Annual Report & Accounts 2026
22
PRINCIPAL RISKS AND UNCERTAINTIES
The Corporate Governance Statement includes an overview of the Group’s approach to risk management and internal controls. Set out below are the principal risks and uncertainties that the Group faces, which remain substantively the same as last year, and the activities designed to mitigate these risks. The Board recognises that the nature and scope of risks can change and that there may be other risks to which the Group is exposed; therefore, the list is not intended to be exhaustive.
Risk
Mitigation
Economic downturn
A significant downturn in the UK economy impacting the demand for legal services.
We deliver our services across a broad range of legal services, supporting clients across a large range of sectors, such that we have no dependence on any one area of law, sector of the economy or client. Furthermore, the remuneration structure of our lawyers (fully variable and pay when paid) provides a substantial cushioning effect in the event of economic volatility.
Finally, an economic downturn may provide further impetus to recruitment as conventional firms, which have high fixed costs, may struggle in this environment, thereby increasing the candidate flow.
Litigation, professional liability and uninsured risks
Due to the nature of a law firm and its role in providing legal advice, the Group remains susceptible to potential liability for negligence, breach of contract and other client claims. From time to time, in the ordinary course of business, Keystone receives claims of professional negligence which it notifies to its insurers. Any potential claim may be expensive to defend, divert the time and focus of management away from the Group’s operations, and may result in the Group having to pay substantial monetary amounts, any of which could impact on the reputation of the Group and result in a material adverse effect on Keystone’s business and overall financial condition.
We have a robust compliance and risk management team, which focuses on supporting lawyers to reduce the risk that such issues may arise and, to the extent that they do arise, we seek to mitigate any such risk by carrying professional indemnity insurance with a cap of £60 million.
PRINCIPAL RISKS AND UNCERTAINTIES
The Corporate Governance Statement includes an overview of the Group’s approach to risk management and internal controls. Set out below are the principal risks and uncertainties that the Group faces, which remain substantively the same as last year, and the activities designed to mitigate these risks. The Board recognises that the nature and scope of risks can change and that there may be other risks to which the Group is exposed; therefore, the list is not intended to be exhaustive.
Risk
Mitigation
Economic downturn
A significant downturn in the UK economy impacting the demand for legal services.
We deliver our services across a broad range of legal services, supporting clients across a large range of sectors, such that we have no dependence on any one area of law, sector of the economy or client. Furthermore, the remuneration structure of our lawyers (fully variable and pay when paid) provides a substantial cushioning effect in the event of economic volatility.
Finally, an economic downturn may provide further impetus to recruitment as conventional firms, which have high fixed costs, may struggle in this environment, thereby increasing the candidate flow.
Litigation, professional liability and uninsured risks
Due to the nature of a law firm and its role in providing legal advice, the Group remains susceptible to potential liability for negligence, breach of contract and other client claims. From time to time, in the ordinary course of business, Keystone receives claims of professional negligence which it notifies to its insurers. Any potential claim may be expensive to defend, divert the time and focus of management away from the Group’s operations, and may result in the Group having to pay substantial monetary amounts, any of which could impact on the reputation of the Group and result in a material adverse effect on Keystone’s business and overall financial condition.
We have a robust compliance and risk management team, which focuses on supporting lawyers to reduce the risk that such issues may arise and, to the extent that they do arise, we seek to mitigate any such risk by carrying professional indemnity insurance with a cap of £60 million.