Firms adopt a global approach to risk management
Intapp provides key findings of risk staffing survey
This is the first of a two-part series examining the results of the 2018 Intapp risk staffing survey. In this post, we summarize the key survey findings. You can also learn more about the benefits of centralizing risk management and the results of this survey in an upcoming webinar, featuring speakers from Dickinson Wright and Greenberg Traurig.
The law-firm risk landscape continues to grow in complexity. A reliance on mergers and lateral hires to support firm-growth strategies increases a firm’s exposure to conflicts, jurisdictional regulations, and patchwork processes. With the proliferation of these risks, firms are taking a threefold approach: hiring dedicated risk staff to serve highly specialized functions, reorganizing their operating models, and investing in technology to augment human effort and establish standardized, scalable processes across distributed offices.
A global approach to risk management
In November 2018, Intapp surveyed a number of law firms to learn how they are organizing their risk teams to address these growing challenges. Representatives of 44 firms responded.
Overwhelmingly, the survey results show firms adopting a global approach to risk management (74% of respondents), in which all offices — regardless of location — adopt the same policies, systems, and operating models, with limited exceptions for local requirements. This approach necessitates a heavy reliance on technology to ensure consistency, but it also requires firms to organize staff in ways that are conducive to the consistent application of policies across all offices and practice groups.
To this end, the industry has largely moved away from the distributed business acceptance model, where lawyers perform client due diligence and conflicts analysis. Firms are now centralizing these decision-support tasks and employing dedicated risk personnel. They are increasingly relying on conflicts analysts to perform the majority of research in these areas.
A centralized approach for conflicts management
All survey respondents indicated that their firm maintains a centralized team for conflicts management. At 82% of those firms, the conflicts team performs at least some level of analysis, though many firms still rely on lawyers for final clearance decisions. Only 18% of respondents indicated that lawyers are still performing conflicts analysis, and those respondents tended to represent smaller law firms where the total volume of clients and matters are much smaller. Similarly, on the client due-diligence side, 84% of respondents indicated their firm employs a centralized team that performs at least some level of analysis, though firms are more likely to rely completely on that team to give clearance to proceed. Again, it is primarily smaller firms that are still relying on lawyers to perform due-diligence checks.
The shift to a centralized business-acceptance model started with the client due-diligence function — and then conflicts clearance followed. Only 29% of respondents indicated that their firms had made changes to their client due-diligence model in the last five years, whereas 42% of respondents indicated the changes to their firm’s conflicts model have taken place in the last five years.
Technology and third-party tools play a key role
Unsurprisingly, nearly all respondents indicated that their firms utilize software systems to facilitate some or all of the business-acceptance process. Most firms also conduct research using third-party databases — such as sanctions lists, corporate-tree providers, or financial ratings — which, in some cases, are integrated into the software system.
The next area for change will be the management of outside counsel guidelines. Although the majority of respondents (87%) indicated they have a centralized team performing review of client-engagement terms, only 23% of respondents reported that their firm has a software system to help manage this process. Several respondents indicated that implementing this software would be a priority for their firm in the upcoming year.
In part two of this series, we’ll discuss the opportunities available to firms who have implemented a centralized approach to enforcing risk-management policies and processes globally. We encourage you to learn and explore the entire Intapp Risk Management Survey and please leave us a comment on our LinkedIn page with your questions.
- How law firms can minimize information governance risks and maximize value when using Microsoft Teams and Copilot
- Small and midsize law firms risk significant losses without proper due diligence procedures
- How two law firms improved their realization rates and revenue by using software that helps lawyers comply with outside counsel guidelines
- The pathway to modern legal work: Why and how law firms should begin or continue their journey to a modern way of working
- The importance of a well-designed new business acceptance process at professional services firms
- 3 ways DealCloud supports Activator behaviors
- How professional service firms can optimize conflict management
- Meet PCAOB auditing standards and support change management with risk-based technology
- Meet WIN’s Executive Sponsors: Jennifer Richard and Lavinia Calvert
- How best-in-class deal and relationship management technology helps TAS teams win more business (and why solutions once considered the best CRM software for accounting firms can’t)
- Inside Intapp Spotlight: Meet Jaqualia Jones, Senior Manager of Client Success
- Weaponizing data to gain a competitive edge
- Legal Modern Work Consortium members discuss solutions that improve attorney and client experience
- Choosing the best software for outside counsel guidelines management
- How cloud-based software enables your firm to deliver on outside counsel guidelines
- Actionable client intelligence: Can next-gen dashboards deliver?
- Strengthen business development (BD) with experience management software for law firms
- 4 key risk management trends for consulting firm leaders
- Digital prebilling reduces costs and boosts profits
- Why in-house legal departments are moving from point solutions to leveraging Microsoft 365 for their legal operations
- How top law firms transform their practice with purpose-built firm collaboration software for Microsoft Teams
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