Legal Risk Management of a Limited Liability Company: Change towards Customer, Ethics and Responsibility

Tiina Ojala

Research output: ThesisDoctoral ThesisMonograph

Abstract

This dissertation examines the ways in which legal risk management enhances a limited liability company's business and in which business law integrates into business. The research question is approached in a pragmatic way, from the internal perspective of a company organization, and from outside of law. The study emphasises the instrumental nature of business law. Traditionally, legal risk is seen as a negative risk of loss. However, the legal risk has also other dimensions. Legal risk may be also positive. Legal risk management combines to business ethics. In financial sector regulation, breach against company internal rules and ethical rules is considered as a legal risk. Legal risk arises due to inadequate knowledge or understanding or even negligence. Duty of legal risk management and of the inhouse legal counsel is to ensure that the organization understands, interprets, and effectively cares about how regulation affects the entire business of the company. The focus of legal risk management is shifting from litigation and contractual obligations towards prevention of misconducts and unethical actions. This is done by strengthening personal responsibilities of individuals. Business ethics strengthens responsibility, builds the company's moral value base and safeguards operating conditions. The core of the company's moral value base is the customer around which the company's operations and other values are built. Liability based on the company law, criminal law and morality oblige the management of a limited liability company to take care of legal risk management. The legal purpose of a limited company, that is, purpose to generate profit, is an instrument for achieving the company's ethical goal. These two goals do not conflict with each other. The legal risk management tools must be versatile, and their level of sophistication being in line with then current level of the organisation's competence, the tools develop further the organisation's competence. Morality, regulation and meta-regulation are ways of directing companies to actively take responsibility for regulating their own business. An inhouse legal counsel must understand the company's business environment, its customer perspective and his or her own role in this context. Presumptive contextualism and system theory are tools for this. Only then can the legal counsel generate real added value for business.
Translated title of the contributionLegal Risk Management of a Limited Liability Company: Change towards Customer, Ethics and Responsibility
Original languageFinnish
QualificationDoctor's degree
Awarding Institution
  • Aalto University
Supervisors/Advisors
  • Rudanko, Matti, Supervising Professor
Publisher
Print ISBNs978-952-60-8475-6
Electronic ISBNs978-952-60-8476-3
Publication statusPublished - 2019
MoE publication typeG4 Doctoral dissertation (monograph)

Keywords

  • legal risk
  • legal risk management
  • limited liability company
  • business ethics
  • systems theory
  • change
  • role of inhouse legal counsel

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