May 10, 2017 | Categories: Articles
How legal professionals can benefit from developing critical business skills
A recent Harvard Law School study, identified the most crucial skills for new lawyers to develop. At the top of the list were skills like accounting, the ability to analyze financial statements, understanding financial markets, business strategy and industry analysis. Their conclusion in other words, was that lawyers need stronger business acumen. But why?
Consider the following scenarios:
Scenario 1: A tech company releases a brand new patented product that has been in development for several years. The next day, one of the company's major competitors announces work on a similar product to be released soon. It’s clear that the competitor’s product is almost identical.
Lawyer A jumps right into building a case and compiling the paperwork to begin a lawsuit against the competitor.
Through a legal lens, the course of action seems cut and dry, but Lawyer B looks at the issue through her business lens before jumping into action. She talks to the marketing, engineering, finance and sales, and considers the development of the product itself, along with the implications of a lawsuit on all the different areas of the business. She also considers the potential cost of a legal battle, and the effect a lawsuit would have on product sales and company image.
Now, both lawyers in this scenario may conclude that a legal action is necessary, but which one do you think has the trust of the C-suite?
Scenario 2: The same tech company is considering a purchase of a smaller company. The companies are both in the same industry, and have complimentary goals, so the merger makes sense. However, it’s still the beginning of the decision making process and company leaders want to bring legal in to identify the potential legal risks and ramifications of a merger.
Lawyer A puts together all the documentation to get the deal done, and advises company leaders on the best deal structure, tax benefits and drawbacks, potential non-compete risks and timing issues.
Lawyer B does all that too, but she also looks at the smaller company’s financial statement history over the past several years and notices a sharp drop in the smaller company’s assets over the past 3 years. She’s happy to help navigate the legal considerations, but she wonders if the purchase is in the best interest of company goals, and because of the trust she has built with management, she brings up her concerns.
Now, both lawyers again will be accomplishing the same end goal, but Lawyer B’s reputation for looking at issues through a business and legal lens make her a trusted advisor, where Lawyer A simply fills a necessary business function.
You know that businesses make decisions based on a variety of factors, and there’s a lot to consider. When legal counsel can provide advice from a big picture perspective, looking at all the moving parts of the business together through both a legal and business lens, they are more engaged with the success of the business, and are better able to communicate the potential risks that would have an impact on company strategy, and ultimately, revenue. They become critical business partners whose ideas and insights are sought after.