No longer a game of chance
12 June 1994
Mary Heaney reports on the growth of risk management. Is it proactive lawyering or another way of attracting client cash?
Two years ago, Bevan Ashford entered uncharted territory for most law firms - it entered into a joint venture with international risk management consultancy Willis Corroon.
The resultant company, QRM Healthcare, advises on all aspects of risk in the health service, particularly trusts. It deals with clinical and non-clinical risk as well as running seminars for trust staff.
It is part of a growing trend to encourage lawyers to become more proactive and is emerging in such diverse areas as medical negligence, construction and product liability.
In the medical negligence field, Brian Capstick, of Capsticks, led the way in 1982 when he began assessing risk for a health authority, advising hospitals how to avoid claims.
He devised a computer program to assist the process. This is essentially a database of claims which links them with characteristics. It is now licensed to other bodies including fellow lawyers Oxley & Coward of Sheffield, the South East London Health Authority and the Mayday Hospital.
The rationale is not money, says Capstick, who has also instigated an Open University training course on the subject.
"There is no money to be made out of it," he says. Law firms get to know quite a bit about their clients. The main value is that lawyers get a better relationship with clients, says Capstick.
Bevan Ashford has gone one step further with its risk management work. The firm's move into the area, according to partner Richard Annandale, is because of the changes in the health service. "We would like to think we were long sighted," he says. "There is going to be the need to reduce claims and increase quality."
The venture has worked with 100 trusts so far and means lawyers deal with risk areas on a consultancy basis.
The consultancy gets involved in projects such as monitoring clinical drug trials for trusts with volunteer patients.
The legal aspects include looking at the agreements governing the trials.
The consultancy is also involved in advising on a new initiative for insuring trusts. The Government has given the green light for central funding. "Trusts are going to be given the chance of becoming members of the fund as they have been told they can't insure on the general market," says Annandale.
QRM is involved in advising on the clinical protocol to be used by the managers of the fund, which will come into force on 1 April 1995. This will include the basic principles which the trust needs to adhere to and may allow for discounts if trusts have done all that is required on their checklist. Panels of solicitors will be set up with one panel dealing with basic claims while a 'superpanel' of specialist lawyers will deal with all the larger claims.
Masons also takes risk management seriously.
The firm has a consultancy unit, headed by ex-Ernst & Young management consultant and technological guru, partner Richard Susskind.
According to partner Martin Roberts: "Lawyers are increasingly involved in assisting clients in whatever market in reducing their legal risks. Lawyers are now doing much more that comes under the consultancy division."
In the field of construction contracts, risk management is an integral part of project advice. Clients need to know where risk is going to be allocated, he says, adding that technology plays a major part in this.
Susskind is convinced that proactive lawyering is the way forward. He wrote in the Financial Times that competition was forcing lawyers to extend the range of topics on which they were qualified to advise.
"One natural development will be the provision of consulting services in fields of expertise in which competence has already been established within their own firm," he said, adding that firms could sell their expertise in IT, marketing and training. They could also move into consulting "through the provision of legal services proactively, using techniques and adopting a perspective that would normally be regarded as the province of management consultants."
He said in recent years clients had been asking for a more proactive approach. "In dispute-oriented work, the theme of proactivity is that of dispute pre-emption rather than resolution; while in transaction-based activities, lawyers will be retained not just to crystallise in legal terminology a deal already agreed on by all the parties, but as advisers on all legal risk management," he said.
Susskind said this shift will force lawyers to reposition themselves and instead of considering the particular consequences of specific facts, they will have to broaden their scope to consider the implications of the range of potential scenarios, risks and opportunities.
But how likely are they to do this? All now say they are proactive and demonstrate this through a variety of services. For example, audits in particular fields such as property and environmental. Few have developed proactivity to the extent of Masons, Bevan Ashford and Capsticks. But, says Mark Tyler, of McKenna & Co, a number of law firms have been doing it without the label for a long time. And, he cautions, law firms have to be careful on how proactive they are as they could run the risk of negligence.
Mary Heaney is a freelance journalist.