The real damage is not in the sentence, but in the inability to transform procedural knowledge into a strategic action
Few are unaware of the impact of their balance sheets. Talking about superdimened provisions is no longer a new alert. But there is a kind of risk that is still unnoticed by many organizations, including well -structured legal departments. It is the risk of sophisticated inertia, a liability that is not renewed by increased litigation, but for the absence of practical actions on the own data that the company already has.
The real damage is not in the sentence, but in the inability to transform procedural knowledge into strategic action. The problem is not judicialization but the failure in information governance. It is not the volume that distorts the scenario, but the absence of intelligent and continuous curatorship over what should be reflected in provisions and is not.
In a country with more than 3 million new labor lawsuits a year, mismanagement of contingencies is not just an operational error. It is a systemic distortion that compromises accounting reliability, the company’s reputation in the financial market and access to corporate credit.
The silent origin of distortion
Even in companies with good procedural control, contingencies follow inflated by non -legal, but operational, behavioral and structural factors. And that is precisely why they perpetuate themselves. See some examples of how the problem is indoors:
- Reclassifications that depend on active request from the legal to outsourced office, but do not occur due to lack of routine or clarity on the accounting impact;
- Detailed databases at the beginning of the process, but neglected throughout the life cycle, even after favorable judgments or definitive archives;
- Processes with null risk that remain provisionally because the accounting system does not communicate with the legal system and no one assumes reconciliation as formal responsibility;
- Offices with high technical domain, but passive performance in the risk review, maintaining old classifications for fear of liability or conflict with their remuneration models;
- Relevant procedural milestones, such as the absence of conviction, a res judicata, or filing for inertia of the plaintiff, are not ignored for not being part of a protocol of reclassification.
These are not rude errors. They are structural failures. And the cost is high: artificially maintained provisions, distorted balance sheets, immobilized capital and a false perception of risk that affects relevant financial decisions.
Offices that support nonexistent risks
External offices are a central part in the governance of provisions. Your reports directly impact numbers that feed accounting decisions, financial projections and business strategies. When they do not update the risk, they keep a distortion that paralyzes box, inflates and compromises the result. It is not a matter of style. It is responsibility.
Fulfilling procedural deadlines is the minimum. What makes real difference is to review the classifications with method, interpret relevant milestones accurately, and keep data alive and reliable. Offices that do not position themselves firmly about reclassifications feed a addicted cycle: the legal does not update, accounting replicates, the financial financial provision. The company pays the account of a liability that no longer exists.
To be strategic is actively participating in the rationalization of litigation. It is translating outlets exceeded into accounting relief. It is to see in the data not only a history, but an efficiency lever.
Provisional is not a bureaucratic task. It is risk management with direct impact on cash. Office that does not update, delayed. Office that does not review, distorts. Office that delivers dead data, compromises the whole. Updating provisions is to release value. And who doesn’t understand this is out of the game.
Provisions management as strategic asset
With high interest rates and compressed budgets, keeping inflated provisions is to freeze resources that could finance innovation, restructuring or expansion. Irrelevant processes that follow assets represent immobilized capital for lack of governance.
The Legal must be an active source of accounting relief, based on data, technical criteria and real integration with the financial area. Offices that do not deliver this intelligence proactively will be replaced by partners more aligned with this new role of law.
The legal maturity of a company is not in the number of shares, but in the way it transforms closed or harmless disputes into more efficient accounting decisions. Governing contingencies is not to review risks. It is unlocking value.
Finally, it is important to recognize that the problem is often not in the isolated acting of legal or accounting, but in the natural distancing between these areas. Without clear protocols, their fear of taking over the front leads to the postponement of the already extinct risks, maintaining provisions that could be adjusted with more agility and safety. This misalignment, almost imperceptible in everyday life, silently compromises the financial result. Creating a collaborative environment with a real flow of well -defined information and responsibilities is an essential step towards more efficient management that generates concrete value for the entire company.
*This text does not necessarily reflect the opinion of the young Pan.
