Lawyers and Commerciality

I. Introduction

A long time ago, in the sanctuary of Delphi in ancient Greece, dignitaries, heads of states, military leaders and commoners alike would form snaking lines to seek advice from Pythia, the Oracle of Delphi. Access to the sanctuary was limited to only a few days over nine months in a year, and to overtake the long lines, great sums were paid by some for Pythia’s oracles. The advices, believed to be from the gods, were communicated in indirect and mysterious ways. This left many departing visitors to Delphi to try to decipher the meaning of the advices they had received.

Now, as the threadbare paths and remains of Delphi are trampled upon by the hordes of modern tourists released by the busloads each day, some clients may be forgiven for thinking that they have chanced upon their own Pythia when they receive legal advice from their lawyers.

In this article, I will discuss the importance of commerciality to contemporary commercial legal practice.

II. Where do Lawyers Fall Short?

The complaints about uncommercial legal advice can be grouped roughly as follows:

A. Lack of understanding of the client

The advice belies a lack of understanding of the business environment, business and industry practices affecting the client, the decisions the client has to make, the risk management imperatives of the client, and the organisational dynamics affecting the client asking for the advice.

B. Too much law

Lengthy pronouncements on the law with dense legal analysis, bereft of a clear message on the legal position and its application to the problem at hand.

C. Presentation

Advices which are hard to read, understand or apply, failure to use plain English, excessive use of Latin or legal terms and phrases, long and multi-layered sentence structures, and excessive explanations with multiple exceptions.

D. Lacking purpose

Identifying the problem without offering (or attempting to offer) a workable solution, which demonstrates a lack of understanding of how the legal advice will be used by the client.

E. Value for money

Failing to apply a cost-benefit analysis of the advice, scope and length of advice goes far beyond what the client required for the particular problem, advices which fail to address an obvious issue/problem, insufficient creativity in coming up with solutions.

III. Why do Lawyers Fall Short?

Truth be told, most lawyers will fall short in the test of commerciality at some point or stage of their careers. Commerciality defies easy definition. Some would venture that commerciality involves giving clients what they want. Then again, clients are human, and there are as many wants as there are clients.

In my experience, the one universal truth seems to be that clients neither wish nor want to pay for long and dense treatises on the law. They generally assume their lawyers know the law and therefore the long discourses on esoteric legal points is not a differentiator between law firms. Also, a long recitation of the law may distract from the clear recommendation which the client seeks.

Here are some explanations of the shortfalls:

A. Display knowledge and expertise

Some lawyers - especially inexperienced ones - write long-form legal discussions because they want to demonstrate what they know of the law. Some do it to show that the client is paying for a whole lot of learning and expertise.

B. Failure to define the problem

More pertinently, some write extensive and rambling advices because they have failed to crystallise the problem in their heads and therefore cannot distill the necessary advice to address it head-on.

C. Failure to properly inquire into the facts and purpose

Insufficient grasp of the facts. The advices then cover a great many scenarios and advices drafted in different permutations with assumed fact scenarios, which makes it all unduly convoluted.

D. Failure to write effectively

They fail to take the time to refine an advice. It takes longer to draft a bespoke and to-the-point legal advice in simple and ordinary English than it does to draft a perambulatory one.

E. Risk management

Lawyers are concerned about liability and risk management. If we have not pointed out every single exception or uncertain point in law, we fear that we will be called to account for that failure if something goes wrong. Also, there is a natural reticence in stating what a client can do versus what they should simply avoid doing.

F. Comfort zones

Discomfort in making a recommendation on a business decision unless the applicable rule is very certain.

IV. What Gives a Lawyer the Edge of Commerciality

As mentioned above, commerciality is often described as giving clients what they want. However, to simply say that lawyers should give clients what they want is not terribly helpful. In some cases, that is not even advisable for either the lawyer or the client. When it matters, external lawyers in private practice do need to act independently and give independent advice, unshackled by employment obligations to or control by the client appointing them. As an aside, this independence is the very rationale for the grant of legal professional privilege over legal advices rendered by lawyers to their clients.

There is little emphasis on teaching commerciality in law schools. Even the post-graduate practical training courses, which are prerequisites for admission to practice in some jurisdictions, do not satisfactorily address commerciality in legal practice.

So how does a lawyer become a trusted legal adviser whose advices are easy to understand, enhanced with commerciality, and (most importantly) useful to a client? There is no secret sauce to it I hate to say. Giving clients "what they want" is in itself not really the secret incantation to open the door to commerciality.

