The Ethical Lawyer | Legal Ethics as business development opportunity
When I started as an M&A lawyer in private practice with a large Dutch top-ten firm in 2002, I only knew about the law from my books from university. During these first years, the foundation was laid for my career as a corporate (employment) lawyer. I learned do’s and don’ts of being a lawyer, how to serve a client’s needs best and how to maintain myself within a challenging and very competitive organization. To this day, I am grateful for that foundation and lessons learned.
What I did not learn or better said, what I did not understand back then, was that being a lawyer also means being an entrepreneur. In order to not only survive but to be successful, it takes more than ‘sharp legal thinking’. Back then, I wasn’t up for that challenge. My ambitions to succeed as a legal professional took me on another path; firstly, the judiciary and thereafter, working as an in-house corporate counsel at a big Dutch bank. Eventually and quite unexpectedly, I returned to the familiar surroundings of a big law firm in 2008. One of the biggest law firms in the world with very competitive DNA.
During one of my interviews, when discussing me joining the firm, I was told that working there could be like the ‘American Dream’: “the ideal by which equality of opportunity is available to any American, allowing the highest aspirations and goals to be achieved”. In other words: work hard, play the game well and you can reach any aspiration or goal you want. Besides having done amazing cases, working with high-profile clients and making friends for life, I learned a few important lessons I am most grateful for. Life lessons but also lessons on how to be the best corporate employment lawyer I could be. These lessons include a lot about business development, the best (and simplest) being:
Know your client.
Know your client’s business.
Know your client’s business’ risks and opportunities.
In other words: do not only say you are a business partner, act like one.
It will enable you to truly collaborate with your clients and add value to their business: by limiting legal risks and enabling business opportunities. For example, if the client is the general counsel of a large corporate, the context of the advice or guidance requested, can and most likely will be different from when the client is the works council of that same large corporate. Another lesson worthwhile mentioning, that goes hand in hand with ‘knowing your client’, is ‘treat your client’s wallet like it’s your own’. By following these principles, the client/lawyer relationship is based on trust. On the basis of that trust, clients will more likely share more information necessary that enables the lawyer to act as a business partner.
Developments in business development Any lawyer that wants to successfully practice law knows: business development is key and bringing in clients can be an exciting challenge or a struggle. Having a ‘business development strategy’ is not a quick fix. A sustainable law practice can only be built on sustainable relationships with clients and/or an expert skill or knowledge area of the lawyer(s) within the firm that attract those (long-term) clients. Finding your niche as a lawyer is therefore elementary. With ‘niche’ I do not only mean the area(s) of the law that one can practice and focus on; I also mean the way you conduct yourself as a lawyer.
The law as such is not the most innovative. However, the business of practicing law is continuously in development, even though some lawyers would like to argue differently. 'LegalTech' is a trending topic. LegalTech is the collective name for innovation in the legal sector and is here to stay. Within LegalTech, one can distinguish two developments. On the one hand, legal service providers and their clients meet up at web platforms that allow clients to manage their own legal affairs, such as drafting and managing contracts. On the other hand, software providers enable automation of (parts) of the legal work process. There is a lot to do about LegalTech and legal automation as a business development opportunity for law firms. Whole businesses have been (successfully) built around educating us lawyers about LegalTech and legal automation! And although LegalTech and legal automation certainly can be development opportunities, another development has been going on within the practice of law. Or more accurate, on the clients’ side. One I have been looking into over the last years. Clients no longer merely want to know if their decisions, strategies and choices are lawful. They also want to know whether a decision, strategy or choice is socially or ethically correct. And they look at us corporate (employment) lawyers for an opinion.
Financial crisis raised ethical awareness
The financial crisis that started in 2008, has made companies more aware of their corporate social responsibility and 'ethical entrepreneurship'. Clients’ business strategies no longer only focus on ‘bigger, faster, stronger’ but also on sustainable growth and realizing stakeholders’ value (instead of ‘only’ shareholders’ value). As set out above, an important cornerstone for business development is understanding that legal advice requires more than just knowing the law or a code of conduct. It requires a profound and genuine insight into the clients, their businesses. And because the ethical awareness of corporate clients has grown since the financial crises, corporate lawyers must also know about and understand the clients’ standards & values: their ethical DNA, to provide them with the best legal advice. The 'new corporate lawyer' – or should we say, ‘ethical lawyer’ – is no longer selected by clients to give legal advice; the ethical lawyer is chosen because he or she gives legal advice that not only complies with the law and the ethical DNA of clients and their businesses but also is acceptable according to applicable standards and values of society.
But what about the business? Are ethics running the show now? The blunt answer is: No. Business models are based on profit maximization; no changes there.
