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CANADIAN BUSINESS AND THE LAW Second Edition by

CANADIAN BUSINESS AND THE LAW Second Edition by Dorothy Duplessis Steven Enman Shannon O’Byrne Sally Gunz. Presentation prepared by Allan Elliott, Southern Alberta Institute of Technology.

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CANADIAN BUSINESS AND THE LAW Second Edition by

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  1. CANADIAN BUSINESS AND THE LAW Second Edition by Dorothy Duplessis Steven Enman Shannon O’Byrne Sally Gunz Presentation prepared by Allan Elliott, Southern Alberta Institute of Technology

  2. CHAPTER THREEMANAGING LEGAL RISKS OBJECTIVES: • Methods of managing the legal environment of business • The development of a legal risk management plan • The importance of anticipating and reacting to developments in the legal environment • Methods of managing legal services

  3. ASSESSING THE LEGAL ENVIRONMENT LEGAL RISK A business risk with legal implications LEGAL RISK MANAGEMENT PLAN Action plan for dealing with the legal risks involved in operating a business

  4. CREATING A RISK MANAGEMENT PLAN Four-Step process to create a plan: Step One: Identify the legal risks. Step Two: Evaluate the potential loss associated with those risks. Step Three: Devise a legal risk management plan to address those risks. Step Four: Implement the plan.

  5. CREATING A RISK MANAGEMENT PLAN • IDENTIFY THE LEGAL RISKS Assess Functional Areas • likely risk in marketing, production, human resources & information systems Assess Business Decisions • likely risk in financial arrangements, standard form contracts, ownership and use of land and in decisions affecting personnel

  6. CREATING A RISK MANAGEMENT PLAN Assess Business Relationships • both internal and external relationships, identifying both long-term and short-term relationships and the risks, both long-term and short-term, involved in those relationships

  7. CREATING A RISK MANAGEMENT PLAN • EVALUATE OR MEASURE THE RISKS Assess the probability of loss • Is there a high probability that a particular event will occur causing loss? Assess the severity of loss • Even though the event is unlikely to occur, is the potential loss high? • Some risks become liabilities even though their impact is small. Other risks materialize infrequently but their impact is severe.

  8. CREATING A RISK MANAGEMENT PLAN • DEVISE A RISK MANAGEMENT PLAN Avoid or eliminate the risk • risk avoidance - if the risk of loss is too great, avoid the risk • risk reduction - undertake steps to lessen risk such as credit checks, maintaining property, hiring professionals

  9. CREATING A RISK MANAGEMENT PLAN Retain the risk • organization pays the loss out of own resources by self-insuring, policy deductibles or non-insurance Transfer the risk • shift the risk to someone else through contract • can use indemnity, exemption and waiver of limitations of, liability clauses in a contract

  10. CREATING A RISK MANAGEMENT PLAN • IMPLEMENT THE PLAN Carry out the Plan • devise guidelines and appropriately educate those with responsibility • clearly define responsibility for carrying out the plan Monitor and Revise the Plan • determine effectiveness of plan and revise as necessary

  11. CREATING A RISK MANAGEMENT PLAN SUMMARY Step 1 Identify the legal risks Step 2 Evaluate or measure the risks Step 3 Devise a risk management plan Step 4 Implement the plan

  12. IDENTIFY THE LEGAL RISKS Assess the organization’s functional areas Review the organization’s business decisions Examine the organization’s business relationships EVALUATE OR MEASURE THE RISKS Assess the probability of loss Assess the severity of loss CREATING A RISK MANAGEMENT PLAN SUMMARY

  13. DEVISE A RISK MANAGEMENT PLAN Avoid or eliminate the risk Reduce the risk Retain the risk Transfer the risk IMPLEMENT THE PLAN Carry out the plan Monitor and revise the plan CREATING A RISK MANAGEMENT PLAN SUMMARY

  14. INTERACTING WITH THE LEGAL ENVIRONMENT WHEN TO SEEK LEGAL ADVICE • Too often – expensive and time-consuming • Too rarely – risk of letting problems become worse • Appropriateness depends on circumstances • Delegate one manager as contact person

  15. INTERACTING WITH THE LEGAL ENVIRONMENT HOW TO CHOOSE A LAWYER • Expertise in your business area • Nature and type of legal work required • Allocated budget • Personality fit • Discuss your business requirements • Business associates, friends and law societies for references

  16. INTERACTING WITH THE LEGAL ENVIRONMENT CHOOSING A LAWYER • Lawyer – a person who is legally qualified to practise law • Law firm – a partnership formed by lawyers • In-house counsel – if your external legal costs become significant, you may consider a Corporate Law Department • Hire the necessary expertise as employee lawyer • May satisfy your need for a ‘specialist’ who can be close to your business

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