Yet Another Reminder For Why You Don't Let Your Lawyers Make Business Decisions

from the hammers-and-nails dept

One of the common themes around here is that it’s bad when you let your lawyers make business decisions. Why? Because lawyers understand the law, and they understand how to use the law — but they don’t often think through the business consequences of using the law. Often, in fact, it’s better for business not to use the laws — even if you can. This has only gotten worse in the internet age — where using the law to bully is all too often exposed for ridicule, making the impact on business even more negative. However, many companies still have a hard time learning this lesson, and the lawyers are still looking at every situation with their legal hammer as if it’s a nail.

The latest such example occurred over the weekend with the Consumerist blog. Last week, the site had an informative, but not particularly earth-shattering, post about 22 “confessions” of a former Dell sales manager, basically providing some good advice for people buying Dell (or, in some cases, other) computers. On Saturday, a Dell lawyer threatened the Consumerist and demanded the site take the message down. Of course, what happens? For all the hype it got, you probably already know: Digg, Slashdot and Fark all picked up the story of the takedown request — and Dell was forced to apologize and admit it had screwed up (yet again). Of course, this is the type of situation that companies should know enough to avoid already if they stopped focusing on having the lawyers do what they can do under the law, and focused more on what’s best for business. This isn’t to say that lawyers can’t make business decisions — but that just because you can do something under the law, it’s important for anyone (lawyer or not) to take into account the overall impact on the business.


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Comments on “Yet Another Reminder For Why You Don't Let Your Lawyers Make Business Decisions”

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18 Comments
dorpus says:

Do Lawyers Run the Twinkie Business?

This is a serious question. I have lived in Alabama for a year and never found a store in the state that sells Twinkies. I just spent a weekend at the beach, spending 5 hours each way driving through back roads to get there, and I could not find a single service station that sells it either.

You can find Starbucks stores in the most unlikely places in backwoods Alabama, but not Twinkies. Did lawyers do something funny to “outlaw” them here?

Overcast says:

A good lawyer understands that. I used to work for a law firm, actually one of the more successful lawyers in my area.

He chose to not run a big corporate slime pit, but he hired a business manager to deal with business decisions and strategy for him. He openly admitted, he knew the law – but as an intelligent person, he knew it was wise to leave business to a professional.

I guess it’s what separates a good, successful law practice from the bad ones.

Eric Goldman (profile) says:

Who made the decision?

A good lawyer wouldn’t proceed without permission from the client. Now, lawyers can influence that decision and need to avoid swaying a client into a bad business decision. However, it’s comparatively rare when a lawyer makes a business decision unilaterally. Indeed, not atypically, lawyers have strongly protested a bad business decision but get vetoed and told to proceed anyway. In those cases, the lawyer takes the fall for the bad result, even if the lawyer tried to steer the client towards the light. Eric.

Joe Smith says:

Re: Re: Who made the decision?

Most managers will defer to a wet behind the ears junior lawyer.

Lawyers are trained to err on the side of over-stating the client’s case on the theory that you can always back off an over-stated position but it is much harder to recover from under stating your position. On top of that “aggressiveness” is seen as evidence of being keen and well motivated. Combine all of that with a lack of maturity and the arrogance that most law students have and no one should be surprised when lawyers write that kind of letter.

(Some of my best friends are lawyers but there is no reason I can’t be realistic about them).

Susheel Daswani (user link) says:

You need a new title....

The title should be “Yet Another Reminder For Why You Don’t Let Your Business Managers Make Business Decisions”. How many in-house lawyers at Dell have broad executive authority? I assume not many. Lawyers are known as ‘counselors’ since they provide advice. Business managers usually call them (whether external or in-house) when they have a problem and want to know what their legal options are. It is unusual for a lawyer to commandeer the business making process. Mike blames lawyers who can’t make business decisions. It it much more probable that we have business managers who don’t know their own businesses, and decide to rely on the advice of their lawyer. Perhaps lawyers often give bad advice, but given that business managers ultimately make business decisions, we must hark back to Obi-Wan Kenobi: “Who’s the more foolish: The fool, or the fool who follows him?”

ProofReader says:

Just WHICH side are you on?

You said: “Often, in fact, it’s better for business not to use the laws — even if you can.”

Didn’t you mean “use the lawyers”? Or was this some sort of freudian slip?

Of course, many modern incarnations of burning Rome…er, corporations (e.g., Enron) didn’t “use laws”, at least not the ones that weren’t in their favor.

BTW, weren’t the imperial lawyers the first in line for “the blade” during that everso snippy French Revolution? Maybe they had the right approach…

IronChef says:

Yeech

I posted an analysis on “What Dell needs to do to re-gain its #1 market position” a few weeks ago… Its simple, really- cultivate a culture… Understand what your end user wants. Instead of hiring expensive lawyers and consulting firms, increase the flow of communication between your senior management and the customer facing employees.

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