1. April 2020

Lawyers as risk and crisis managers? What they have to consider at this very point in time

The current corona situation serves as an opportunity for a scrutiny of the role played by lawyers in times of crisis, regardless of whether they work in a law firm or in a law department. Basically, this is about three subjects: the provision of legal advice, acting as risk and crisis managers, and finally client care.

The simple matters first: these uncertain times raise unusual questions. This primarily concerns legal issues in connection with labour law (Will I still be paid?), company law (How can I do my AGM?), corporate governance (What is the board of directors liable for?), contract law (Does this qualify as force majeure?), tenancy law (Is the lease item defective?) and private insurance law (Who pays for the cancellation of the trip?) and social security law (Can I apply for short-time allowance?). These activities are part of lawyers’ basic craft: they have to provide correct legal advice, maybe adding any necessary disclaimer.  (cf. the recent webinar of the HSG)

There are slightly more difficulties when it comes to risk and crisis management. First of all, a distinction must be made between the two areas, which follow their own rules and accordingly require different competencies. The purpose of the former is circumspect precaution to ensure that an undesirable event does not happen at all or at least will not hit us with full force; the latter focuses on the appropriate management of an event that has already happened.

In the case of risk management, we thus look ahead and assess how likely an event is to occur and what the worst possible consequences could be. We take appropriate measures in order to control and steer the occurrence in line with our plans. For this purpose, lawyers are primarily consulted to assess legal risks. This is done with a simple question that is perfectly well known to everyone: how big is the probability that I will win my case, and if I don’t, how much will the total costs be for me? Such questions already make certain lawyers begin to break out in a cold sweat.

However, things become even more difficult when it comes to crisis management, when yet another set of qualities are in demand: communication, leadership and management skills. Here, lawyers are primarily challenged in the field of communication, for instance in the assessment of a press release (Does a statement lead to liability?). Communication in a crisis follows different rules and purposes, however; prospectively driven as it has to be, it focuses on the timely prevention of even greater damages rather than being retrospectively concerned with the liquidation of any damage that has already been incurred. This situation already becomes critical for lawyers at this stage if they behave in a too risk-averse way, fail to conceive of themselves as part of the crisis team, are unwilling to participate in the business risk and constantly want to play it safe. In a crisis, the objective is not to prevent every possible risk and to preclude any conceivable liability for a customer. In this extraordinary situation, customers expect more than simply a correct piece of legal information, namely a realistic assessment of the given circumstances and considering their very business situation.

Which is where the third part comes into play: client orientation. Particularly in times of crisis, customers are extremely fraught and will – from the customer’s perspective – react more sensitively to good or bad services. This provides a good opportunity to sustainably reinforce the much-vaunted relationship of trust or to lose a customer forever. Those who want to become a so-called trusted advisor can just now prove that they are, or earn the title. This is the time for lawyers to be there for their customers and their concerns (optimally 7×24), to reduce their uncertainties (many are threatened in their livelihood), to be generous (be careful with regard to billing), to do good things for customers and make it known that you do, or in simpler terms: go the extra mile. If not now, when?

Needless to say, the above is also applicable to your own staff. Here, too, circumspect risk and crisis management is required, as are leadership, clear management and, in particular, clear communication. Because only appropriately motivated members of staff will be able to ensure the required customer satisfaction (CX) and still be there for their employer tomorrow.

Back to the initial question: crises do not only bring out the good in people, but also the bad. Of course, lawyers can concentrate on their core function at the present time and continue to limit themselves to providing legal information. However, those who want to conceive of, and prove themselves to be, genuine risk and crisis managers both in-house and externally can seize this opportunity to emerge stronger from this crisis. After all, risk does not only stand for threat but offers also an opportunity! Make use of it!

About the author
Prof. Dr. Bruno Mascello Academic Director Law & Management of the Executive School of Management, Technology and Law at the University of St.Gallen, Director of the executive programme for lawyers “Management for the Legal Profession (MLP-HSG)”, attorney at law, lecturer and author dealing with various topics at the intersection of law and management.