Do you remember your Risk Management class in law school? Neither do I. It’s not offered. Yet as lawyers, we have to manage risk every day. True, rarely do we reflect “I’m doing a good job managing my risks today.” We just do it. But taking time to understand risks and risk management can make us better lawyers.
There are multiple risks lawyers take in the practice of law. When a new client comes on board, a lawyer takes a risk the client will be cooperative and pay for the work. When a lawyer accepts a matter in an unfamiliar area of law, there is the risk of quickly getting in over one’s head. Lawyers take a financial risk when they invest time and money to build a practice. Just about everything lawyers do involves some level of risk. Some risks are small, others larger. For the larger risks we tend to want to manage and minimize the risk. In the world of immigration law practice, EB-5 clients and matters are larger risks that must be carefully managed.
There are four ways to handle risk in a law firm: Accept it, reduce it, share it or avoid it:
- Firms accept certain risks every day, but they tend to be smaller issues that can be easily addressed and resolved.
- More often, firms decide to accept risk but work to reduce it through management and education. Two examples: we create calendaring processes so we don’t miss deadlines, and we attend CLE seminars to improve our competency to handle client matters. A clear representation agreement is a great way to explain and discuss risks with the client.
- Firms often share the risk by obtaining insurance. Rather than taking on the liability for every client matter, the firm has a malpractice insurance policy in case there is a problem.
- Firms avoid risk by not doing certain kinds of legal work or not accepting certain types of clients. Many immigration firms limit their services to certain types of cases, often to avoid the risk of liability in unfamiliar practice areas. Firms may also have client selection criteria to help them determine whether to take on new business.
It is best to know and understand the risks of EB-5 practice, and to try to address each of the multitude of risks using one or more of the management strategies suggested.
That’s why we’ve added a new risk management component to the AILA EB-5 Summit scheduled for later this month. With the attention this program is getting politically and from government regulators (including the SEC), knowing how to better manage the risks of EB-5 practice can help anyone, whether you are a seasoned practitioner or considering taking on your first EB-5 client.
Remember that old adage, “An ounce of prevention is worth a pound of cure.” Taking steps now to manage your risk will allow you to focus on what’s most important: helping your clients.
Written by Reid Trautz, Director, AILA’s Practice and Professionalism Center
Wondering what topics will be featured at the EB-5 Summit October 24-25 in Washington, DC? Watch this video with AILA President Bill Stock previewing the conference program or check out the full program to see more opportunities to increase your knowledge on these issues.