Working Smart: Boosting Your Business Acumen
by Valerie Fontaine
Special to Law.com
March 7, 2011
Law school teaches you to think like a lawyer but, to succeed in today's legal marketplace, you must also think like a businessperson. As the profession becomes increasingly bottom-line-oriented, business and management skills are essential to advancement within your organization and for optimally servicing your clients' needs. Each case or transaction involves money in some way, and every lawyer in private practice is running a business.
To represent most business clients well, whether you are in a private law firm or in-house legal department, in addition to knowing case law and relevant statutory and regulatory schemes, you also must have basic financial literacy. You should be able to read and understand balance sheets, profit and loss statements, and annual reports, understand fundamental tax principles, and perform basic statistical analysis. Business lawyers also need to comprehend the workings of domestic and international private and public financial markets, stock markets and financial institutions. If you didn't earn an M.B.A. or take business courses in college, you may need to take at least a course in accounting or business for lawyers.
This is especially true if you want to practice in-house, where a good legal department is a respected part of the business team. You will need to interface regularly with executives and personnel at all levels of the company's operations, and must be able to speak their language. You need to understand their objectives and the importance of any particular day-to-day legal question to the overall success of the business.
Furthermore, you must possess some knowledge of the client's business and how it competes within its particular industry. You also need to be familiar with your clients' business structures, internal politics and decision-making processes. In addition to keeping up with changes in the law, you should keep abreast of business trends by attending seminars and reading financial media such as The Wall Street Journal and your clients' industry trade papers. Of course, a wealth of information is available online. This kind of knowledge allows the legal role to move closer to the business function, therefore becoming more aligned with the client's overall decision-making, resulting in your becoming a much more valuable resource.
LAW BUSINESS MANAGEMENT
Lawyers with business competency also become cost-effective contributors to their firms. As legal practice become more bottom-line-oriented, in-house training programs for lawyers from senior partners to junior associates and even non-attorney staff now include not only programs on delivering quality legal services, but also on how to be a good business person. Topics include management, leadership, marketing, business concepts and client development.
Managing partners at law firms resemble CEOs of other businesses and corporations and need similar managerial skills. Regardless of your seniority and status within the organization, however, you should think like an owner. See the big picture, be proactive and, if possible, take initiative and responsibility for the success of the whole project although you may be working only on a small part. Be entrepreneurial: seek to understand the business aspects of your firm, including its structure and governance, revenues, billing procedures, and competitive environment and trends in the legal community at large such as mergers and globalization, so that you can do your part to contribute to its overall success.
Many bar associations and continuing education providers offer business and management courses for lawyers. Online resources include the American Bar Association (www.americanbar.org) and West Legal Education Center (westlegaledcenter.com), which collects business and legal education programs from the Practicing Law Institute, the National Bar Association and many others. General business programs and materials are available, for example, through the American Management Association (www.amanet.org) and the Conference Board (www.conference-board.org).
If your firm is one of the growing minority that partners with top business schools to create specialized law firm management programs, do everything within your power to be selected to attend. Both Northwestern University's Kellogg School of Management and the Wharton School of the University of Pennsylvania have developed business curriculums tailored for individual firms or geared toward partners and high-potential attorneys. Classes aim to prepare lawyers to either take top management positions at their firms or help them better understand their business -- and their clients' businesses. This trend is expanding to European business schools, as well, with IMD, a business school in Lausanne, Switzerland negotiating to offer a custom executive M.B.A. program to a global mega-law firm.
Other organizations provide business training to the profession at large. In early 2008, Boston University School of Management joined with the Association of Corporate Counsel to offer a mini-M.B.A. program to its members. The three-day intensive course focused on skills traditionally taught in business schools such as organizational behavior, finance, accounting, risk analysis, marketing and strategy. George Washington University and Hildebrandt Institute created a two-year degree program in law firm management. Launched in 2005, it teaches law firm leaders how to apply general management skills.
Law schools, also, are expanding their curriculum to include more business and practical courses that include the vocabulary and analytical skills usually associated with M.B.A. training. This is in response to clients' increasing preference for attorneys who know how to meld the law with business goals. To succeed in the law firm environment, new attorneys should be familiar with concepts such as realization, utilization, leverage, and law firm terminology like WIP (work in progress), origination, RPL (revenue per lawyer), and NIPP (net income per partner). Furthermore, industry-specific knowledge is critical for lawyers seeking jobs inside corporations.
Lawyers who understand the business aspects of the industry will become leaders; those who don't will remain followers. Although your professional plate probably is more than full with the practice of law and business development activities, it is a wise investment of your time to learn what those lawyers who remain followers don't know.
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