As a corporate employment lawyer, I specialize in international and European corporate employment, employee participation and privacy law. I used to be a corporate M&A lawyer, advising clients on ‘how to make money’ by acquiring and selling off companies. As of 2008, my focus shifted when I started to advise clients on ‘how to save money’ by managing labor costs. Within my areas of expertise, the factor of labor is a focal point. When dealing with the factor of labor, ‘sustainable labor costs’ are a reoccurring item on any entrepreneur’s agenda. Employees are a very important if not the most important asset of any company. They are also one of the costliest factors when doing business. Balancing the importance of developing that important asset on the one hand and managing labor costs on the other, is an interesting juggle from a corporate employment lawyer’s perspective. My contribution to sustainable labor costs is guiding my clients through (cross border) reorganizations, collective redundancies, structuring employment conditions including socials plans and employee participation.
But I am not only a corporate employment lawyer; I am business partner. In order to add value (entailing managing labor costs) as a business partner, I build relationships with my clients and gain an in-depth understanding of their business, their organizational structures, work and decision-making processes as well as their employees and what drives them. So, I can understand where the business (and legal) opportunities lie that my clients pursue and help them achieve sustainable labor costs.
The above is no longer enough. Given the current economic climate – where the public considers corporates to have taken enough from society and are now expected to give back –
I must take my legal advice to the next level. My legal advice should not only meet the standard of excellent guidance and services. In order to keep adding value to my clients, I must also get a sense of the morals and values of my clients’ companies, understand my corporate clients’ ethical DNA. And set against what is acceptable according to applicable standards and values of society.
Legal Ethics were not a very big part of my training as a corporate lawyer. Legal Ethics were not part of the curriculum at the university where I studied law. When I started my training as a lawyer, the Bar Association did include (some) Legal Ethics in the curriculum. However, most important was developing ‘my own legal ethics’ while on the job. I had to learn by doing, or by going through the legal dilemma’s.
Over the years, I have come across many legal dilemmas that required some ‘sharp legal thinking’. Thinking through these legal dilemmas brought about the first shaping of me as a ‘corporate lawyer’. The second phase of my development in becoming a ‘corporate lawyer’ became clear when my involvement with corporate clients and their legal dilemmas expanded to not only providing legal advice but also strategic guidance on how to incorporate the given advice within the organization or legal entity of the corporate client.
Having had the opportunity to practice law from different angles – private practice, the judiciary and as an in-house legal counsel – I learned that it is most important to look at the legal dilemma from all angles. Furthermore, there is no such thing as the correct answer. Of course, we must obey the law and advice accordingly. However, most legal dilemmas are not so clear-cut that there is a simple fix or a ‘one-size-fits-all’ legal advice. Over the last years, I noticed clients not only want legal guidance for their legal dilemmas based on ‘sharp legal thinking’. They want guidance on whether the solution for their problem or legal dilemma is also ethical, looked at from all angles.
Clients are governed by hard and soft laws. These laws stipulate how a good corporate citizen should act and do business. For example, the financial sector is governed by the Financial Supervision Act (in Dutch: Wet op het financieel toezicht, Wft). The Wft requires a company in the financial sector to operate its business in a controlled and ethical way. This includes controlling the risks of possible irregularities. Guiding a client in the financial sector through – for example – the Bankers’ Code of Conduct requires the lawyer to not only have profound knowledge of that Code of Conduct and related case law as well as a deep-rooted understanding of doing business in the financial sector. More than ever, clients in the financial sector require their corporate lawyer to be an ethical compass and not merely advise them on how to deal with an employee that acts in breach of the Code of Conduct.
The ethical lawyer should also provide a legal advice that enables the client to deal with the moral pressure society the financial sector is currently under.
From a ‘corporate lawyer’ I have evolved into an ‘ethical lawyer’. The essential question every corporate lawyer should ask him- or herself is what are my client’s ambitions and goals. A good corporate or ethical lawyer should also ask the clients about their morals and values, their ethics. Often those morals and values are included in the client’s Corporate Social Responsibility code (CSR).
Reading such a statement is a great starting point when wanting to gain an insight in a company's DNA. Sitting down with the client and understanding what the company is all about (not only profits), is the next step and key in being an ethical lawyer.
About Karolina Dorenbos
Karolina has over 15 years of corporate and employment law experience in private practice, the judiciary and as an inhouse corporate counsel. She advises and litigates about M&A, labor & employment law and HR-related privacy. Her modus operandi is building relationships; adding value to clients by not only solving legal issues and obstacles, but by uncovering (legal) opportunities within the clients' businesses. She is Partner at L&A advocaten, Amsterdam.
L&A advocaten is a Dutch employment law niche firm, based at the Zuid-As, the Amsterdam high-end business center. All partners in the firm have an excellent track record with large Dutch and international law firms.