Lawyers are trained to be reactive. If you have ever watched The Paper Chase or Legally Blonde, you have some insight into how law school takes already high achievers and trains them in how to fix their future clients’ problems. From the start, the model etched into the budding attorneys’ heads is that their purpose is to deal with clients’ problems ex post facto. They are taught that their job is to fix the problem only after it happens. Add in the ego rush of putting on the hero’s cape to rush in and solve what is now a Gordian knot, and the stage is set for an adrenaline-filled career. But that model overlooks two critical roles for any business attorney: to prevent problems before they have a chance to set in, deepen and potentially bring a business down; and to be proactive about the opportunities facing a business owner.
But reactive attorneys are the norm — and what clients have come to expect. It is what the market has to offer. But it is not what the market needs. Consider Ben Franklin’s practical advice: “An ounce of prevention is worth a pound of cure.” In business, reacting is a lot more expensive than anticipating an issue and strategically working — to not only prevent it, but seize opportunities that will put the business in a better position — and farther away from the problems that could take it down.
From a psychological perspective, it’s certainly true that prevention is not a lawyer’s mission or purpose, fixing is. Dig a bit deeper, though: fixing problems is what presents lawyers as saving the day, while preventing problems removes that drama and emotional payoff. Further, without problems to fix, how are attorneys going to make a living?
For businesses to thrive, they have to start demanding that lawyers also provide prevention and proaction. Prevention addresses potential problems; proaction considers opportunities. Most lawyers never develop their thinking beyond fixing problems, let alone helping a business capitalize on opportunities; but business owners need to start requesting their lawyer take a more advisory capacity. You can get so much more out of your lawyer, but it is going to take a little reeducation on both of your parts. You might even have to do a little hand-holding to get your attorney on board, but the change is worth it. One of the keys to getting started on a more constructive path is having a framework for what your attorney should be doing for you.
In addition to reacting to and preventing problems, as well as proactively helping to spot and capitalize on opportunities, there are eight core competencies your general counsel should be able to address. Having this list in hand helps frame what otherwise may seem like a nebulous “where do I start?” quandary of what to do:
- Corporate Governance and Administration: On the one hand, this is an almost administrative role of keeping the corporate records and filings up to date. Beyond that routine work though, an attorney can be your best asset in protecting your business. In their prior incarnation as a problem-solver, they have pulled clients out of ditches when things go wrong in all the other core competences outlined below.This experience gives them acute foresight that most of your team will not have. It is the rare occasion that a lawyer deals with a problem without thinking, “Had I been there when the bad decision was made, I would have prevented this.” Unlocking this experience and then also getting the attorney to focus on how to help improve and grow the business is an untapped gold mine of prevention and proaction. Quit thinking about your lawyer like a tow truck, and demand they act as your wingman.
- Contracts: Of course, contracts are the province of lawyers. This competency ranges from your internal contracts to customer contracts to vendor contracts. Business contracts tend to be full of five-dollar words fraught with all sorts of legal significance. The really big ones are built over years of particular industry experience as clause after clause gets tacked on to deal with a situation that led to a dispute. If you did not draft the contract, it is likely that the deck just got stacked against you. This is one of the times when my maxim, “Law is like dentistry – you can do it yourself, but you probably shouldn’t,” really gets traction.Oddly though, contracts can serve as great marketing and sales tools. This is a great proactive tip: presuming you really do have some great differentiators from your competition, put them up front in your contracts. This goes for your external customers, as well as for your very valuable internal customers — aka, your employees.
- Claims: Again, this is home turf for lawyers and a place where yours should be on the front line of offense and defense. Taking this a step further, a lawyer’s default is to react to the need to pursue or defend claims. That is a key role, but it is still fixing, not preventing or improving. Your layers of protection kick in only after the problem happens, thus leading to a claim. Getting your attorney under the hood to think about how to prevent claims is a key to making your business stronger. Another step further would be getting them to think about how to use your legal rights to assert a stronger position in the market, or even to push your competition around.
