Businesses have increasingly recognized that legal capabilities are critical for on-going corporate success, and they understand the value of working with legal counsel. But this small view of the law doesn't clarify how some leading businesses, for example Qualcomm along with the Walt Disney Co., have managed to deploy their legal sections to shape the legal environment in order to ensure long-term competitive advantage. In their research, the writers have developed a framework that may help executives identify the various ways legal strategies may be used to accomplish various corporate goals, including the identification of value-creating opportunities.
The framework includes five distinct legal pathways, which the authors describe using examples including Xerox, Microsoft, United Parcel Service and Qualcomm. In the sequence of least to the greatest impact the fivenerve pathways that are legal are (1) avoidance, (2) conformity, (3) prevention, (4) value and (5) transformation. In the avoidance path, managers view the law as an impediment to their desired business aims. Businesses running in the avoidance pathway will most likely have a failure or lax internal controls to perform due diligence, and this strategy may lead to disaster. Companies in the conformity pathway understand that the law is an unwelcome but required constraint, and they think as a cost that must be minimized essentially of conformity. For businesses in the prevention nerve pathway, managers take a more proactive approach, utilizing the law to preempt future business-related threats.
For companies in the transformation path,executives have incorporated their legal strategy within the organization's various value-chain activities but also with important external partners' value chains. Finding the correct path that is legal for a particular firm demands much more than just a consideration of the overall business model. Other essential components comprise managers'attitudes toward the sophistication of legal counsel as well as their level of legal knowledge, the law and, in particular, the ability to work with supervisors to attain strategic business aims of the legal department. Using the authors'framework as a fundamental guide, executives can craft a legal strategy that is most suitable for their particular business needs.
PUBLICATION DATE: October 01, 2014 PRODUCT #: SMR500-HCB-ENG
This is just an excerpt. This case is about STRATEGY & EXECUTION
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