After a brief sabbatical, Legalliteracy is back; and what better day to return than today — May 1st — Law Day.  While some people hiss and boo at lawyers and lawsuits and otherwise poke fun at a profession they think takes itself too seriously, let’s not forget that a mature legal system and rule of law does have some real business advantages.  Advantages that should be celebrated.

An enforceable system of contracts and reliable property rights provides the stability necessary to support solid economic growth and prosperity.  The process of accountability creates trust and confidence.  It is precisely that trust and confidence that lets a business deal be a calculated risk instead of a gamble.

Indeed, the consequences of a developing rule of law and the business risk it creates was driven home last week by Home Depot’s top legal beagle, Jack A. VanWoerkom, who shared his views about the risk of doing business in fast growing foreign markets.  His views were informed by his international experiences at Home Depot as well as the chief legal positions he has previously held at three other global companies.

Here are a few of his candid observations: 

Sao Paolo is a very dangerous place to do business, if you are in Brazil, you operate with a body guard.  [One of my former employer’s competitors in Brazil] paid bribes, the other [competitor] didn’t pay taxes.  It was widely accepted and considered a competitive advantage

[Indian] courts are overwhelmed.  I have great concerns about the enforceability of contracts.  [Extreme poverty and separation of people into social and economic groups causes] people to either manipulate or buy justice.

China has only had property ownership for about 15 years, [its economy and business infrastructure is] very immature.

I did not buy a business in Russia because the level of corruption was so great it just didn’t seem worth it.

Doing business in the world’s fastest growing markets sounds very good; but when things go bad they can go bad very quickly simply because there is no effective recourse when contracts are breached.  Unfortunately, there is no foolproof way to contract around the law of the jungle. 

President Dwight D. Eisenhower established May 1 as Law Day back in 1958.

It’s a good to remember the importance the rule of law plays in our free market economy.  The rule of law codifies cultural norms.  It etches ethics in stone.  It establishes boundaries of right and wrong and in so doing creates certainty and establishes a fair playing field.

Knowing the rules lets businesses manage risks more effectively.  We can stay in bounds.  We can avoid legal problems by knowing which lines shouldn’t be crossed.  Similarly, we can defend our rights and protect our property by knowing when others have crossed the line.

When it comes to protecting ourselves, company trade secrets are one of the most important assets worth protecting.  Yet in today’s highly connected world there are more avenues for sensitive information to leak out.

Take for example the case recently filed by a group of Japanese magicians against Nippon Television Network Corp. and TV Asahi Corp. for revealing how magicians did certain coin tricks.  According to one magician, the broadcasters “instantly deprived professional magicians of their assets.”

A kindergartner can tell you that the best way to keep a secret is not to tell anyone or, if you do tell, to swear them to secrecy.  Unfortunately, we need to be reminded of these things as we get older and competing business interests play tug-of-war with our decison making.

So why not use Law Day to polish your organization’s legal literacy?  Reeducate employees on the importance of confidential information and show them how to protect it.

After all, no organization should lose its magic.