Clients vary in the level of experience, knowledge, expertise, communication abilities and decisiveness. Some want advice to help solve a commercial problem, some require it to give them certainty on uncertain regulations, and some want advices to help guide them through commercial or regulatory uncertainty in a transaction. Yet others may want an advice to bolster a strategy which they have already decided.

However, from experience, there are some good practices and behaviours which lawyers could consider adopting to improve their chances of giving relevant, helpful and commercial advice to clients:

A. Fully understand the client’s situation and the issue or problem at hand

Along with this, a general understanding of the client’s business environment and industry standards and practices will prove extremely helpful. Clients now say they want their lawyers to be business partners and have little patience in educating lawyers on the rules, practices and trends applicable to their industries. It helps to keep up to date with business developments locally, nationally, regionally and globally. Lawyers should be reading contemporary business and industry news. Some law firms have started organising their lawyers in industry groups who are keenly aware of all related developments (legal, technological and business issues alike) in their markets.

B. Ask how the advice was meant to assist the client and what purpose the advice would serve in the client’s decision making

In some cases, the answer is clear. In many others, it may not be immediately obvious. So - within reasonable boundaries - ask. Knowledge of the client, its organisation and its business and a good dose of common sense should help keep silly questions to a minimum.

C. Ascertain the facts

Do not be afraid to ask about the surrounding circumstances so that you are clear about the factual scenario and the context for which the advice has been sought.

D. Use plain English with short sentence structures

Clients are no longer enamored by Latin phrases or technical legal jargon. While legal issues are rarely simple or cut-and-dried, lawyers should present their advices in ways which are simpler to understand. Provide summaries, draft your recommendations and their bases in clear and unambiguous terms. Personally, I state my observations and summary on the first page of the advice while referring to the more comprehensive advice in the following sections of the advice. It gives the clients the punchline they need, and at the same time points out that the recommendation was arrived at after a proper assessment of an often uncertain state of rules and a balancing of the risks.

E. Avoid long legal dissertations

Try to minimise the statement on the law and the analysis. In some cases, you do need to show the client the rationale for your advice or recommendations, working through the legal analysis. Partly for risk management and - depending on who in the client organisation is consuming the advice (e.g. the general counsel or the tax manager) - partly because the client may need to see how the answer was arrived at.

In such cases, consider if the statement of the law and the analysis can be included as an annexure to the advice, leaving you to fill the main body of the advice with a description of the problem or issue, a summary of the advice and your recommendation, and perhaps a short statement on the risk. You can refer to the relevant parts of the annexure if the emphasis is required.

F. Invest in the right clients 

It is important to find clients who believe in investing in the relationship with you! Easily said of course, but how do you go about achieving that? Lawyers always say they want to invest in the relationships with their clients. Less often heard is that lawyers must have a knack to find clients who will work with them in that relationship. You can only really learn about the business issues and risks which  the client faces through assignments they give you. There is no substitute for that.

How do you get enough of those assignments to learn and be trusted by a particular client's organization? You need to be interested in the clients, their organizational dynamics, their performance in the market, the technological and existential threats they face and their opportunities in the market. It should be remembered that not all clients look at external legal advisers in that role. Some see lawyers simply as fairly homogenous service providers. I know which type of clients I would rather do work for.

There are various ways to try to learn and breathe the issues affecting the clients such as conducting promotional workshops with their legal and business teams, regular sit-downs between the teams, secondments etc. However, I think the most important ingredient is for lawyers to be intellectually curious about the business of their clients. The other important ingredients are clear thinking, creativity and maturity, which allow one to define the problem, come up with different solutions and judge which ones are practicable, implementable and whose benefits outweigh their attendant costs and risks.

With the right client and sufficient follow-on efforts, that will develop into a symbiotic and mutually enriching relationship. It is hard to define when that moment has arrived, but personally when a client makes an unscheduled call to say "Hey, I'm seeing an opportunity, it's all very tentative, but I wanted to test how my idea might work. Do you have 10 minutes?", I know that relationship has become a trusted one, and will likely be financially and professionally rewarding in the long run.

G. Do not let the client have to decipher the advice 

Do not simply identify a problem, provide a statement of the law, and assume that the client will work out the optimal way of dealing with the problem. As much as possible and as the situation dictates, aim to be solution oriented. The world is a complex place, and rules and laws are rarely clear-cut. If they were, there would be less need for lawyers!

