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Managing risk in the workplace is crucial for avoiding commercial disputes. In recent years, active risk management has become critical in companies as businesses balance the encouragement to reduce costs versus management of legal risk. Generally, poor communication and delivery, inadequate or no contract drafting and ineffective risk management procedures are largely to blame.
One way to reduce the risk of disputes escalating is by carrying out an early analysis of the key legal issues, which can be achieved by collating the essential documents in an organised format and preparing a detailed description of the case by identifying and speaking to personnel involved. It is also recommended that external advice is sought at an early stage by instructing an expert if the dispute is particularly technical and/or external lawyers. Formulating a strategy and spending money early on could reduce the risk of higher, long term expenditure if the dispute escalates, for example by encouraging alternative dispute resolution. Well trained staff and encouragement of an open ‘no blame’ culture will also aid such investigations.
A particular pitfall is the inadequate management of documents when carrying out investigations and ensuring that companies maintain any legal advice and/or litigation privilege.
Legal advice privilege relates to confidential communications between a client and lawyer and enables the exchange of information between a lawyer and client in a frank and open manner without fear of the communications being relied on by the opposing party.
Litigation privilege is wider in application but narrower in scope. It applies where proceedings are either current or in reasonable contemplation. Not only does it protect communications between a lawyer and client, but also between third parties if such communications exist for the dominant purpose of the conduct or preparation of litigation. Litigation means adversarial proceedings of any type, including tribunals and arbitration.
Issues can arise when pursuant to internal investigations lawyers give advice about commercial matters when not acting in a legal capacity if the report is not prepared for the dominant purpose of litigation. Care should therefore be taken when carrying out internal inquiries and the basis on which parties seek legal advice, by:
In summary, a business can benefit from their in-house lawyers working closely with the business and gaining an understanding of the commercial drivers, through attending management meetings, engaging with compliance and governance policies and working towards being seen as part of the wider team rather than an obstacle.
This article was written by Stephen Burns. For more information please contact Stephen on +44 (0)1483 252618 or email@example.com