The role of legal counsel in achieving business success Featured

9:01pm EDT May 31, 2011
The role of legal counsel in achieving business success

As many industries experience increased regulation and undergo fundamental changes in a difficult economic climate, companies require lawyers with a niche in key areas of service, such as health care, real estate, regulations, mergers and acquisitions, etc.

Even with specialized expertise, constant changes in a volatile economy can lead to many sleepless nights for those responsible for the legal affairs of large companies. This is especially true in health care.

“We are seeing major consolidation in the health care industry at all levels, which requires a lot of careful legal work,” says James deGlee, senior managing counsel for the Florida Region of Tenet Healthcare Corporation. “We need to be proactive and provide our clients with concise guidance on new developments in payment systems and regulatory areas, and at the same time provide the day-to-day legal services required for our facilities from an operational perspective.”

Smart Business spoke with deGlee about how having the right expertise to competently and expertly address legal issues can influence business success.

What is the role of legal counsel in achieving business success?

In the landscape of today’s competitive marketplace, it’s becoming critical to integrate legal expertise within all constituencies of an organization. It’s impossible to put legal function in a silo and expect business success. Progressive companies are closely integrating legal strategy into business operations to open communication, join forces with shared goals and work proactively to maintain a competitive advantage. This is especially true in health care, where the legal test is often whether a proposed transaction is ‘commercially reasonable’ or a payment is ‘consistent with fair market value.’ You simply cannot provide good legal advice without understanding the business details.

Even though we are an in-house legal department for the Tenet Florida region, we consider our 10 hospitals and their administrators our ‘clients’ and we treat them that way. It’s our responsibility to bridge Tenet’s overall goals with each individual hospital’s goals, and that can be a challenge. We must listen to both our corporate leadership and hospital clients to find legal and compliant ways to strategically accomplish positive business outcomes. As legal advisers, we can influence the organization’s success by developing our legal strategy around supporting the best, most efficient ways to operate hospitals and deliver quality care to the community.

How do you influence your organization’s ability to achieve its strategic goals?

Tenet has adopted a corporate culture of compliance, which has influenced our legal strategy. First, the ‘legal’ hurdle is generally a low barrier and should not be the standard to gauge acceptable behavior. The first question shouldn’t be ‘Is this legal?’ Rather, the organization should ask: ‘Is this ethical business conduct in the best interest of our patients and consistent with company values?’ Just because something may be legal, it might not be the best or right thing to do. We also refrain from ‘risk of enforcement’ analysis or advice. For example, if the speed limit is 55, lawyers shouldn’t engage in discussions about whether their clients risk a ticket if they go 60 or 65.

Our challenge is always finding a way to legally accomplish our clients’ business goals. I believe it’s important to consider workable solutions and analyze alternative courses before you simply reject an idea on legal grounds. The easy answer to many clients’ questions is to simply say, ‘no, that’s not legal.’ When the client doesn’t take action and your decision is never tested or challenged, ‘no’ does little to benefit the company. The right course is to carefully consider the goals and give the client legally compliant ways to accomplish them. You need to have a good understanding of the industry and work closely with your business leaders to give that advice.

What is your strategy for building relationships between legal and business leaders within the organization?

Relationship building is key. Professional business relationships cultivate mutual trust, and with mutual trust, the client is more likely to provide the facts and information required for the legal team to build an effective strategy. Without full disclosure of facts and the answers to the important questions, a legal team will not have the insight and basis to deliver the best legal advice on important business decisions. Building trust with an organization’s senior leaders is often a challenge because each may have preconceived beliefs or past experiences that either positively or negatively influence their openness to legal involvement in business matters.

To build professional relationships, you have to listen. Active listening builds trust and mutual understanding. To really know what a client or business leader is trying to accomplish, you need to do a lot of inquiry to get a better picture of their situation and their needs. Pay attention, listen to cues and be engaged in what they are telling you. Really listening to people encourages them feel more comfortable. Building strong communication patterns and mutual trust fosters respect, which is the foundation of any professional relationship. With strong relationships, business leaders will be more likely to partner with legal teams and the resulting cooperation is invaluable to achieving shared goals.

How do you perceive the role of general counsel evolving within large organizations?

Consolidation is a big trend, and with more mergers and acquisitions, we will likely see large organizations becoming even bigger. Their need for in-house legal counsel may grow, along with the legal team’s job responsibilities. Forward-thinking companies are involving legal counsel in business strategy, which brings the legal department more accountability and responsibility for outcomes and the bottom line. Large organizations of the future will be looking for legal experts with a solid knowledge of the close interworking between law and business, as well as experience working within large system-based law departments.

James deGlee is the senior managing counsel for the Florida Region of Tenet Healthcare Corporation.