Lawyers' Role

In my last post, I talked about the need for each in-house lawyer to really participate in the business of his or her company. Not only as a legal expert but also as a business executive. In-house lawyers need to be both. I take to task all lawyers who go only half way, by t-ing up legal analysis but then running away from business decisions.

In this post, I go the other direction. Here, I want to recognize how difficult it can be for in-house lawyers to really participate in certain aspects of business. For example, I recognize that it can be hard for lawyers working with business development and sales groups to take a leadership role. It often is difficult to stand shoulder-to-shoulder with executives who design business development and sales deals. Why is this so? The one word answer is: "customers."

Someone once told me that every successful executive within a company has at some point "carried the company bag." What he meant is that one cannot understand the business of a company unless one has represented that company on sales calls. In his opinion, until one has gone out, time and again, and had the door slammed in his or her face when pushing the company product or service, one can't understand the business well enough to lead it. This sounds right to me.

Unfortunately, this is bad news for in-house lawyers who would like to progress out of the role of lawyer and into the role of effective senior leader.

In my experience, in-house lawyers are seldom asked to make customer calls or to meet with their company's strategic partners in the early stages of any deal. Even in-house transactional lawyers, whose job it is to help close agreements, are usually excluded from the early and mid phases of sales and business development deals. In-house lawyers often find themselves stepping in only to take the deal through the necessary, but formalized and often somewhat adversarial, documentation process. Trust me on this one. A lot of lip service is paid to the idea that lawyers are integral to the business, but the reality does not live up to the talk. All of this is unfortunate because it means that we internal business lawyers are typically not set up to understand the human context of the deals we work on.

In-house lawyers who do not work on sales and business development deals have it even worse. They have skant exposure to customers at all. They may not need to have that customer-facing work in order to succeed perfectly well within the legal department, providing valuable service to the company. But I contend that every lawyer in a corporation, from securities lawyers to patent lawyers to litigators to human resource specialists and general counsel cannot rise the the level of leading executive without having represented a the company's products and without having built personal relationships with people who are customers and potential strategic partners.

So what can be done to break down this roadblock?

My advice to younger lawyers is to simply keep trying. Exploit every opportunity to get in front of customers and partners, and not only for purposes of negotiating. Be a part of the sales process in which personal relationships are built, the needs and desires of the customer/partner are heard, and your company's wares are pitched. Invite yourself along. Be greedy (but not too greedy). The experience you accumulate is invaluable and will serve you very well.

Recommendations

I've been thinking recently about the role of in-house lawyers and what is expected of us by our business colleagues.

I find that members of corporate legal departements (and, indeed, lawyers generally) resist making decisions. Too often I see young lawyers serving up problems and then running away from decisions. As if they think lawyers have a special status that excuses them from the hard part of business.

One rule of thumb that I live by, and that I push upon the people that I manage, is that in most cases the legal guidance that we give to our colleagues should be accompanied by a recommendation about how to proceed with the business. As in-house professionals, we have the burden of wearing two hats, not only one. When we give legal guidance, we wear our lawer's hat. But inhouse legal professionals also wear the hat of a business executive, which requires that we make decisions ourselves, and, when we are not the decision maker, give real recommendations that help others decide.

For example, suppose an inhouse lawyer is asked by a senior technology executive to explain the process for running a patent clearance for a new product. The question calls for legal guidance of a factual sort. The guidance may be something like: "We would have an engineer work closely with an outside law firm that will research all issued patents that might be infringed by the product and then generate an opinion letter."

The next question from the technology executive might be: "Well, we don't have money for that kind of clearance. What is the likelihood that we will be sued for patent infringement if we just release the product without running it through a clearance process?" The likely legal guidance is something like: "I don't really know. In order to know, we must run a clearance analysis. If we roll the dice and just go for it, the company history of releasing new products without patent clearance tells us that we could see a patent lawsuit."

Obviously, this answer gives the technology executive nothing to work with. So, he asks: "What is the risk?" What is the likelihood that we will be sued?"

At this point, many lawyers will repeat what they said the first time: "I don't know. We need more information." I see lawyers get into this position often. We sometimes can't measure risk very well because we cannot reasonably determine the liklihood of a harm. The inexperienced lawyer stalls out there and can't move past the "I don't know the risk" answer. But this is not good enough.

The more experienced lawyer will acknowledge that it is difficult or impossible to measure the likelihood of a bad thing happening. But she will not stop there. She will move the conversation forward by taking off her lawyer's hat, put on her executive hat, and make a real recommendation. For example, by saying: "Look. I can't tell you the likihood of getting sued for patent infringement. I can tell you that we run those clearances as a matter of process and we still sometimes get sued. I can also tell you that I know that other companies in this industry do not run patent clearances of new products, so just going ahead without a clearance is not an unreasonable thing to do. Since I understand that the product you are going to release is an extension of an existing product line and that it fits within the core existing business, I recommend that you move ahead without a clearance."


The point here is not whether the lawyer gives the business executive the answer he wants to hear. The recommendation could have been to hold the product release until a clearance is run.


The point is that when you are an in-house legal professional you are two things. You are someone with a particular expertise, in the case above, a working knowlege of intellectual property law. You are also a businessperson who makes recommendations and decisions. It is far too easy for legal professionals to serve up the problem and then run from the decision that must be made. Everyone within a corporation must make decisions and make recommendations about how the business should be operated. No one individual in a corporation has complete wisdom. Everyone matters and should pay a role.

Scott v Scribd

Here's another case by a copyright holder against the operators of a copyright infringement filter technology. I have not read the complaint, but it smells like fair use to me . . .

Scott v. Scribd Complaint