The
Laws of Leadership
by
Bruce Leonard Beal, Esq.
Larger
businesses have a CLO (Chief Legal Officer), as well as a CEO and CFO,
demonstrating that legal compliance is considered a chief component of
business leadership. Successful
businesses of any size must focus on conducting their business
objectives in a legal manner and not succumb to the distractions and
costs of legal compliance issues and litigation.
Legal recommendations follow to assist you in meeting your
successful business leadership role.
All
businesses have risks. Successful
leadership internally manages risks and externally insures for risks
that cannot be reasonably managed.
This article assumes that you execute your business plan in a
legal manner, eliminate dangers from your products and services, and
have assumed a limited liability form, which you maintain by keeping up
formalities and separation of business from personal assets and records.
These measures mitigate in large measure the legal risks of doing
business.
A great
legal risk to business, especially in California, takes the form of
employee claims, which are largely uninsurable.
Employee risk is managed first and critically at the recruitment
stage. My experience has
shown that what I call “marginal” employees are risky employees.
Marginal employees are persons who are more likely to assign
responsibility to others, rather than to themselves. Interviews and psychological tests can be used within legal
limits to determine where a potential employee falls on this scale.
Once the
employee is onboard, a reasonably detailed employment manual, fairly
enforced, will go a long way towards mitigating employee risks.
Ensure the manual is legally up-to-date. Put the manual on your network, so that your supervisors and
employees know the legal and business rules and have immediate access to
the latest procedures and forms. Create
links in online manuals to definitions and forms, so that everyone is on
the same page. Stay on top
of emerging issues, such as family leave and employee privacy
expectations while they are using your employer-provided communications
networks.
Contracting
risks can also seriously damage your business.
For each type of transaction that you do for the first time,
obtain legal and accounting advice, and develop a standard form that
should be used each time. Thereafter,
only unusual circumstances for that type of transaction need be elevated
to management or legal counsel. These
standard forms and procedures should also be placed in a manual,
preferably on your network in a secure area.
Unusual transactions, not in the normal course of business or
involving international parties or environmental liabilities, need
management and/or legal review.
All
business is becoming more and more international.
The complications, expense, and mystery can make international
work risky and intimidating for first-timers.
However, if you start small, take one step at a time, have
realistic goals, develop solid contacts, and take advantage of available
international commercial resources, you will manage these risks wisely.
Only lawyers with solid international experience should be
consulted.
Environmental
risks are inherent in the purchase of real property, purchase of other
businesses, generation and disposal of hazardous substances, or use of
hazardous substances by employees.
Due to the strict and potentially ruinous liability environment
of hazardous substances, a successful business leader will ensure that
his or her business is adequately addressing these risks through
well-advised procedural and legal means.
Oftentimes
the time and expense of dispute resolution is greater than the dispute
itself. Consider the
adoption of progressive alternative dispute resolution procedures in
your agreements, perhaps even with your employees.
Legal counsel should be consulted to ensure that it is done
correctly and whether it is even in your best interests in any
particular transaction.
Resolving
disputes by litigation is time-consuming, costly and inefficient.
To remain competitive, avoid litigation through the provision of
well-managed, quality products and services, open and timely
communications, experienced legal advice, and prompt attention to early
dispute resolution.
Where
litigation is unavoidable, conduct your litigation in a cost effective
manner and pursue alternative dispute resolution proceedings which may
result in faster, cheaper and no less detrimental results than
litigation. The courts should truly be your last resort, absent special
circumstances.
You, your corporate attorney, or other
responsible manager, should be assigned to manage your large claims and
litigation. Formal outside
counsel guidelines available from experienced corporate counsel will
assist you to effectively engage and manage your outside lawyers. Compliance with these guidelines will determine which lawyers
are retained by you in the future.
Caveat:
The purpose of this article is to provide information, rather than
advice or opinion. It is accurate to the best of my knowledge as of the
date of the article. I have no duty to update this article. The
information, examples and suggestions presented in this article have
been developed from sources believed to be reliable. This article should
not be viewed as a substitute for the guidance and recommendations of a
retained professional and should not be construed as legal or other
professional advice. In addition, I do not endorse any actions addressed
herein, unless they are produced or created by me. I recommend
consultation with me or other competent legal counsel and/or other
professional advisors before applying this material to any particular
factual situations.
