End of May I had the privilege of being invited as a speaker at the ACC conference in Madrid. ACC stands for Association of Corporate Counsel, the largest organization of in-house lawyers in the world. The conference committee wanted me to talk about ‘Unlearning traditional legal speak and thought – Retooling hard skills to lead and more effectively partner with the business’.
While this might just seem like one of those typical vague and lofty topics that can be found on any conference’s agenda, there is actually a great deal of relevance behind it.
Primarily there is the fundamental question whether a lawyer that is employed by a company, is first and foremost a lawyer before anything else? While some may say: “obviously, yes”, I would beg to differ. Any employee in a commercial organization is fundamentally hired to help the company reach its commercial goals. Employees that have no added value in that process will ultimately be made redundant. A commercial company is not a law firm. Lawyers in a company are expected to keep their eyes on the business.
Prize draw
Allow me to share an example from my days in a corporate legal function. At the time I worked at one of Europe’s largest apparel retailers. The company operated in a high volume segment of the market that is super competitive and highly sensitive to price.
In one country one of our main competitors had held a mid-season sale event that involved a lottery and a price draw. Customers who made a purchase during the event could potentially win some attractive prizes, among which a brand new car. No need to explain that our company lost customers and market share to that competitor during the period of the event.
As things are in a highly competitive retail market, my company immediately set off to organize a similar sort of event. The problem was that lotteries and prize draws legally were not allowed in that country. We asked our external law firm for advice. The answer we got after several weeks was many pages long, but in essence it said that indeed we could not do it. Legally such events were not allowed.
After we had received and digested the outside counsel’s advice, I sat with my team and we discussed how we could help our company to remain competitive in the face of competition. What we came up with is this: it turned out that the law on which the prohibition of prize draws and lotteries was based, was almost a century old. There was already a proposal put to parliament to abolish the ban on such commercial events. In addition we found that there had not been any enforcement from the government on this for almost two decades and that in the unlikely event that we would be prosecuted, as a first offender, the maximum penalty would be the equivalent of €25.000. Realizing that our company would lose close to a million in revenue, our advice to the board was to accept the risk and go ahead.
Probably no need to say that the board decided to go for it and that nothing bad happened. On the contrary, our event became a tremendous commercial success and became the new standard-to-beat in the market and was annually repeated for many years.
Lawyers must keep their eye on the money
I have also shared this real-world story with my audience at the ACC conference. It illustrates how company lawyers are part of a wider ecosystem, geared towards supporting and enabling the companies success. It illustrates that company lawyers are not first and foremost lawyers, but are primarily team members with expert legal knowledge. While this might seem a futile semantic difference, it is not. It is a totally different mindset and attitude.
Lawyers in a company are not the guardians of risk and compliance as they often like themselves to be portrayed. Risk and compliance are everyone’s responsibility. If not, the company is doomed.
Company lawyers are well advised to remember that their primary role is to help their employer to be commercially successful. Of course limiting risks is an important part of this as risks could turn out to be costly. But more important than the risks, is the opportunity.
The reason I’m writing about this is because this also holds true for you, the external counsel. Back to my example story on the prize draw: while the external counsel was technically right, they still did not provide the right answer. Lawyers at law firms are well advised to also be very aware of how their client exactly makes money.
Understanding the Business (interests) is one of the TGO Core Dimensions© that distinguish the tier-1 lawyers from the tiers below. For any lawyer, both in-house and outside, it is of crucial importance to understand how a company makes money. Only after you fully understand you are able to deliver value. Back in the days when I was with the retail company, the outside counsel (one of the 4 leading firms in the country) failed to understand, rendering their legally correct advice useless.
TGO Consulting has a method that has been tried and tested to help partners develop and grow on the 7-Core Development Dimensions©. Understanding the Business is one of them.