Allianz Commercial Looks at ESG Risk to Law Firms

Allianz says companies are increasingly consulting legal firms for guidance on ESG, creating legal risks for both clients and lawyers.

Nearly 60% of law firms expect demand for ESG-related professional advice to increase over the next three years according to Wolters Kluwer.

Allianz says many law firms are seizing the opportunity to promote their ESG credentials to clients who are challenged by an unprecedented increase in ESG initiatives and growing public awareness of the issues involved. But, in doing so, law firms also face challenges. The services they are offering will require additional resources and investments in a post-pandemic legal environment undergoing rapid change. Each passing month sees a growing body of legislation and regulation in both developed and emerging economies (particularly in relation to climate change), which aims to give teeth to the broader objectives of ESG. To provide effective advice to clients and mitigate any legal risks associated with their advisory role, law firms will need to provide ESG training, create ESG sub-practices, and supervise less experienced colleagues.

“Despite the evolution of understanding of what ESG issues entail, their sheer potential breadth creates a difficulty in laying down clear, measurable guidelines and that ambiguity leaves open the potential for disputes over the extent to which businesses are meeting their targets as expressed,” says Diego Assef, Head of Global Practice Group Professional Indemnity Claims, at Allianz Commercial

“As with all new areas of practice, as insurers, we are concerned about the availability of capable resource within the legal services market, contract selection, risk management and supervision of work within firms. It is essential that legal service providers really do build out appropriate capability in order to effectively service this emerging market,” says Rob Green, Global Head of Professional Indemnity Insurance at Allianz Commercial.

The full risk article from Allianz is available here. 

Source: Allianz, https://commercial.allianz.com/news-and-insights/expert-risk-articles/esg-challenge.html