Once upon a time, there was a lawyer. S/he was a solid lawyer: Heads down, hard worker and always ready to solve the next legal issue with precision and correctness. Possessing a single focus on what was allowed…and what was not. The lines were clear – and “no” was a frequent uttering in the office of The Big Cheese. The lawyer stayed in the legal lane to which s/he was assigned and never drifted. Ever.
Then one day, the lawyer’s boss expected more. Understand the business! Help move it forward! Focus only on the risks that matter! Be proactive! Be a business partner! Possess executive presence! Aaaaand…no more “no’s”! The boss knew that her/his legal counsel could offer more…should offer more. And such became the new expectation.
Suddenly the world was different and the old way of doing things was out of date, unwanted and less marketable. The lawyer quickly realized that in order to gain a competitive career advantage…in order to stay relevant, a new way of practicing was in order: One that incorporated business acumen.
But the lawyer wasn’t sure how to proceed: What exactly is “business acumen”? Is it something a person is born with or is it something one can develop with education and diligence? If it’s the latter, then what is the best way to achieve it? The lawyer began a quest for answers – and in that quest encountered The Lawyer Whisperer who imparted the following words of wisdom:
The meaning of “business acumen” may vary slightly depending on who you ask – as personal experience tends to heavily influence how individuals define it. But generally speaking, lawyers who possess business acumen have a comprehensive understanding of the factors that influence and affect how a business operates and achieves its goals to maximize growth, economics and cultural harmony. They derive this understanding through intellectual curiosity and an ability to identify and assess how the puzzle pieces of an entity fit together…outside of their own nook. They are educated on relevant industries, trends and the domestic/global economy, which helps inform them of corporate rhythms and possess good business judgment. This influences a lawyer’s understanding that the purpose of her/his function is to be an integrated part of the wheel that moves the business forward – whether in house or as outside counsel. And the pursuit of an entity’s business objective is the priority, which can be facilitated by legal solutions while simultaneously mitigating risk. Business acumen can also involve a more evolved EQ including a lawyer’s ability to embrace the priorities of the Top Brass, understand their temperaments and idiosyncrasies and tailor style and approach accordingly.
Conventional wisdom has held that business acumen is one of those human qualities that is subjective in nature and the product of innate wiring: You either have it, or you don’t. Could this be true? Most certainly no. While temperament is a factor, business acumen can be learned and acquired – even early in a career.
So if you are striving to hone your skills in this area, the best starting point is with the corporate basics. Below is a list of questions that every lawyer should be able to answer about her/his employer or client’s business. Take a read and see what you know about yours:
- What are the company’s annual revenues?
- What are the company’s profits (losses)?
- What are the company’s earnings per share (if publicly traded)?
- What are the company’s gross margins?
- If publicly traded, how many shares are outstanding?
- Who are the company’s biggest shareholders?
- Who are the company’s largest investors?
- How much, if any, debt is outstanding? Is it convertible? When is it due?
- How much of the company’s sales are domestic? How much international?
- What kind of customers does the company sell to?
- Who are the company’s biggest customers?
- Are the company’s sales subject to seasonal cycles?
- How does the company sell and deliver its products/services (direct sales? distribution channels?)
- Are the company’s non-exempt employees unionized?
- How long are the company’s product life cycles?
- Who are the company’s most significant competitors?
- Does the company rely on technological advantages or price competitiveness (or both) to lure customers?
- What are the company’s most significant expense items (raw materials? labor? research and development?)
- How much do the company’s products cost?
- How big is the company’s patent portfolio and what, in general terms, is its composition?
- What are the executives’ business priorities?
- How many employees does the company have?
- In which geographic areas does the company have offices and conduct business?
- What are the company’s industry trends?
- How are marketing and sales aligned in the organization?
- How is the company culture viewed externally and by its employees?
- How does Legal impact and influence all of these areas?
After working though this list, identify where your knowledge is robust and where it is lacking. Then take the time to fill in the blanks with the resources available to you. This knowledge will serve as the foundation for your business acumen and will help you refine your approach and quality of your practice as your career progresses. This is where you start….
And with that, the lawyer and The Lawyer Whisperer parted ways. The lawyer returned to her/his role with a plan and newfound optimism – and implemented what s/he had learned on her/his quest. It wasn’t easy and it took some time working through the discomfort zone. But with perseverance, the lawyer was transformed and the practice of law took on new value and meaning. Relationships were enhanced, recognitions were received and the lawyer’s stature was elevated.
The lawyer went on to receive numerous accolades and achieved career success beyond her/his wildest dreams. In the sunset of her/his career, the lawyer spoke publicly and addressed eager-minded audiences about the importance of business acumen and how to develop it in this modern day profession. And in closing, the lawyer always left them with the parting words s/he heard so long ago:
“Conventional wisdom has held that business acumen is one of those human qualities that is subjective in nature and the product of innate wiring: You either have it, or you don’t. Could this be true?” s/he asked the audience. “Most certainly no. “
“This is where you start….”