Lawyers can add value by understanding your business. This includes knowing your products, target market, and internal processes.
How many times have lawyers heard that:
- Legal slows down business….
- Legal is always saying no…
- Legal is a bottleneck, an obstacle….
In light of this reputation (perhaps deserved on occasion, but mostly a misleading perception in my humble opinion), how can lawyers, particularly in-house lawyers, prove their value in order to become that tried-and-true, go-to trusted business advisor? Over my 30-year career, I have had many “lawyer” roles, working in-house for several companies, in private practice and in the Federal government. While each opportunity was very different, I’ve gleaned from these experiences several universal principles when it comes to demonstrating legal’s true value within an organization.
Although these principles alone do not define the lawyer-client relationship, nor do they represent an exhaustive list of actions that one can take in order to become a trusted business advisor, they can go a long way in helping in-house attorneys demonstrate real business savvy, know-how and the value they can bring to an organization.
In this 4-part series, we will discuss the various ways that lawyers can demonstrate their value to clients, starting with the first, and perhaps most important, principle: “know your client’s business.”
Principle 1: Know your Client’s Business
When a lawyer joins an in-house legal team, their first order of business is to learn about the client’s business
I know this sounds obvious, and it probably is. However, over the course of my career, I have (surprisingly) engaged with many lawyers, both in-house and outside counsel, that did not fully understand the drivers of the business they were representing. A lawyer cannot provide practical, strategic advice to a client without this baseline - it would be like trying to drive a car without understanding its features and capabilities for optimal road performance.
The following 4 areas are a particularly good place to start:
- Understand the product or service being offered
An in-house lawyer MUST fully understand the product/service offering in order to practically advise on the spectrum of risks that may exist in a deal. For example, if the company offers a XaaS (either software as a service, infrastructure as a service, business process as a service, etc.), the attorney should seek to understand the nature of this service and how it is being sold to the customer by asking some basic questions such as:
- is it offered as a stand-alone service?
- is the company reselling a third-party platform, or does the service integrate with or rely on other third party services or platforms?
- is there native intellectual property (IP) that is valuable and may need protection, or is there licensed IP from a third-party included with the offering?
- is the platform offered uniformly to the customer base, or does it require configuration and professional services support?
You get the point here. The key is understanding what the company is selling and its full value proposition.
- Understand how the company goes to market, including the pricing model
An in-house lawyer should be familiar with the client’s total addressable market, its target customer, and the go-to-market approach. Find out if the company is a direct to consumer (B2C), business to business (B2B), or business to business to consumer (B2B2C) model, as well as how deals are sourced (for example, through a direct sales model, leveraging channel partners or both). Learn how its product is priced – is it a limited or perpetual licensing model, subscription model, time and materials, one time fixed fee, or some combination of these - and how the company recognizes that revenue. All of these factors will impact the contracting approach and risk mitigation strategies which are critical to efficient deal making. - Understand the company’s organizational structure, functions and key stakeholders
An in-house lawyer should meet regularly with the company’s executive leadership team, extended leadership team, sales organization, product development and engineering, and other key personnel. Nothing can replace the impact of positive personal relationships; plus, there is so much to be learned about the organization from the perspectives of these business professionals and their respective goals. This in and of itself will go a long way toward establishing the trust necessary for effective legal operations. - Learn how the company operates internally
An in-house lawyer can play a valuable role in helping leaders create efficient and effective operational processes and internal controls, especially with respect to contract management. On that front, consider (i) how the contract review process is initiated and managed; (ii) who has access to contracts and can revise them; (iii) who has signature authority; and (iv) how contracts are stored and managed. Understanding these and other internal processes will provide critical insight into how the organization operates, what controls may need to be implemented, and how legal can help facilitate, rather than impede, operations. By tackling these issues proactively, an in-house attorney will not only foster speed and efficiency, but more importantly, provide true risk mitigation.
Let’s dive into the second installment of my 4-part series on how in-house attorneys can demonstrate true value within an organization by following 4 universal principles. In part one, we explored the first, and perhaps most important, principle: know your client’s business. Next, we review principle two: “understand the real question being asked.”