Good lawyers need to identify and break down the problem for the client, get the agreement of the client on which issues he/she would need advice on, analyse the law, and where appropriate make a recommendation as to the optimal solution to the problem. Some advices in the real world tend not to be confined solely to law, and - with certain limits - lawyers should not shy away from making a recommendation as to practical, reasonable and lawful options for the business people to take. The lawyer may also supplement that with an observation on the level and type of risks involved in pursuing the option(s).

H. Look ahead

Think ahead, and think broadly for the client. Some clients may only see a self-contained and limited issue. In preparing your advices, if you can foresee substantial issues ahead (be they legal or commercial) which the client may not have picked up, do alert the client of those issues and ask if they would like further advice. Do not proceed with going deep into the additional issues without first checking with the client.

I. Form of communication

Consider the appropriate mode of communication. On some matters, the client may just need a telephone call and may dispense with written advice. On others, due to urgency, the client may want a call to be followed by written advice. Not everything needs to be given in writing. For risk management purposes, lawyers should consider making contemporaneous file notes of what was discussed.

J. Understand the client’s goal and strategy

Appreciate that there are often several strategies to get to a client’s ultimate goal. In transactions or in disputes, appreciate that a nuanced approach with elegant solutions may help a client reach their goals faster. Appreciate the differences and think strategically.

K. Apply common sense

Above all, utilise some strategic thinking with the application of common sense. Do not recommend a course of action which may be a legal solution but would - to any reasonable commercial person - seem impractical, take too much time or is inordinately costly compared to the benefit. Apply a sense of proportionality in the advice.

L. Think strategically

A good legal counsel would advise not only on the law but on other issues which the client should think about. For example, while the corporate lawyer may not be the expert on tax, he should strive to have a working understanding of it, if only to alert the client of potential tax pitfalls and remind him to seek proper tax advice. A good lawyer would understand the difference between whether a client can legally do something vs (having thought about other considerations) the client should take the course of action. These considerations would include the costs, regulatory oversight, long-term reputation of the client etc.

V. A Caveat

Most businesses now operate in highly complicated and fast-paced environments, and it is made all the more knotty by intricate regulatory environments. Laws and rules are sometimes neither transparent, clear nor systematic. And the laws change regularly, although often not in goose-step with the evolution of technology and new business practices. There is a high level of uncertainty, and it is foolish to think that any lawyer can clear the fog of uncertainty by the wave of their pens across the legal memo pad.

Good lawyers appreciate the complexity of issues but strive to simplify and crystallise the problems. They will strive to provide the best possible solutions after having considered the logical and defensible interpretation of the law. There are risks to be adopted depending on the options, and often a cost-benefit analysis is required. A good lawyer will point out all these but endeavour to state the optimal course of action or decision and the bases for them, such that the client can act on it.

A bad lawyer would see the issues and get so tangled up in them that he can provide neither himself nor his client recommendations as to the way forward. The advices would end up long and convoluted and yet still short of any solutions or recommendations. A worse lawyer would be one who does not even see the issues and provides a simple, easy to follow recommendation without alerting the client as to the complexity and risks, and labels it 'commercial advice'.

While simplicity and straightforwardness are key in commerciality, lawyers should be aware that the imperative of simplicity should not displace a thorough understanding and incisive analysis of the law, an appreciation of the risks involved, and proper professional judgement. One can only help try to simplify and address the issues at hand, after first appreciating they exist in the first place.

Furthermore - and this is not often discussed - giving advice exactly upon terms which a client representative wants may also not be in the best and long-term interests of the client's company or organisation. Individual client representatives may want advices crafted in a particular manner to service or support their individual agenda, and this may not align with the best or long-term interests of the client. While lawyers should help point the client to a clear and practical solution, proper commercial advice should also help a client understand the complex issues and risks surrounding a particular decision or course of action.

Lawyers should also be mindful that they owe duties not only to their clients but also to the courts, the interest of justice, the profession and (notably in litigation) other lawyers. A lawyer should, in giving advice to a client on what to do, be mindful of his other duties as well. He may not be able to do or advise on absolutely anything his client requires of him in the name of commerciality.​

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This article was written by Andre Gan, the Managing Partner and Corporate M&A Partner of Wong & Partners (a member firm of Baker McKenzie International), and was originally published as a 3-part series on his Linkedin profile, accessible here: https://www.linkedin.com/in/andregan/. This article has been reproduced on UMLR with his express approval. (Edited by Leeroy Ting Kah Sing)

Disclaimer: The opinions expressed in this article are those of the author and do not necessarily reflect the views of the University of Malaya Law Review, and the institution it is affiliated with.