25 Apr 2012 Back

Law - A Strategic Tool for Leaders

PROGRAM NEWS: Professional legal advice is not a substitute for informed judgment and leadership, believes John Akula, Senior Lecturer in Law at MIT Sloan.

The Washington Post reported last week that businesses are relying less on law firms and assigning more work to in-house company lawyers, according to a recent study of nearly 6,000 in-house attorneys in the US and elsewhere by the Washington-based Association of Corporate Counsel. The shift is “a reaction to the significant increases in billing rates over the last ten years” said Edward Ryan, Executive VP and General Counsel at Marriott International, which began a concerted effort to ‘insource’ more legal work several years ago.

This symptom of the changing relationship between companies and lawyers only emphasizes the need for business leaders to be able to make confident strategic judgments fully understanding their legal implications.

It is increasingly important in a complex, litigious, and cost-conscious business world that senior executives really understand for themselves both the negative and positive characteristics of the legal environment in which they operate. It is no longer acceptable for companies to run scared to their lawyers at the slightest excuse and it is important when employing lawyers and professional legal support to do so based on a sound knowledge, not of the technicalities, but of the broad strategic implications of the law.

The Washington Post also reported that, sensing the shift, many law firms are moving away from traditional hourly billing to what is known as ‘alternative fee arrangements’ largely because their biggest clients, corporations, have been pulling back. However cost is not the only reason for leaders to develop a better understanding of commercial law.

The common law system in the US, UK and elsewhere is on the side of business. Used effectively the law can protect intellectual property, help design effective IP strategies, support innovation in products and marketing technologies, and ensure companies develop engaged and effective management teams.

Making good use of lawyers is essential in ensuring the success of complicated business transactions, dealing with IP disputes, complex contracts, class-action litigation, aggrieved employees, government investigations, transnational legal problems and the multiple risks that most businesses face.

A renowned two day executive program, Essential Law for Executives, run in July and December at MIT Sloan, addresses these issues head on. Taking the premise that – ‘ability to navigate tricky legal waters is a powerful source of value for a company and an important competence for a manager’, and that – ‘errors in judgment can doom a business strategy, create liability both for you and your company, and cast a long shadow over a career’ - this program is for senior executives that need to provide strategic leadership in law-sensitive areas of their businesses and manage the use of legal professionals.

Further Information

Essential Law for Executives at MIT Sloan

MIT Sloan School of Management

MIT Sloan Executive Education profile on IEDP

The Association of Corporate Counsel report

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