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Five key questions a lawyer can ask to learn the client’s business

This past week I guest-lectured at an introductory lawyering-skills class for first-year law students. One of the points I wanted to make was the old chestnut, get to know your client’s business, which is self-evidently important for any lawyer or other professional who helps clients arrange their business relationships and document them in contracts.

Flickr photo by Ed Yourdon Suddenly, though, I remembered a few of the parents at my son’s Little League baseball games, who would shout out from the bleachers to the batter: “OK, Johnny, be a hitter!”

Be a hitter? Even back then I wondered, what does that mean — what is little Johnny supposed to do?

It dawned on me that when we tell law students and young lawyers to get to know the client’s business, we might as well be yelling, “be a hitter, Johnny!” After the jump, some practical tips on actual things you can do toward that end.

The five questions:

“Talk me through a typical sale”

Ask the client to talk you through a typical sale, including:

  • How the product (or service) is marketed and advertised;
  • How sales leads are generated;
  • How orders are placed;
  • How orders are fulfilled.

Consider asking for copies of the client’s sales quotation forms and standard terms and conditions. Then read them, looking for possible areas of improvement.

If the client uses resellers, consider asking for copies of the client’s contracts with them.

Keep an eye out for possible legal-process bottlenecks that might be slowing down sales.

“How does production work?”

Similarly, ask the client to talk you through how they make their products (or provide their services) and position them for shipment to customers.

Consider asking the client for copies of its contracts with manufacturers and licensors.

Keep an eye out for contingencies that might interrupt deliveries.

“Any tax- or accounting land mines?”

Taxation: Multi-national companies sometimes have specific corporate structures set up to manage their tax liabilities. It wouldn’t go over well for a lawyer to run afoul of these, and possibly cost the client a lot of money in the wake of an audit. [Suggested by Victor Segura, Houston.]

Accounting: Under generally-accepted accounting principles, the client might have to do X or Y or Z — or maybe not do these things — in order to recognize revenue (“book the revenue”).

For example, a software company might not be able to offer a one-year warranty because that could prevent it from immediately booking the revenue from the sale.

It can be important for a lawyer to know about these business constraints arising from rev-rec restrictions. If our hypothetical software company’s lawyer didn’t know about these constraints, it’s not inconceivable that the following cascade of bad news might occur:

  • the lawyer might advise the software company’s sales person to agree to a customer’s request for a one-year warranty;
  • as a result, the software company might not be able to book 100% of the revenue for that sale right away;
  • the company’s inability to book that revenue could cause the company to miss its quarterly- or even annual sales targets;
  • the “miss” might cause the company’s stock price to plunge;
  • the company might have to put itself up for sale.

“What’s the biggest single challenge you see coming up?”

Consider asking the client what challenges they think they face, especially but not exclusively in the legal- and regulatory environment. Who knows, you might be able to suggest something you could do for them.

“If the company could have one do-over, what would it be?”

You might ask the client something like, If you could change one decision that your company has made in the past, what would it be, and why? That could give you some interesting historical perspectives.

Before you ask: Things to read

Before you start asking the client questions, it makes sense to do some preliminary homework.

Client’s own Web site: An obvious place to check first is the client’s own Web site. Find out about their products or services; their management; their history.

Google is your friend: Next, Google-search for information about the client. Of particular interest will be:

  • Press releases
  • News articles
  • Product reviews

Don’t leave out LinkedIn: It’s also easy to check LinkedIn to find out who’s who at the client; you can search for people who work — or used to work — for the client.

Public companies: If the client is a public company, it’s fairly easy to skim the following docu­ments on the SEC’s EDGAR Web site, jotting down specific questions as you do:

  • the company’s last few 10-K, 10-Q, and 8-K reports
  • the S-1 registration statement (if the company did an IPO within the past few years)
  • the description of the business and of risk factors in the above documents
  • the last few proxy statements
  • the exhibits to the company’s SEC filings, especially key contracts
  • press releases from the last year or so (available at, e.g., www.yahoo.com)

Do all this “off the meter”

It can’t hurt to proactively tell the client that you’re not going to bill them for this get-to-know-you work. It won’t take more than an hour or so, and the client will appreciate knowing that you’re not going to mindlessly bill them for every millisecond that you spend thinking about them.


NOTE: This is an authorized Dilbert reproduction — thanks, Scott Adams!

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