A Lawyer's Three Worlds

By Nico Jansen 

Nico A. Jansen graduated in private law at the University of Utrecht in the Netherlands and has a Masters of Business Administration (MBA) from Edinburgh Business School/ Heriot Watt University in Scotland. He holds the professional qualifications in marketing (A and B) of  the Dutch Institute of Marketing (NIMA) and the Diploma in Marketing of the British Chartered Institute of Marketing of which he is a Member and admitted as a Chartered Marketer. In his capacity as managing consultant of www.legalmarketing.nl he operates as an interim lawyer and marketer and holds a lecturing position in (European) Business Law at the Faculty of Economics and Business Administration of the VU University in Amsterdam. In 2011 he published ‘Law & Self-Regulation. A legal and business perspective’.

Law, business and economics are three different academic disciplines, each with a specific object of study and theoretically developed concepts. Legal science focuses on structuring society by regulating behaviour in the interest of justice which is the fair recognition of relevant interests. Business studies on the other hand, tends to focus on value creation and strategies while economics studies how the forces of supply and demand allocate scarce resources.

 

In short; law regulates behaviour, economics studies behaviour and companies will attempt to influence behaviour.  To succeed in a competitive business environment, it's crucial for a lawyer to fully understand the underlying concepts of each discipline and the attitude of the professionals involved.

Some of the major differences between law and business, including the main key concepts of each discipline, are outlined in the following table.

Differences between law and business

	Law	Business
Focus	Justice and society	Value creation and profit
Orientation	National	International
Organisation	Sovereign states and supranational oganisations	Headquarters and national subsidiaries
Decision making	Centralised and delegated	Mix of centralised and decentralised
Adaptability	Static, slow, reactive to change	Dynamic, fast, innovation and change focus
Relationships	Focus on bilateral relations	Multiple stakeholders’ interests
Key-concepts	Law, self-regulation, compliance, the rule of law, human rights, legal family, legal system, contracts, dispute resolution, enforcement	Strategic management, strategy, mission, reputation, compliance, sustainability (csr), environments, (shareholder) value,  economies, markets, industries, risk management.

Law is typically a centralised, national matter and legal systems are usually not open to fast change. However, while law is a national matter, sovereign states can decide to transfer specific regulatory authorities to supranational organisations such as the European Union. The business world in general, has an international orientation and recognises the need to adapt to changes in the environment. In law, the principal relationships  are bilateral; such as those in sales and employment contracts. Companies however, owing to the fact that they have a number of different stakeholders, are required to simultaneously manage multiple intertwined relationships.

The globalisation of industries and companies has increased concerns about national governments’ ability to regulate firms’ conduct. International firms seeking to avoid complying with stringent national regulations, may base their operations in less regulated countries. This classical national basis of regulation results in what is called a ‘regulation or governance gap’. In order to help close this gap, companies and industries must regulate themselves - self-regulation is fast becoming a widely accpeted strategy for the regulation of behaviour in an increasingly transparent world.

These types of initiatives provide a solution to the legislatures’ problem of declining effectiveness, of their national regulation.  It is also an effective way to protect the reputation of a company and the industry as a whole.

To become an effective business lawyer, it's vital to have an in depth understanding of these three - legal, business and economics - different, interrelated worlds and to be integrate their principles into concrete legal advice. With the increasing complexity of the world, lawyers’ jobs becoming increasingly complicated but that should not be viewd as a problem.  From a business perspective it is simply an opportunity to work towards new core competencies as a basis for enhanced competitive advantage.