Business Acumen for Lawyers: A Framework
By Chris Wedgeworth
Creating a business acumen curriculum for a law firm can be an enormous challenge. Here’s a framework to help you think through the right approach for your firm.
At the 2017 Professional Development Consortium (PDC) Summer Conference in Austin, I moderated a panel titled Business Acumen for Lawyers: What Clients Expect, What Lawyers Want and How PD Can Make It Happen. We had some really interesting perspectives on the panel:
- Mark Mouritsen from Dell, an in-house lawyer
- Wilson Chu from McDermott Will & Emery, a big-firm partner
- Caitlin Vaughn from Goodwin, a professional development leader
The panelists described the challenge facing PD teams when creating a business acumen curriculum. On the one hand, clients are saying “I expect my lawyers to understand my business,” while partners want associates on their deals to “speak their clients’ language.” On the other hand, PD teams have limited resources, clients certainly aren’t subsidizing associate training any longer and lawyers struggle to find time to attend business boot camps.
So, how can PD teams deliver the right content in a way that’s effective, scalable and affordable?
A Business Acumen Training Framework
The first question for PD teams is who should get what training.
If my MBA taught me anything, it’s that every business problem can be solved with a 3D pyramid. So, we put one together – a framework (see image above) that PD teams can use when developing a business acumen curriculum for their firms.
The idea is to think of business acumen training in a segmented way: different content and approaches for different audiences.
Starting at the base of the pyramid, every business lawyer should have an essential set of business skills. Since there are many lawyers, the cost per lawyer needs to be low. As you move up the pyramid, the number of lawyers receiving the training goes down and the content becomes more specialized. Since there are fewer lawyers, the cost per lawyer can be higher. For example:
- At the base layer (all lawyers participating), you might buy a “mini MBA” from an external provider.
- At the middle layer you might have an in-person offsite that covers business and finance topics for a smaller group (say, senior associates who are close to becoming partners).
- At the top of the pyramid, you might send a very select group of senior partners to an executive education program for law firm leaders at Harvard Business School or a similar institution. The cost is very high on a per-lawyer basis, but since fewer lawyers need that level of training, it could be a viable option.
The Base of the Pyramid: Essential Business Skills for All Lawyers
At Hotshot, we focus on the base of the pyramid: that set of essential business skills that every business lawyer, both transactional and litigator, needs to have.
This base layer is often called a “mini MBA.” I don’t really like that phrase because even the basic classes in an MBA program include portfolio theory, regression analysis and other relatively advanced concepts that most lawyers don’t need to know. Regardless of what it’s called, essential business skills are very important and more specialized business acumen training builds on them.
We think of the base, or “fundamentals,” layer as having four main elements:
- Accounting and Finance Concepts: e.g., the basics of financial statements and an understanding of valuation, present value and similar concepts
- Numeracy: e.g., knowledge and experience using Excel and interpreting data that might be presented in a deal or case (even though lawyers often say they don’t like math, they need to be able to work with numbers)
- Understanding Your Client’s Business: e.g., understanding of the dynamics of the client’s industry and the strategic issues that the CEO and GC think about every day
- Application of Financial Concepts to Legal Practice: e.g., an M&A lawyer knowing what a closing balance sheet is and a litigator being able to challenge an expert witness’s assumptions on damage calculations
Effective, Scalable and Affordable Training
While deciding who receives what type of training, PD teams also need to consider the best way to deliver training. During the PDC session, I talked about the use of modern learning techniques for business acumen training, both for in-person training and for just-in time learning.
In-person training can be a great way to teach business and finance concepts, particularly assets, liabilities, accrual accounting and other non-intuitive concepts. When done right, in-person training can be a good opportunity to ask questions and work through problems.
But in-person training has its downsides:
- It can be expensive.
- It doesn’t work for remote offices.
- It can fall flat if the facilitator isn’t excellent (it’s not just millennials who don’t like boring lectures).
- Lawyers are often too busy to attend in-person sessions.
- Even when people do attend, the training is often too far removed from the point of need.
At Hotshot, we believe good training should be:
- Effective: Lawyers should actually complete and learn from the training.
- Scalable: Training should be equally effective for all geographic locations, not primarily benefitting main offices.
- Affordable: Costs need to be reasonable, particularly for that base layer of the pyramid where there are many lawyers participating.
I recommend that law firms incorporate digital learning into all types of training programs, not just business acumen:
- Video is a great way to communicate complex concepts and is perfect for the YouTube generation. Keep in mind that it needs to be done well and presented in bite-sized segments. It should also work on mobile devices so learners can watch from any location.
- Lawyers can complete online quizzes that incorporate interactive learning to reinforce what they learned in the videos.
- A blended learning environment can be created by assigning videos and quizzes as pre-work for in-person training (“flipping the classroom").
Digital techniques make learning more fun, and certainly pass the Effective, Scalable, Affordable test.
Hotshot’s business acumen content on Accounting & Finance and Excel & Data Analysis includes short videos, interactive quizzes and training exercises that can be used in flip-the-classroom sessions. Please get in touch at firstname.lastname@example.org if you’d like to learn more.