Businesses spend large amounts in litigation costs every year. The amounts lost on account of lost claims are frighteningly higher. An emerging trend is to identify and prevent or reduce such losses at an early stage, resulting in substantial financial benefits to businesses.
There are various innovative ways by which potential legal risks can be identified at an exceedingly early stage, address them appropriately to prevent risks from escalating into problems. A combination of legal and practical principles that helps in forecasting, identifying, and preventing legal risks from becoming legal problems can be named as Preventive Legal Methods.
In order to better understand the scope and effectiveness of Preventive Legal Methods in the present-day business, we need to first identify some of the common legal risks businesses usually confront, including but not limited to regulatory risks, contractual risks, risks or claims arising out of negligence or misrepresentation, disputes risks and reputational risks.
Preventive Legal Methods provides for methods by which impact of the above can be minimalised or avoided. Primary tools used are Legal Audits and Compliance Programs at an organisation level. Systematic and periodic Legal Audits conducted with the aid of trained professionals help reveal potential legal risks and liabilities at an early stage. Similarly, robust Compliance Programs helps with prevention, detection, and correction of potential legal risks.
Apart from the above, a collaborative approach between businesses and legal practitioners focusing on crisis management is also recommended. In Preventive Legal assignments, a legal expert will work more like a counsellor working closely with the business to discover reasons behind legal issues before it manifests. For Preventive Legal Methods to be effective, businesses should work closely with legal experts at all time and does not wait until legal issues emerge. Many new age entrepreneurs seek the involvement of a legal practitioner right from the inception of a business idea all the way through its implementation and day to day operations. Here, legal experts evolve as proactive business facilitators, delivering end to end legal and business advisory services. These tools and techniques are not conclusive, yet these can substantially benefit businesses in financial terms.
