The Thin Line Between Legal & Business Advice
, answers questions submitted by various businesses and entrepreneurs. Most of the time it focuses on such primal entrepreneurial issues as how to compete better in a local market or the best strategy for running operations. In the latest version however, there was a question submitted by a lawyer (hopefully this lawyer and I are not the only two lawyers who read this magazine). The gentleman asked how entrepreneurs can get the most benefit and the best value from their [lawyers]. Before I read Norm’s answer I reread the question again and focused on “benefit” and “value.” In most businesses and professions the definitions of these two words are well established and known. In the law however it appears we are in a time where these two concepts are being debated and fleshed out. Certainly the traditional services of a lawyer are well understood and arguably therefore so are the accompanying benefits and values. We know the benefit of having a will drawn up and its value both in terms of cost in the immediate term and in the long term by having clarity over disposition of property. In the corporate sense we know the benefit of having our lawyers review potential transactions for liabilities or outline a proactive sexual harassment training/avoidance program. The value represents both the cost of the legal services and the prospective avoidance of future legal liability.
What happens though when a business faces an issue that touches both upon a legal issue as well as a business issue? After reaching this point in thinking I returned to the article to read Norm’s answer. In short Norm states quite clearly and emphatically that lawyers should stick to giving legal advice and not business advice. He goes on further to state that business advice when given by a lawyer is almost always bad advice. The point – there is no benefit or value to seeking business advice from a lawyer. This is fairly damning language about the legal profession by a well-regarded businessperson so I took Norm’s point seriously and not as a cynical pot shot at lawyers (considering he is one himself).
So can lawyers ever give sound and useful business advice? Or better yet, where is the line drawn between legal advice and business advice? Is it not foreseeable, if not unavoidable, to have a scenario where a legal question directly informs a business decision or strategy? Or vice versa?
To use a medical analogy; when a person goes to their doctor should they only listen to “medical” advice? How can one determine what is medical advice versus other types of advice, such as lifestyle advice? When a doctor says to a patient “you should exercise more often” – is that medical or lifestyle advice? Thus in the business context when a lawyer says to the entrepreneur that they should be protecting their assets, is this legal advice or business advice or is it both?
A lawyer is in many ways like a doctor – they have seen many different patients/clients with similar problems and therefore have a perspective that the individual may not possess. There is value in this experience - though it may not directly apply to every situation. How one evaluates and considers advice is the key. Just because advice is given does not mean that it should be followed. It is worth remembering that lawyers dispensing legal advice may not always be 100% correct but that should not make their advice of no benefit or value. In fact getting a lawyer to proclaim that their legal advice is 100% accurate may be a Herculean task. Nevertheless their advice is considered valuable.
I do agree with Mr. Brodsky when he states that most lawyers, by training and habit, think differently than business people. I do not agree however that therefore their business advice should be avoided. As always it comes down to the individual lawyer – some may be great with business while many if not most may not be (despite what they think). Certainly the profession can and should move towards a more business capable mindset. But I leave that issue to debate for another day . . .
So while Mr. Brodsky’s advice should be respected it is somewhat shallow in that it does not recognize that the two types of advice are not so neatly decoupled and isolated from one another. In fact, as many businesses come to recognize, the challenges that are most perplexing and worrisome are the ones in which business and legal concerns collide. In these situations I would argue it unwise to forgo any type of advice – that said it should all be weighed and evaluated. In the end though most businesses, especially entrepreneurs have to rely on something even more innate yet powerful – they own street smarts.
One final thought: In the wake of the BP oil spill the convergence of legal and business issues and advice can be seen vividly. I would invite Mr. Brodsky to watch the commercial where BP CEO Tony Hayward states that BP takes full responsibility for the tragedy and that BP will “honor all legitimate claims.” Was Mr. Hayward following business or legal advice using the language he did?