lem survey

Perspectives

The value of litigation risk management

It’s time to create your risk mitigation plan

Welcome to the second installment in our study of legal entity management (LEM). In part one, we explored the impact of effective legal entity management on M&A. Now, we delve deeper by speaking with 15 prominent legal specialists to look closely at the critical role of litigation risk management. We’ll look at what’s at stake, how you can avoid the pitfalls, and how you can leverage the benefits.

Key takeaways

  1. Corporate structures should prioritize clarity to avoid personal liability for directors and maintain a clear separation between parent and subsidiary entities to strengthen litigation risk management.
  2. Precision in documentation and actions is needed to prevent misinterpretation as deceptive behavior by judges or juries.
  3. Board decisions should be meticulously recorded and double-checked to bolster their authenticity and enforceability.

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Why legal entity management?

We've crunched the numbers, spoken with the specialists, and reached an unsurprising conclusion: Consistent legal entity management offers significant advantages in litigation scenarios. Now, let's dig a bit deeper and look at why it's so important.

Effective LEM can provide clarity and meticulous management, allowing legal representatives and decision-makers to focus on essential legal aspects rather than administrative distractions. Potential benefits include instilling confidence in executive witnesses and evidence, facilitating jurisdictional maneuverability, and yielding cost savings by avoiding cleanup efforts and reducing litigation expenses.

To leverage the potential benefits, corporate leadership should consider prioritizing comprehensive reviews of entity structures and records, address gaps, and implement careful subsidiary management practices. This upfront investment can help mitigate litigation risk but also enhances the likelihood of achieving favorable outcomes at reduced costs, either through settlements or trial victories.

View the full report

Substandard legal entity management can lead to litigation risk in several ways. Here are three big ones:

Learn more about Deloitte’s Legal Entity Management Services

An outdated and inefficient legal entity management process may create needless costs and risks, including potential instances of noncompliance. Deloitte's Legal Entity Management* (LEM) services can provide increased transparency into legal entity governance and reduce costs, all in an effort to make your legal ecosystem more efficient and effective. We are powered by an integrated workflow, data, and document management technology platform providing high visibility into engagement management workflows and real-time analytics.

*The Deloitte US firms do not practice law or provide legal advice

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