Let’s get Mischievous

Earlier this week Corporate Counsel wrote about a new study highlighting the top 8 characteristics of a successful GC/CLO.  Of the 8 characteristics listed, most are relatively intuitive; a successful GC/CLO is persuasive, competitive, and decisive.  But my favorite characteristic by far was “Mischievous”. 

By “Mischievous”, the study is refers to informed risk taking.  Any risk taking is rare in legal types, so it’s easy to see how those that master the art of it are most successful with business people who make their millions doing just that.   For many lawyers, risk is what we spend our careers advising our clients to avoid.  We get frustrated when they don’t heed our warnings and end up in hot water.  Every lawyer out there has a story about when a client didn’t listen and it ended up costing.  Most don’t think about it, but they’ve got more stories about when a client didn’t listen and it ended up okay or benefiting the client. 

Let’s be clear, we’re not talking about dumping toxic chemicals in the water or committing securities fraud.  We’re talking about signing that contract without the best language in it or entering into that market that’s high risk, because the likelihood of needing that language or facing a catastrophic claim is so low that the profitability of the deal until then is what really matters.  Sometimes, it’s taking a more liberal interpretation of a regulation because otherwise the cost of compliance is exponentially higher than the cost of non-compliance.  

For lawyers, making the recommendation to do the riskier can be hard.  It’s innate in us to have our first reaction be to advise the path of least risk, even if that is the path of lowest profitability.  I’ve had that gut reaction before too (and still have it some days).  The trick is to lighten up a little.  Before giving your sage, risk adverse advice analyze the real risk from the perceived risk and how material the risk is to the business.  What are the chances that the language you’re fighting to get inserted will come into play in the real world?  What is the real potential for a claim even should things go wrong?  If a claim arises, what’s the practical damage?  What are the potential benefits of doing the deal or entering into the market despite the risks?  Then use those questions to frame your advice.  Inform of the risks, but also of the practically of them really being an issue.  Find creative ways to avoid or minimize them and at the end of the day realize that some risk is necessary and even beneficial.  If it wasn’t at least a little risky, everyone would be doing it and making money at it would be more difficult. 

If this comes really hard for you, practice with small things.  Let your marketing department use a description that stretches the reaches of puffery.  Let you HR team terminate an employee without having the *perfect* documentation.  Let go of the million dollar limitation on liability for the $5,000 vendor contract.  Once you’ve gotten to the point where these things don’t bother you, move on to bigger risks.  As your risk tolerance rises to match that of your management team, you’ll find that you are brought in on more conversations and sought out for your advice more often.  You may also find out that it’s kind of fun being mischievous. 

What are your tips for taking informed risks?