finding the right corporate legal strategy

... by a creative patent licensing structure reveals a deep level of legal proficiency and its application to top-level corporate strategy. UConn’s Robert Bird: Finding the Right Corporate Legal Strategy. 1 (fall 2008): 1-41; D. Orozco, “Legal Knowledge as an Intellectual Property Management Resource,” American Business Law Journal 47, no. Here, executives acknowledge that the law can be used to further well-identified business goals. Transformation is the most complex legal strategy but it’s also the one that reaps the most profit. InsideCounsel, Blickstein Group and Huron Legal, “Findings.”. email smr-help@mit.edu or call 617-253-7170. Finding the Right Corporate Legal Strategy by David Orozco, Robert C. Bird Get Finding the Right Corporate Legal Strategy now with O’Reilly online learning. 2 (March/April 2005): 23-24. http://www.ssmic.com/UploadedFiles/file/Executive_Counsel_6_page_pdf_of_pdf.pdf. The chief legal strategist is responsible for conceptualizing and spearheading legal strategies that generate value for the organization. This attitude leads to the attainment of some legal knowledge but only enough so that the business can operate within the legal bounds. For example, companies have been experimenting with alternative billing arrangements and other methods of quantitatively tracking legal expenses. Along the way, the research was refined through insights gained from collaborations and interviews with consulting firms and attorneys working in-house at major U.S. and foreign corporations. Sophisticated legal strategies like those deployed by Disney, Microsoft and Nokia are far more the exception than the rule. Consider the following example of an elevator and escalator manufacturer that was able to reduce its product liability claims from incidents involving children who had been injured in department stores where the escalators were located. We are sorry. This table lists the different pathways and their key attributes. For its part, Nokia will benefit from the unique arrangement because, having sold its operating business to Microsoft, the company won’t be subject to any patent infringement countersuits that Google might initiate. Finding the Right Corporate Legal Strategy. Finding the Right Corporate Legal Strategy. So it’s no longer separate but a crucial part of the business’ operating model and strategy … Armed with that crucial knowledge, the legal department could then work with the department stores to relocate the perfume counters, resulting in a decrease of the manufacturer’s product liability claims.15, The second way to increase ROI in the value pathway is to generate additional revenues. In our research,7 we have found that many executives view the law too narrowly as a cost or compliance issue, inevitably forsaking strategic opportunities.8 (See “About the Research.”) To help executives broaden their perspective, we have developed a framework that can help identify the various ways in which legal strategies can be used to gain competitive advantage and identify value-creating opportunities. Indeed, as companies like IBM have discovered, in-house legal departments can be more than just cost centers; they can be powerful instruments for generating value and securing a competitive advantage. Corporate attorneys also begin to view legal data in a unique way: They fully recognize the importance of measuring and quantifying legal issues and data as part of a broader effort to support a business-oriented strategy.11, With respect to patent law, companies can adopt a prevention approach by deploying two types of tactics: defensive technical disclosures and “patent fencing.” Using the first tactic, companies like IBM, Motorola, Siemens and Xerox12 have chosen to disclose patentable technical information to prevent a rival from obtaining a patent and to preserve their freedom to operate in that technology space. Faced with the eventual expiration of its media copyrights, Disney executives transferred the value of that intellectual property into thousands of newly registered trademarks for various characters, names and images.5 This legal strategy achieved two important goals. MIT Sloan Management Review (Oct. 22 2014). Consider Qualcomm, the digital communications products and services company based in San Diego, California. David Orozco is an associate professor of legal studies and MBA program director at the Florida State University College of Business in Tallahassee, Florida. K.G. But this limited perspective of the law does not explain how some leading companies, such as Qualcomm and the Walt Disney Co., have managed to deploy their legal departments to shape the legal environment in order to secure long-term competitive advantage.In their research, the authors have developed a framework that can help executives identify the different ways in which legal strategies can be used to achieve various corporate goals, including the identification of value-creating opportunities. Managers operating in the prevention pathway understand the law as it relates to their functional business areas, and they appreciate how it can be used to minimize particular business risks. Legal counselors, in turn, assume a more entrepreneurial role and have enough business proficiency to discuss various issues fluently with managers. And Disney is but one of many companies that have successfully deployed sophisticated legal strategies to capture the profits of innovation-related activities, particularly in the field of intellectual property management.6. Conley, “Patents Come and Go: Trademarks Are Forever,” Executive Counsel 2, no. Every company that operates at the compliance level has the opportunity to move up to the prevention pathway. Bird, “Pathways of Legal Strategy,” Stanford Journal of Law, Business & Finance 14, no. 21. R.L. Williamson and X. Zhang, “Combining Patent Law Expertise with R&D for Patenting Performance,” Organization Science 18, no. Pick a law firm of the right size. (To get a better grasp of the chief legal strategist’s role and characteristics, see “Traits of an Effective Chief Legal Strategist.”). A. Bhaskarabhatla and D. Hegde, “An Organizational Perspective on Patenting and Open Innovation,” Organization Science, http://pubsonline.informs.org/doi/abs/10.1287/orsc.2014.0911. R.C. In the transformation pathway, a company has incorporated its corporate legal strategy into its business model. With no legal strategy, you feel confident in your decision. For businesses in the prevention pathway, managers take a more proactive approach, using the law to preempt future business-related risks. Litigation generally involves a lot more legal research and writing whereas most of the everyday work in a corporate practice does not involve arguing the law. An example of a different type of powerful legal strategy involves Microsoft’s recent acquisition of Nokia’s handset division. A key differentiating attribute of the value pathway is that managers and attorneys work together to devise legal strategies and techniques that increase ROI in ways that can be directly tied to a profit-and-loss statement. The research that led to the five pathways framework emerged from two sources: industry and academia. All rights reserved. In the past, Microsoft has vigorously asserted its own patents against Google, and the licensing deal with Nokia allows Nokia to pursue actions against Google independent from Microsoft, thus creating a multifront attack against Google.

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