ACTIO Legal Risk Prevention Series : Focusing on Legal Risk Prevention in the 21st Century

Setyawati Fitrianggraeni, Tiyana Sigi Pertiwi

 Traditionally, legal practice is perceived as reactive in nature, wherein lawyers are consulted by companies only after a dispute occurs or compliance issues arise (e.g., when a contract collapses, claims raised during operations, regulators or law enforcements intervene, etc.), and this, more often than not, comes at high cost. Litigation can be costly as court proceedings may be prolonged for an extended period of time, draining resources and energy for the parties involved during the duration thereof.

As opposed to the traditional reactive model of the adversarial Anglo-American common law system in the US, proactive law emerges as a new approach in legal literature from scholars, notably from less-litigious continental European civil law system. These systems emphasize collaboration, common goals and dispute prevention.(1) Preventive law is a method that minimizes the likelihood of the occurrence of disputes, or in cases where they occur, exploits their impact, and strengthens legal rights and duties.(2)

Implementing safeguards from preventive law can play a substantive role by preventing misconduct. As such, companies should recognize signs of potential legal issues early on, assess their risk profiles and obtain appropriate support instead of seeking legal help after a crisis. Analyzing legal risks should not be limited to a particular dispute, but rather preemptively before the dispute even occurs, by contemplating the client’s long-term goals, interests, and how best to achieve them while minimizing exposure to risks due to legal difficulties.(4)

Some companies may view preventive measures such as compliance programs as costly and impractical, with no real results. This may because reactive legal practice is typically quantified with key performance indicators (KPIs) focused on outcomes, (e.g. the number of cases handled, amount covered or expenses involved, hours spent on research, etc.). It is difficult to quantify benefit if the aim is to reduce the legal issues altogether.(5) However, preventive measures are paramount to ensure the sustainability and smooth continuity of businesses.

As an analogy, putting preventive legal measures for your businesses is akin to the concept of preventive healthcare, wherein early diagnosis and change of lifestyle following a medical check-up may reduce likelihood of serious health illnesses.(6)

In this sense, rather than falling victim to corporate crime, prevention would be deemed as more cost-effective for companies rather than the cure, but having managerial auditors to devise their own preventive law programmes.(7)

Why This Matters Now

The urgency of preventive legal strategy in the modern era of the 21^st century is paramount, noting that legal risk is no longer episodic but continuous. Businesses face expanding regulatory oversight, cross-border exposure, and heightened stakeholder scrutiny, meaning that a single compliance failure or contractual breakdown can rapidly escalate into multi-layered disputes, investigations, and reputational damage.

Companies that rely solely on reactive legal responses are likely to face:

• escalating litigation and enforcement costs;
• regulatory penalties linked to inadequate compliance systems;
• operational disruption from avoidable disputes;
• reputational harm affecting investor and partner confidence; and
• diversion of management resources away from growth initiatives.

Legal risk management can no longer be treated as an after-the-fact service. Preventive law empowers businesses to understand their rights and responsibilities while reducing the likelihood of litigation and other legal risks.

As a matter of fact, many preventive legal measures are already commonplace. Such practices are becoming increasingly utilized including:

• Legal Risk Assessments and Audits

Identifying client-specific legal risks by assessing business activities and categorizing areas of greatest legal exposure based on the organization’s risk profile.

• Contract Review and Strategic Drafting

Reviewing and drafting contracts to enhance clarity, allocate risk appropriately, and reduce the likelihood of future disputes.

• Compliance Planning and Framework Development

Designing and implementing tailored preventive tools, including internal policies and handbooks, standard internal procedures, training programs, audit schedules, and compliance monitoring mechanisms.

• Education and Legal Literacy Programs

Providing workshops, training sessions, and practical resources for employees at all levels, including non-legal professionals, to strengthen legal awareness and early issue detection.

How We can  Help:  Introducing our Holistic Approach to Legal Risk Prevention Services (Collaboration between AP x VP x SVB)

Here in Anggraeni and Partners, we go beyond traditional legal dispute resolution services by delivering proactive prevention over legal risks for your business and operations. We holistically navigate legal and human risk for our clients through regulatory compliance and advisory, strategic framework, and capacity building in our anchored Sector Focus.

As such, we are pleased to inform you that our Legal Risk Prevention service, through collaboration by Anggraeni & Partners (AP), Veda Praxis (VP), and Stevland Bridge (SVB), now serve to assist you in navigating integrated compliance risks—not only through the lens of law, but also in governance and people development. Find out more on our capabilities, experiences, and how our collaborative services will help you [here].

References

1. Siedel GJ, Haapio H. Using Proactive Law for Competitive Advantage. Am Buisness Law J. 2010;47:641.
2. Brown LM. Preventive Law. New York: Prentice Hall; 1950. 1–346 p.
3. Teichmann F, Wittmann C, Boticiu S. Compliance as a Form of Defense against Corporate Criminal Liability. J Econ Criminol. 2023 Sep;1(100004):1–4.
4. Stolle DP, Wexler DB, Winick BJ, Dauer EA. Integrating Preventive Law and Therapeutic Jurisprudence: A Law and Psychology Based Approach to Lawyering. Calif West Law Rev. 1997;34(1):15–51.
5. Imperiale M. Proactive law in contemporary legal landscape: five main barriers and potential pathways to success. TalTech J Eur Stud. 2025;15(1):309–23.
6. Haapio H. Business Success and Problem Prevention through Proactive Contracting. Scand Stud Law. 2010;49:150–89.
7. Braithwaite J, Fisse B. Preventive Law and Managerial Auditing. Manag Audit J. 1988;3(1):17–20.

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