COMPLIANCE IS NUMBER ONE ISSUE
The recently released results of a study conducted by Serengeti Law and the Association of Corporate Counsel identified “keeping track of company activities that might have legal implications” topping the list of major issues for 86% of the 169 companies surveyed. Ironically, when I first launched this blog in January I identified 2006 as the year of compliance. Is it a coincidence? Was my crystal ball in synch with the in-house universe? Or was it sheer luck?
Neither. When you stop to think about it, it’s not hard to realize that the general counsel or even an army of outside counsel can’t possibly serve as the legal gate keepers of the company? Why? Because the lawyers are not the decision makers, the clients, the business people are. Those decision makers make choices that have legal consequences for the company and when they make decisions without the advice of legal counsel there is little the lawyers can do except clean up afterwards if the decision backfires. After all, the lawyers can do only what the clients allow them to do.
That places the real burden for compliance on management’s shoulders, not the lawyers’. But how well are managers trained in the law? Some basic harassment training? Maybe some specialized industry regulatory training? Throw in a dab of antitrust and the rest is usually learned through trial and error: the boot camp of the School of Hard Knocks.
You wouldn’t diversify your financial risk through trial and error, so why should your organization’s legal risk be treated any different when it can have the same impact on your bottom line? Diversifying legal risk starts with improving the legal literacy of business decision makers. It helps them avoid predictable surprises.
For more tips on how to diversify your company’s legal risk see The Business Guide to Legal Literacy: What Every Manager Should Know About the Law (Jossey-Bass, 2006). Soundview Executive Book Summaries says it seamlessly bridges the gap between the business and legal worlds.