- Human Resources: Depending on the size of your business, you may or may not have a full-time HR director. If you do not, your attorney needs to be your ad-hoc director: employment — from recruiting to promoting to discipline to separation — are all potential minefields for businesses. If your attorney has had experience dealing with a business that hit one of those land mines, that’s a huge asset you should take advantage of.If you have an in-house HR department, your attorney becomes a troubleshooter working with the rest of your team, but more focused on critical issues. In either circumstance, the goal is not to just react, but to protect and improve the company though smart decision-making.
- Insurance: Speaking of contracts being stacked against you, there is no place that happens more than with insurance policies. It has been said they are designed to prevent the payment of claims with all the exclusions, riders and small print. There is undoubtedly some truth in this assertion. One part of your lawyer’s job is to sort through the eight-point font and determine if you are getting the protection you need.Another part of the job is making sure you have enough coverage. Here, the attorney’s street smarts are critical. The key lies in knowing what size claims you might get hit with. Insurance agents do not know this like lawyers do, because lawyers are the ones that pursue and defend them.
- Policies and Procedures: Strong businesses run on systems built around policies and procedures. You might include your employee handbook in this competency, and it also extends to your standard operating procedures, administration and beyond. You need to make sure these comply with the law — and also that they proactively protect your company. For instance, in recently helping a business that serves children, I insisted that we institute mandatory sexual abuse prevention training for all employees. Proactively, your attorney needs to take steps to make sure you are in compliance with laws and regulations.
- Property: Protecting and asserting rights to your property is also a critical function of your attorney. This spans three types of property – real, personal and intellectual. The former two are the more mundane. This is transactional work to make sure you get property security in your rights. Again, my legal-dentistry rule applies: A lot can go wrong here, and it needs to be tended by a trained professional.Intellectual property tends to be esoteric and highly specialized. Here, your attorney’s role is likely issue-spotting – to put it in medical terms, that means knowing when to call in the brain surgeons, or in this case, the patent, trademark and copyright attorneys. That said, your lawyer’s training likely makes them the best member of your team to know when you need to get help protecting or asserting your intellectual property rights.
- Regulatory Compliance: President Ronald Reagan aptly noted that the most frightening words in the English language are, “I’m from the government and I’m here to help.” I have repeatedly maintained — without a single protest — that the economic boom of the Trump years is mainly due to the fact that American business is not worried about what Washington is going to do to mess with them. The statutes are horrific enough. Then, Congress and the state legislatures hand off the more detailed regulation to agencies, commissions, boards and the like.
The devolution to this alphabet soup is a morass for business. Your attorney is a key player in helping you avoid the swamp or get out of it if you wander in. Sometimes there is even opportunity in the regulations. For instance, one of my clients was on the front lines of renting flame resistant garments to the oil patch, after OSHA mandated their use.
These eight core competencies give you a comprehensive list of where you can get great value from your lawyer. I refined this list while serving as outside general counsel for a quarter-billion-dollar-a-year company. When they took my gig in-house, they hired a top shelf, full-time general counsel from a publicly traded company. He looked at how I had the files set up based on this list and asked, “Who set this up?” I told him we did it. He thought for a second and replied that he had never thought about his role in such structured terms, but that it exactly outlined what he does as general counsel. In short, this outline of what you need will jump start getting massive, value-added legal help – if you also insist that your attorney employ it with not only reactive but also preventative and proactive thinking.
There is obviously much more to say about each of the areas, but my point was to lay out the framework so business owners know how legal help can better support your goals to be rock star entrepreneurs. It is counterintuitive that the general rule is that law does not help business beyond reacting, but that’s the status quo. If you learn how to get more from your lawyer, it will put you ahead of the competition, and get you where you want to go faster and cheaper.
If I own a medium business, is it necessary for my business to hire a lawyer?