is over or not, the entrustment should not be accepted. Similarly, if the other party of the client you are going to represent in the lawsuit is the enterprise you have served as legal adviser or the unit or individual with conflict of interest, the firm should not accept its entrustment, thus avoiding some risks caused by the agency of both parties. Such conflict-of-interest clients may also cite, for example, a lawyer who is an arbitrator and has served as an arbitrator in a client's case and is now entrusted by the client to act as his agent, or a lawyer who has served as a judge in a case and is now an agent in the case. In all these cases, commissions involving parties to a conflict of interest should be regulated.

2, difficult case discussion system. The firm is the subject entrusted by the parties, is a party to the entrustment contract, and is also the direct undertaker of the lawyer's practice responsibility. Law firms should carry forward the team spirit and give full play to the overall wisdom. When handling difficult cases, major cases and new types of cases, lawyers should report to law firms. Law firms should organize lawyers to discuss collectively. When necessary, they should hire law professors and legal experts to discuss. When special issues in other industries are involved, they should entrust relevant experts in the industry to make necessary conclusions on the professional issues. This should become a system, avoid solving such difficult, major and new types of cases due to insufficient personal professional ability of lawyers.

3. Quality control system. Lawyers handle cases and often act individually in practice; lawyers act as legal advisers and the actual performance of their duties is not well understood by the firm. What is the quality of the lawyer's legal service of the law firm? What is the satisfaction degree of the parties to the lawyer's service? The law firm should have the methods and systems to control the quality of the lawyer's case handling: First, the pre-examination system of major and novel legal affairs documents. When the firm issues important legal documents, a review system should be established to ensure the quality of the documents. Second, law firms should establish a case quality spot check system. Where possible, random sampling of cases undertaken by all lawyers according to a certain proportion, organizing a lawyer case quality assessment team, assessing the quality of the case, identifying problems, proposing aspects that should be paid attention to, and exploring measures to improve the quality of lawyers handling cases. The third is to establish a customer return visit system. For consultants, long-term customers, regular or irregular return visits, solicit and listen to opinions, improve service methods, and improve service quality.

4, complaint investigation feedback system. The law firm shall have a special person responsible for listening to the client's visits and complaints. The complaint letter should carefully listen to the opinions of all parties and conduct necessary investigations; the results of the investigation should be fed back to the complainant and the complained lawyer to eliminate misunderstandings, resolve disputes, improve the work of lawyers, and improve the quality of service.

5, the orderly flow of lawyers system. Lawyer mobility is normal and necessary. However, the flow of lawyers should establish a corresponding system, should be carried out in an orderly manner. For firms that have made efforts to train young lawyers, the lawyers trained should be guaranteed a certain number of years of service. In some cases, reasonable and appropriate compensation is used when moving.

(III) improve the insurance system

The practice risk, market risk and accident risk of lawyers and law firms should be solved simultaneously with the establishment and improvement of the national insurance protection system, and their own insurance protection system should be established.

1, practice liability insurance. As a legal service industry, a law firm is an industry with certain risks, especially a law firm that undertakes more non-litigation legal affairs. In addition to handling lawyer practice liability insurance in accordance with the regular, it should also be aimed at undertaking certain items of legal services., The project legal service insurance of the insurance policy can resolve the practice liability risk of the law firm.

2, medical insurance, accident insurance. At present, accidental injury insurance for judicial personnel has been opened, which is a basic guarantee, but the amount of claims is too low. Medical insurance is also available. Many firms in this area have a deeper experience, of course, to be improved and perfected. Lawyers and their staff should also undergo regular medical examinations.

3, pension, unemployment insurance. As a compulsory insurance, pension insurance is a must. Unemployment insurance should also be provided, which is not only a social obligation and responsibility of law firms, but also in a very competitive market economy environment, it is not impossible for law firms to close down and lawyers to be laid off.

(IV) improve the quality of talents

In the final analysis, the risk management of law firms is the management of personnel quality. It is a cultural construction of the firm, is determined by the purpose of the law firm.

(1) The capacity of a lawyer. The lawyer shall provide competent representation to the client. To be a competent agent, a lawyer must have the legal knowledge and skills required to conduct the agent, as well as the necessary investigation and preparation for the agent. If a lawyer does not have this ability, the law firm shall assign a lawyer with this ability to jointly undertake or direct the undertaking. The client is a client of a law firm, which is far from the current situation of actually being a lawyer's individual client. This situation does not change, no matter what kind of legal affairs, whether lawyers have the ability in this area, whether they have the practice and experience to undertake such cases, and there is no preparation and research on the legal affairs in advance. it is difficult to be a competent agent if lawyers who have considerable experience in the legal field discuss or consult or cooperate. The firm has the responsibility to require lawyers to provide competent representation to their clients in terms of ability and skills.

2. Abide by professional ethics. A lawyer's dedication, sense of responsibility, and lawyer's professional ethics are the minimum conditions for a lawyer, and they are also the prerequisites for a lawyer to run a good law firm. From the awareness of risk prevention, law firms carry out continuous and uninterrupted education of lawyer's professional ethics, so that lawyers can do their duty when handling lawyer business.

