The Legal Liability Risk Management Institute Explained
The Legal Liability Risk Management Institute is the non-profit membership organization that was created in 2003 by a group of risk management, insurance and legal experts. With the mission of improving insurance coverage and claims handling practices, as well as balancing the scales between large insurance companies and their insured clients, LLRM Institute was initiated as a way to lobby for the rights of all insurance policyholders.
At the time , insurance coverage disputes were becoming more common, and policyholders were losing. As a result, LLRM Institute was developed to serve the needs of businesses and individuals who need assistance in resolving insurance disputes fairly and efficiently. A major benefit of LLRM Institute is the free educational seminars, where experienced speakers guide participants through important topics in the insurance field.
Services Provided by the Institute
The Legal Liability Risk Management Institute, LLC, or the Institute, is a prominent provider of products and services for the purpose of managing the risks that can jeopardize the legal liability of organizations. Supported by a vast network of risk management professionals throughout the United States, in Canada, and increasingly in other countries, the Institute is a leader in enhancing awareness of the need for effective legal liability risk management.
At the core of all Institute programs and services are the Institute’s risk management principles: The Institute offers two categories of services. The first category consists of products and services that the Institute provides in partnership with other organizations, including development of legal liability management certification training programs, accreditation and on-going auditing process, legal liability management workshops, and a variety of products designed to improve legal liability awareness.
The second category are the direct products and services offered by the Institute, which include legal liability risk management certification training programs, risk management certification training programs for insurance agents, loss prevention workshops and seminars, audits and assessments, strategic planning facilitation, and development of risk management systems. By focusing on the core principles of legal liability risk management, the Institute places the emphasis on outcomes that will achieve effective management of the organization’s resources.
The Importance of Legal Liability Risk Management
Effective management of legal liability risks is important to organizations because of the potentially catastrophic impact of statutory and regulatory liabilities, contractual and tortious liabilities, liabilities for corporate/government misconduct, and liabilities to employees and third parties. Organizations must be diligent in limiting their legal liability risks or face potentially significant consequences. In the worst-case scenario, an organization could be exposed to significant liabilities that could result in bankruptcy, loss of business relationships, adverse publicity, and/or a large settlement or judgment.
With respect to statutory and regulatory liabilities, an organization may find itself subject to heavy government fines or denied rights to do business in the future for failure to comply with various statutes and regulations. In addition, the courts may impose heavy damages, sanctions, or injunctions against an organization if it is found to be lacking in compliance with such laws. Contractual and tortious liabilities can have a devastating impact on an organization as well. A breach of contract claim could result in the organization being required to pay for all losses incurred by the other contracting party plus any consequential damages suffered by that party as a result of the breach, not to mention the potential additional claims by the other party for attorney’s fees or indemnification. Tortious liability claims brought against the organization can be equally damaging and costly to defend. Finally, liability arising from corporate or governmental misconduct could result in severe penalties for individual officers, directors, executives and other agents of the organization, including exclusion from doing business with the government and a jail sentence; the organization itself could lose its insurance policies and/or forfeit its charter or right to do business.
In short, legal liability management is important for any organization because of the significant risks, costs and consequences associated with exposure to liability.
The Strategies of Legal Liability Risk Management
Organizations can take a number of steps to better manage legal liability in workplace-related claims. Risk assessment is a crucial first step in developing a liability risk management plan. A risk assessment enables the organization to identify both the litigation risks and the compliance vulnerabilities of its employment-related activities. A thorough risk assessment gives the organization the information it needs to develop an effective legal liability risk management strategy.
With informed guidance from outside counsel, the organization can then work to develop policies, procedures and practices to address the vulnerabilities identified in its risk assessment. A comprehensive legal liability risk management plan is likely to include a combination of human resources practices, including employee screening, training and discipline; appropriate record keeping, including file documentation systems; and complying with applicable laws and regulations. Legal liability risk management also should include an exit strategy. Employers should develop effective exit programs for employees, such as retiree health benefits, to avoid being trapped in an economically unsustainable plan. An additional component of the exit strategy is a layoff procedure. Layoff procedures should include the use of voluntary layoffs or attrition as a preferred method of reducing the workforce, and an employer-initiated severance incentive as a last resort .
