ALA Risk Management and Liability 3

Question 1

A law firm's engagement letter should include which element to most effectively limit the firm's malpractice exposure?

Accepted Answer

A clear scope-of-representation clause

Answer

A well-defined scope-of-representation clause sets boundaries on what the firm has agreed to do, reducing the risk of claims based on work outside the agreed engagement.

Question 2

Under the ABA Model Rules, an attorney's duty of confidentiality extends to:

Accepted Answer

All information relating to the representation, regardless of source

Answer

Model Rule 1.6 broadly protects all information relating to the representation, not just privileged communications, requiring careful information-handling risk controls.

Question 3

A firm discovers that a departing associate emailed client files to a personal account. The FIRST step in the incident response process should be:

Accepted Answer

Contain the breach and preserve evidence

Answer

The first step in any incident response is containment—stopping further exposure and preserving evidence—before notifications or other remediation steps are taken.

Question 4

Which concept describes the minimum acceptable level of risk that a law firm's leadership is willing to tolerate before taking corrective action?

Accepted Answer

Risk appetite

Answer

Risk appetite is the amount and type of risk an organization is prepared to pursue, retain, or take, distinct from risk tolerance which defines acceptable variance around objectives.

Question 5

A CLM is reviewing insurance renewals and notices the current policy has a 'claims-made' trigger. What does this mean?

Accepted Answer

Coverage applies when the claim is reported during the active policy period

Answer

A claims-made policy provides coverage only when the claim is both made against the insured and reported to the insurer during the policy period, unlike occurrence-based policies.

(ALA) Association of Legal Administrators CLM Practice Test

(ALA) Association of Legal Administrators CLM Practice Test

ALA Risk Management and Liability 3