Principle 2: Understand the Real Question Being Asked
Legal language can be complex, circuitous and, at times, frustrating for clients. When asking questions, clients may not always fully understand, or even realize, the real legal issues that are at play. Because clients communicate in a way that is different from how attorneys analyze the law, it is the lawyer’s responsibility to “decode” a client’s questions before responding in order to avoid frustration and miscommunication. In other words, a lawyer must work to understand the real question being asked by a client.
To accomplish this with internal clients, an in-house lawyer should:
- Listen closely
Just listen . . .don’t speak. Some of the best advice I ever received in my career was “Talk Less, Listen More.” As lawyers, we are trained to solve problems; and sometimes, we jump in to help fix an issue before fully understanding a client’s need. This can backfire, however, especially if a client uses words that are not 100% accurate or doesn’t fully understand the legal implications of the question. By listening carefully, an in-house lawyer is more likely to zero in on the real question being asked, as opposed to taking the client’s words at face value. - Consider context
In addition to active listening, a lawyer should also seek to understand the context in which a client’s question is being asked. Besides knowing the business, a lawyer should consider any personal, financial, operational or other biases a client may have which could influence their question. This context is best gleaned by asking several relevant follow-up questions to better understand the situation and ensure that the real issue is being addressed. - Avoid assumptions
It can be easy to make assumptions about a client’s need based on previous experiences advising similar clients or even just personal biases. However, a lawyer should focus on what the client is trying to solve (operational, financial or otherwise), as well as the legal implications of such issue, without allowing his or her own biases to steer the analysis. - Keep it simple
When communicating with clients, a lawyer should always strive to be transparent and clear. Using plain, accessible language (as opposed to legalese) and offering relatable, real life examples are both effective ways to approach a client’s question and ensure the right issue has been identified. This will also help to position the attorney as a trusted advisor.
Here's an example of how this might play out. An in-house lawyer is contacted by HR to discuss a former employee who has been trying to recruit current employees in violation of company policy and her employment agreement. Although HR is rightly concerned about the non-solicitation violation, by listening closely and asking several follow-up questions, the lawyer uncovers an internal control issue posing an even greater risk to company – that is, the former employee still has access to her company email account and has been using it to communicate with current employees. By taking time to understand the full scope of the situation, rather than accepting the face value of what HR shared, the lawyer is able to resolve both the legal and operational issues.
To sum up, lawyers need to identify the real issues being presented by their clients in order to provide effective and efficient legal and business advice. Doing so requires strong, active listening, clear communication skills, an understanding of the context, an open mind, and transparency. With these skills in hand, a lawyer is more likely to become a trusted advisor, helping clients achieve their goals and building a strong lawyer-client relationship in the process.
In this 4-part series, we’re discussing the various ways in-house lawyers can add value within an organization. Drawing on 30 years of legal experience, I have identified 4 universal principles that attorneys can follow in order to demonstrate their true business savvy and legal skills. As previously shared, principle 1 “know your client’s business” and principle 2 “understand the real question being asked” are both critically important practices proven to help attorneys build trust and strengthen their relationships with clients. Next, we will review the third principle: “stop saying ‘no’.”
Principle 3: Stop Saying “No”
Yup, you heard me correctly - remove the word “no” from your vocabulary. Since everybody LOVES the word “yes”, stop telling your clients what they can’t do and start telling them what they can do by using “yes-focused language when facilitating a solution to a problem.
How can a simple change in language help move the business forward, especially when there are in fact certain things businesses won’t legally be able to do? Consider the following fundamentals truths about effective communication:
- The word "no" often creates an immediate barrier in any relationship. Between lawyers and their internal clients, a “no” response can hinder the lawyer’s ability to build trust and establish a positive working relationship. Internal clients and business units may perceive the “no-focused” lawyer as inflexible, unhelpful, or unwilling to explore creative solutions to their legal problems.
- Saying "no" implicitly limits creative thinking. A brain that is pre-wired to focus on what can’t be done is less likely to find alternative solutions to legal problems. However, by staying open to all options and exploring different angles before communicating with a client, a lawyer is more likely to deliver business-focused solutions, resulting in better outcomes for clients.
- “No” can be interpreted as a lack of understanding. Clients expect their lawyers to understand their business and legal needs. Therefore, it is important for lawyers to use language that demonstrates their knowledge and understanding of the business, tailoring their advice accordingly.