The realities of the employment relationship also must be considered when developing an effective legal liability risk management plan. For instance, the preference of many managers and supervisors to hire employees who are "just like me" frequently means hiring employees with the same race, gender, religion, national origin, and/or other protected characteristics and, as a result, underexposing the organization to discrimination claims. Organizations should instruct their supervisors to objectively consider all candidates, irrespective of any protected categories. In addition, organizations should provide training on potential litigation traps in the course of performance evaluations, as unintentional race or age bias is frequently revealed in evaluations. To minimize the risk of leaving behind possible litigation targets when reducing the workforce, employers should ensure they obtain a release of all claims, including unknown, from all employees in a layoff.
Finally, organizations should be aware of the importance of continuously monitoring the status of the law. Education and training is essential, particularly because many senior managers no longer have formal training in human resources or employment law. Keeping abreast of developments in the law is no easy task, especially in the current environment of rapid regulatory and legal change. Employers are strongly encouraged to be proactive in this area by utilizing internal resources and, if necessary, by getting help from outside experts.
The Results: Programs of the Institute
While the Legal Liability Risk Management Institute serves diverse industries and diverse individuals, its programs are often especially helpful to risk managers. International Paper (IP) is one such company that has reaped the benefits of attending LLMI programs. According to Brenda Smith, IP is one of the largest forest products companies in the world, with 2014 sales of $22.4 billion. With a total of 277 manufacturing locations in more than 40 countries, IP sells its products in more than 150 countries. Already guided by comprehensive risk management practices, IP has seen positive results from participation in LLMI’s Risk Management Conference Programs since 2009. "Before LLMI’s Risk Management Programs, our risk managers were experiencing frustration over managing generic information received through insurers whose interests do not always align with the policyholder," said Smith. For Smith, LLMI stands apart from other programs because the Institute approaches risk management from the viewpoint of the policyholder—in other words, the policyholders are LLMI’s clients. "By leveraging the collective knowledge of its members with LLMI, we can inform but also learn from legal professionals, insurance brokers and other risk managers who face the same issues we do," she said. Through the LLMI Risk Management Conferences and LLMI webinars that International Paper employees have participated in, Smith and others at IP have gained insight on issues such as managing high-retention personal injury and advertising liability claims, dealing with the inherent conflict-of-interest associated with vertically integrated organizations and reinsurance, and handling the interplay between insurance and environmental liability risk management. IP is now collaborating with LLMI to mature and build additional capacity around its financial stability, an exercise developed by members and certified by LLMI as "Policyholder-Friendly." Smith believes that the LLMI Policyholder-Friendly Practices demonstrate to the industry—and to policyholders—that IP is committed to shaping strong insurance for an unpredictable future. LLMI is currently working with IP to build additional capacity around financial stability, which is another policyholder-friendly practice. "Presentations and discussions are under way with our insurers. This initiative will underscore our commitment to risk management processes, which we think is especially important in our environment," said Smith.
How to Become Involved with the Institute
The Legal Liability Risk Manager Institute offers several ways for members of the insurance and risk management community to get involved with the organization. Chief among these is membership. The membership categories are individuals working as full-time risk managers or loss control directors, and insurance and reinsurance agents and brokers, including personal lines, surplus lines, transportation and life and health. These individuals must be engaged in day-to-day risk management or insurance activities, including loss control, claims or risk management, at the time of membership, or at some time subsequent to initial membership.
A special category of membership is available for organizations whose members or employees are also eligible for regular membership. Groups can receive a 25% discount on the regular price for any product or service purchased through the site. An additional $50 fee is charged for the administration and processing of a group membership.
A trial membership category enabling individuals or organizations to use resources online for a period of one month is also available for $49.95.
Prospective members can purchase membership easily through the site by simply following the "Membership" link and clicking the "Join the Institute" box in the left navigation menu. A sign-up box will appear for completion of the online registration form , after which an invoice will be generated and sent to the member for payment.
Legal Liability programs are available for online registration through the site as well. In addition, online quizzes and virtual meetings are offered by the Institute. Members have access to the Institute’s web site, and a special section of the site with information exclusively for members is currently under development.
The Institute’s website has several learning opportunities available to download, including a Speaker’s Guide and LLRMI’s 2008 Banking and Regulatory Panel, each available to download for free. Podcasts, training courses, legal resource tools and legal update webinars are also offered for sale through the Institute’s site.