Mitigate and prevent legal risks and contingencies

Risk management means identifying, analyzing, and managing the legal risks an organization may face. Legal risks may be related to contracts, procedures, products, technologies, or intellectual property. Legal risk management generally involves reviewing contracts, identifying risks, and taking steps to reduce them. The legal department can also provide advice on complex legal issues and ensure that the organization complies with applicable laws and regulations.‍

Improving legal contingency risk management to avoid litigation  

For companies, local authorities and public authorities, this issue is more topical than ever. By the time companies reach litigation, it's too late. Many disputes could have been avoided if legal risks had been properly anticipated and prevented. Poorly drafted contracts are still all too often at the root of the majority of disputes, leaving room for every possible interpretation, as well as misidentification of responsibilities. In our written-law world, there are many rules and regulations. The question is to determine who should enforce them, and how.  

It is therefore important for companies to be fully aware of the stakes these risks represent for their business. Litigation is long and tedious.

Mastering control of legal risks

Proper control of these easilyidentifiable risks depends first and foremost on prevention and contractualpreparation. It's easier to get out of a dispute when there's a clear, preciseframework for negotiation. Each time, we need to start with a new contract andgive ourselves the time to reflect on the risks before signing, between thevarious parties involved. A period of reflection is therefore essential toavoid conflict.  

An analysis of the legal disputes of recent years is instructive, and the caselaw is quite extensive. Legal risks can be classified into several broad categories, representing situations encountered in all types of projects.  

• Breakdown of negotiations. Many pre-projects start with a simple agreement, without a formal contract. In the event of a breach, the company is ill-prepared.  
• The unavoidable debate between obligation of result and obligation of means. While the former is unambiguous (the result is achieved or not), the latter obliges the company toprove that all the necessary means have not been provided.
• Breach of consulting obligations.There is a wide disparity in the nature of the service provider's advisory obligations, with the notion of foreseeability coming into play.
• The validity of "liability limitation clauses". These are currently the subject of considerable litigation. Legal watch is essential on this point to ensure that negotiated clauses are fully effective.  

In-house lawyers, supported by appropriate information systems, have a key role to play in this vital prevention process, checking that projects comply with the rule sand ethics.