Managing risk – it’s good for business! Tim Livesley, Risk analysis and research manager

are two sides of the same coin RISK Risk to the SRA’s regulatory objectives and risks to law firms RISK are two sides of the same coin RISK

Up for discussion today An outline of some of the key risks in this year’s Risk Outlook How managing these risks in your firm can protect your clients and improve your competitive edge

Risk Outlook 2014: Key risks Misuse of money and assets Money laundering Bogus firms Lack of diverse and representative profession Poor standard of service to vulnerable consumers Information security and cybercrime Lack of independence Improper or abusive litigation Can go through these quickly, and then say, now we’re going to look at some of the risks in more detail, and outline the benefits to your business of successfully managing them New Outlook was published in July 2014, followed by an autumn update this month We consulted with many different practitioners at events in London, Birmingham and Manchester Attendees at these events are worried about many of the same risks that we are trying to manage More information this year about how risks apply to different types of firms, particularly smaller practices

Key risk: bogus firms Reports to the SRA are rising – 548 in 2013, we expect the 2014 total to be higher Why managing this risk is good for your business Protect your reputation Protect clients Prevent business losses – e.g. bogus firm is on other side of transaction SRA action Red alert hotline Scam alerts on website and Twitter feed ‘In the shadows’ paper Guidance Police referrals Impact on confidence in use of legal services The majority involve identity theft Bogus firm could steal your identity, or you could unwittingly work with one 4th bullet point – you need to be aware a bogus firm could have stolen the identity of your firm or you personally, but also that you could come across one in your work, such as operating on the other side of a conveyancing transaction. Self search = google yourself and your firm to check for any rogue websites etc. You can also provide advice to your clients, such as what official email addresses from your company look like, or that only you or x alternative colleagues will ever call them. Suspicious incidents – could be that someone mentions a case they believe you are involved in, but you have not heard anything about it. Can cause serious harm to consumers: Loss of money Identity theft Failure to achieve justice Simple solutions Check firm details Regularly self-search Check scam alerts Be alert to suspicious incidents The SRA's Red Alert Line is 0845 850 0999, or email redalert@sra.org.uk

Key risk: lack of a diverse and representative profession A more diverse workforce benefits clients and the public There are some positive trends, but still some way to go Could say something along the lines of – we’re starting with this one as it’s often a controversial inclusion. However, there is clear business and client benefit to looking at the diversity of your team and any barriers to access or progression. The chart shows the difference in pay between different groups of solicitors. The pay disparity is present at many different levels of practice, and the male/female pay gap is larger, at 30%, in the legal profession than in the general population (10%).

Key risk: lack of a diverse and representative profession Why managing this risk is good for your business Recruit the best talent Attract a more diverse client base Diverse points of view lead to better decisions SRA action Collect and monitor data Diversity benchmarking toolkit Looking at improving access through Training for Tomorrow Monitoring our own workforce diversity

Key risk: information security and cybercrime Average annual cost to a small businesses is £4000 Federation of Small Businesses Why managing this risk is good for your business Information security is a key selling point… …and for many a requirement Simple steps – big impact SRA action Cybercrime and cloud computing reports Alerts Internal data security measures Specific guidance – e.g. Windows XP expiry Keeping confidential information secure is a key professional duty Growing problem for all businesses But there are other ways confidential information gets out The average large business faces an attempted cyber attack every few days 63% of small businesses were attacked by an unauthorised outsider in 2013 ‘But there are other ways confidential information gets out’ - e.g. overhearing a confidential phone call, failure to properly dispose of confidential waste. A local authority solicitor was recently fined by the information commissioner’s office for losing confidential child protection papers. Annual cost stat – source is the Federation of small businesses Unauthorised attack stat – source is PWC

Discussion points Your views on the key risks? How can we improve our resources to help firms manage risks more successfully and cost effectively? Spring upda, always consulting internally and externally to monitor risk etc.