3, strict practice discipline. No discipline is not an army. Without strict practice discipline, it is impossible to have a team of practicing lawyers recognized by the society and welcomed by the masses. Law firm discipline is not strict, it may continue to complain. Law firms must not be sloppy in their compliance with practice discipline.

(V) improve the practice environment

The lawyer's practice environment has been greatly improved, but it is still not satisfactory. It is far from enough to rely solely on the ability of law firms to improve the lawyer's practice environment. This involves legislation, law enforcement departments, judicial administrative organs, and trade associations. However, law firms are in the front line, and they must strengthen communication with all parties, take the initiative to reflect, and strive to gradually improve the lawyer's practice environment. This is the most important and basic link to prevent the risk of lawyer practice.

Risk Management of 3. Luwei International Law Firm

Luwei International Law Firm is one of the world's top ten, headquartered in London, with 27 offices around the world (including 7 in Asia, 2 in the United States, 17 in Europe, and 1 in the Middle East). So far, Lu Wei has a history of more than one hundred years, and its risk management model is also very perfect.

(I) Lu Wei's Risk Management System

1. Lu Wei's Risk Management Committee

Lu Wei's risk management committee is composed of five partners, chief operating officer, chief financial officer, general counsel and firm secretary from the UK, other parts of Europe and Asia. Among them, these five partners are responsible for laws and regulations, policies, procedural control and other risk management practices for various activities within the regional firm. The Chief Operating Officer is responsible for formulating and implementing risk management measures in line with the entire firm and monitoring the risks that may occur in the firm; the Chief Financial Officer is responsible for formulating and supervising the implementation of risk management methods on financial aspects; the General Counsel is the chairman of the Risk Management Committee, which is responsible for the risk management of the firm's major risk areas and the process of improving the internal procedures and controls of the firm; Lu Wei's risk management manager is the firm secretary, responsible for reviewing and approving the scope of risk management and developing risk response procedures.

The Risk Management Committee also has risk managers as secretaries of the Risk Management Committee, and these risk managers also advise the Committee and provide risk management mechanisms to ensure that the firm's risk management is done well. The support they provide includes the development of the firm's manual and the construction of an internal LAN for risk management.

The Risk Management Committee meets six times a year and is responsible for reviewing all substantive or significant risks; reviewing the findings of the firm's reviewers or risk management managers and their recommendations to management.

2, risk management contact partners.

Lu Wei believes that risk management cannot be ended after several risk management meetings. Risk management is actually a culture that must be persevered and penetrated into every aspect of the firm's operations. This is the only way to truly manage risk. Therefore, Lu Wei has a partner risk management liaison partner for each country or region office, who is responsible for understanding the risks in the jurisdiction, organizing local risk management work, and playing a role in promoting good risk management.

3, Lu Wei's risk management training.

Lu Wei usually holds risk management meetings for new partners, newly qualified lawyers, trainee lawyers and others to develop their risk awareness and guide them on how to identify risks and how to manage them in their daily work.

Specific activities (II) Lu Wei's risk management

1, Lu Wei's specific business risk management.

At Luwei, risk determination is generally determined by brainstorming discussions at risk seminars by international executives, international management committees, professional support lawyers, risk managers, firm operating officers, project leaders, department partners, etc.

Lu Wei's possible risk assessment is shown in the figure:

Schematic diagram of importance risk evaluation:

2, Lu Wei's office risk review.

The Risk Management Committee selects a different office to conduct a risk review each year, based on the actual risk profile, approximately six times a year, of 4 to 5 days each time, through risk seminars, discussions and document reviews, in the following areas: client matters, such as verification of employment letters, important dates and conflicts of interest; attorney rates, partner documentation; financial risk, including customer funds, employee salaries, procurement and segregation of duties; cash flow, banking, customer company account transfers

, bills and receipts; Human resources, new employees, former employees, employee salaries; Network technology, database access and backup, etc.; Security work, office access, emergency evacuation plan; Understand the laws and regulations of a place.

In order to further control the risks of the firm and ensure the normal operation of the various activities of the firm, Lu Wei's risk management committee decided to continue to strengthen the training of various types of employees on risk management in the future risk management work, strengthen the supervision and reporting of risks in various departments and fields, insist on regularly reviewing risks and formulating risk countermeasures, and update risk countermeasures according to the latest situation, continuously improve the value of risk management in the various management activities of the firm.

Conclusion

The management and control of risk by law firms is inseparable from the improvement and improvement of the protection of lawyers' practice by the social environment, and the improvement of the professional literacy and ability of all colleagues in the legal profession. But in the final analysis, as the law firm of every participant in the law industry, like Luwei International Law Firm, the system of risk management and control is carefully and solidly established and implemented. In this way, in the field of social legal services, the lawyer industry can really develop and grow, and make greater contributions to the construction of social legal system and democracy.

This article won the first prize of 2011 Jinan lawyer business paper selection

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