For example, a client may ask if it is acceptable to use a customer logo for marketing purposes. After reviewing the contract, you determine that it is silent on the issue. How should you respond? Without an affirmative license to use trademarks or logos, your client likely does not have the automatic right to do so. A less experienced lawyer may just say, “no, we can’t use the logo because the contract does not expressly allow it.” However, this response would leave the business unit without a solution to their concern.
Rather, by employing both principle 2 (Understand the Real Question Being Asked) and principle 3 in formulating your response, you ask several probing follow-up questions (e.g., how do we specifically plan to use the logo, in what context and for how long, and finally, what is the nature of the relationship with this customer?) Depending on those answers, you may respond as follows:
“Although the contract doesn’t address that point, given our strong relationship with the customer, we may be able to use the logo simply by explaining our intent and obtaining their consent. I am happy to help with the communication approach if you would like.”
In conclusion, by intentionally avoiding use of the word "no" when advising a client, a lawyer is more inclined to foster a positive and productive lawyer-client relationship, build trust, suggest creative solutions and be viewed as a true value add to the organization.
In-house lawyers are frequently accused of slowing down business momentum with “red flags” and a general inclination toward the word “no.” Although deserved on occasion, this is mostly a misleading perception which attorneys can disprove by following a set of universal principles for demonstrating true value to internal clients. In previous posts, we covered principle 1: “know your client’s business,” principle 2: “understand the real question being asked,” and principle 3: “stop saying no.” Finally, we will examine the last principle: “take more risk.”
Principle 4: Take More Risk
Lawyers are trained to provide legal advice and mitigate risk for their clients; and they are hired, at least in part, based on their proven ability to perform these functions. However, risk mitigation is not always the end-game. In many situations, lawyers actually need to strike just the right balance between managing risk and achieving specific business goals on behalf of their internal clients.
To do this effectively, a lawyer should get comfortable accepting more risk, which can be accomplished by:
- pursuing more aggressive legal positions,
- compromising on contract language,
- challenging established norms or industry practices, and
- fully employing principle 1 “know your client’ s business,” so that they are in a position to fully assess the real risk to the business, as opposed to purely theoretical legal risks.
By adjusting risk tolerance, in-house lawyers can better support clients in their own quest to become more innovative, agile, and competitive in a rapidly changing business environment. It can also help foster a culture of entrepreneurship and model rational risk-taking within the company, which can ultimately lead to greater success.
However, it's important to keep in mind the challenges and limitations that come with a higher risk profile, such as increased costs, reputational damage, loss of business and legal liability. Finding the appropriate balance requires lawyers to rationally evaluate risk in terms of the likelihood and resulting impact of possible outcomes. This evaluation requires a thorough understanding of both the client’s business, and in particular, the ways in which the business can operationally mitigate potential risk, and the applicable law, particularly with respect to the possible consequences of a legal violation.
To illustrate this balancing act, consider the following example. Your company has a general policy against accepting unlimited liability for data privacy breaches relating to personal information. Your customer’s legal counsel has asked that you to provide an unlimited indemnity for data privacy breaches. Given the current data privacy market climate, this issue could prove to be a highly contentious during negotiations, delaying a potentially critical deal for your company. However, upon discussions with your delivery team, you learn (after asking the right questions), that they can fully provide the services without needing access to any personal data of the customer. So, while the theoretical legal risk of liability from a data breach claim could be very high, the “real” risk to the business may actually be very low given that your company will never have any access to personal data. In this case, you can comfortably take on more contract risk by agreeing to unlimited liability, knowing that your delivery team has operationally mitigated the business risk.
The risk spectrum for every company will be different based on the nature of the product and services, go-to-market strategy, business operations and controls, personnel and leadership, service locations and so on. As their trusted advisor, it will be up to you to consider all of the relevant circumstances and factors when implementing your risk strategy. By having an in-depth understanding of business, people involved, and applicable legal principles, an in-house lawyer is able to make informed decisions about the level of risk the company can withstand while pursuing its strategic business objectives.
We work with companies and individual clients. For more insight on how in-house lawyers can add value to their organization, contact Client Success at clientsuccess@outsidegc.com.