Risk management – sure, but how does the law department actually do it?

Three ideas for how law departments can anticipate future legal risks came from a piece in the Harvard Business Review (Feb. 2005, at pg. 40-41).  It referred to a study by the U.S. National Academy of Sciences.  Translating the report’s recommendations to law departments, departments should “adopt a transparent risk assessment process to avoid the blindered view so often bred by conflicts of interest between risk takers.”  A senior lawyer, for example, might see a huge environmental risk, but have a hidden agenda about staffing, personal interest, or connection to a law firm.

Second, the department should “actively consider [risks] that may not be answerable or measurable.”  I favor metrics, without a doubt, but whether the EU might change a fundamental regulation just doesn’t admit to a statistical estimate. 

Third, “assessments of big risk must involve a broad, deliberately constructed community of experts and stakeholders.”  Before bringing a major lawsuit, a law department should call upon the thinking of a wide range of participants, wise people, and affected parties.  No one is even mostly rationale; all of us operate from values and biases – from feelings as well as logic.