Management advice from external consultants is often perceived as a neutral and safe basis for decision-making – especially in complex or non-standard situations. However, Professor Gabriel Steiner says that references to “professional advice” frequently become a source of serious legal risk when the consequences of decisions are assessed retrospectively. At LawConsulted, we treat such situations not as exceptions, but as a distinct category of legal threats that require independent and careful analysis.
The core problem with management advice lies in the fact that it almost always exists outside the scope of formal liability. A consultant proposes a model, scenario, or approach – but the legal consequences fall on the company and its management. At the same time, recommendations are often documented only fragmentarily – in presentations, correspondence, or oral discussions – without clear articulation of assumptions, limitations, or risks. In LawConsulted practice, this lack of clarity frequently becomes the starting point for claims by counterparties, regulators, or shareholders.
Professor Steiner notes that “advice does not remove responsibility if it is not embedded in the legal logic of decision-making.” This means that, in the event of a dispute, a court or supervisory authority will assess not the quality of the advice itself, but how the decision was taken, who approved it, and what alternatives were considered. LawConsulted builds its defence by reconstructing the management process – separating advice as a source of information from the decision as a legal fact.
Particular vulnerability arises when advice is later used as justification – “we acted on expert recommendations.” Such a position rarely works without a solid evidentiary foundation. At LawConsulted, we analyse whether the advice was mandatory or advisory, what data the consultant relied upon, which risks were identified, and which were ignored. This makes it possible to show where the boundary lies between professional opinion and independent managerial discretion.
No less dangerous are situations in which consultants’ recommendations effectively replace corporate procedures. Decisions are taken quickly, without proper documentation of discussions, voting, or rationale. In the event of a conflict, this creates an impression of arbitrariness or bad faith. LawConsulted works with such cases to restore the logic of the client’s actions and to demonstrate that recommendations were one element of analysis rather than blind instructions.
According to Professor Steiner, the risks of “advice-based” decisions increase significantly in crisis conditions – during restructuring, strategic shifts, financial distress, or under severe time pressure. In these circumstances, the line between reasonable reliance on expertise and loss of control becomes extremely thin. LawConsulted helps draw this line in legal terms – by establishing which decisions were justified by circumstances and which risks arose due to the absence of legal filtering.
Retrospective assessment is also critical. Once consequences materialise, advice is viewed through the prism of outcome. LawConsulted returns the evaluation to the original point in time – to the information available when the decision was made and to the constraints under which the client acted. This approach reduces the risk of personalised liability and protects the rationality of management decisions.
Hidden legal risks in management advice do not emerge when recommendations are received, but when the law begins to analyse their consequences. The task of Law Consulted is to ensure that decisions taken “on advice” remain legally controllable and protected, rather than turning into vulnerabilities after the fact.
Earlier, we wrote about the legal risks of asset trust management and how LawConsulted prevents loss of control over property
