Can law firms change their biggest risks by improving workplace culture?

The legal profession has probably experienced more transformation in the past 20 years than any other period of its history – yet it can also be remarkably consistent.

The fact that solicitors face a considerable number of risks is one example of this.

When comparing recent and past data, the top three practice areas that generated claims against solicitors were real estate, litigation and dispute resolution, and commercial work (based on an informal poll from Kennedys Law in 1999 and data from Travelers in 2023).

It’s easy to argue, considering the large number of things that can go wrong in these areas of the law, that this is simply the nature of the work. But could this mindset also be leading firms to accept risks that could otherwise be mitigated?

Lianne Shing, senior risk management consultant at Travelers Europe says: “If we expect certain areas of the law to be high-risk, then it’s no surprise when they prove themselves to be high-risk.

“But we have already seen evidence that shifts in thinking can set the tone for positive change in law firms.”

Bolstering mental health and wellbeing

Supporting employees’ mental health can have a positive effect on risk management and is an area that law firms are navigating through incremental change.

Today, according to the International Bar Association, around three-quarters of law firms have initiatives in place to support employees with their mental health – a sweeping shift from a generation ago.

Of course, questions remain about how well these initiatives are working.

In 2023, lawyers reported experiencing an increase in stress, anxiety and depression according to the ALM and Law.com Compass mental health survey of the legal profession.

Of the nearly 3,000 lawyers surveyed, 71% said they had anxiety, a 5% increase from 2022.

However, while progress in this area can be difficult to track due to the challenge of reliably measuring employees’ mental wellbeing, there are significant signs of change.

Even a decade ago, it would have been rare for a law firm to acknowledge common mental health challenges such as burnout, or for legal professionals to speak up about these issues.

Enabling these discussions to happen more regularly fosters a supportive and non-judgmental environment in which employees can be open about mental health and wellbeing.

Firms can then work with their insurers to connect the dots between risks and the claims they generate – and take steps to make positive changes.

Lianne Shing says: “When firms are proactive about getting mental health and workplace culture right for their employees they can trigger a positive trickle-down effect that sets the stage for better risk management overall.

“The fact that we’re having these conversations to help shape the legal profession into one that’s more inclusive, supportive and open is a positive step forward.”

Setting the stage for better workplace culture

The connection between risks and claims is something that Lianne Shing and Paul Smith, also a senior risk management consultant at Travelers Europe, study regularly.

They have found that in law firms, mental health – or rather mental ill health – appears to be having an impact on claims.

“In the last six or seven years, we have seen an uptick in notifications for slips and lapses, which are often driven by stress, pressure, and fatigue,” Paul Smith explains.

“When firms know this, they can take action on mental health and workplace culture. That can include conducting pulse surveys with employees every week or month, keeping track of workloads, or capturing data about other key risk indicators when it comes to stress and absenteeism.”

Firms can also take steps to enhance workplace culture and give employees greater agency over their careers by developing alternate career tracks, fostering mentorships, and encouraging people to own up to mistakes early as a normal part of the learning process.

Such actions can help a firm manage problems before they blow up into large claims and also inject optimism into teams, giving employees a sense of purpose.

Workplaces that take this approach are highly valued, and even expected, by the rising cohort of Gen Z professionals.

Firms are keen to successfully recruit and retain the next generation of talent, but those resisting making these changes may have change thrust upon them.

Paul Smith says: “Lawyers have agency to make incremental changes in the right direction that, when taken together, can add up to significant progress.”