Hi
@Jacob Miller hope you are doing well. Kind of a weird question but why is business advice even expected out of a lawyer? Shouldn't the businesses go to consultants for that kind of advice? And if lawyers can advise on business areas as well, then who even goes to consultants?
I'm confused about the role of consultants, to be frank. It would be great if you could explain.
Thank You.
Business and Management Consultants (e.g. McKinsey, Bain, etc) are involved in two broad phases: (1) strategy (2) execution (e.g. operations). These are separate and at times, overlapping workstreams that lawyers work on (from a legal perspective). They're more commercial, impacting the commercials of the business directly. Consultants will assist with financial modelling, overall strategy, execution strategy, etc. Contrast this to a purely legal issue, like the validity of a signatory's authority. Obviously it is important, but the client doesn't need to be consulted on this, the legal advisors will usually deal with this between themselves.
Lawyers therefore don't really give 'business advice' in the generic understanding of the phrase. We largely defer to the client to handle the commercial points of any deal (as it should be). However, certain legal issues like the deal structure (e.g. tax, regulatory, etc) often can impact the risk profiles of deals and often it may directly impact it commercially. When we say 'commercial' in this context, it could mean that the legal structuring, mechanic, rep or warranty 'ask' could literally impact the profitability of the transaction In these situations.
In these situations, lawyers (typically partners and very senior associates) may take a view, based on their experience. Lawyers see many deals (and the firm as a network, even more so), so they are privy to the market practices of an industry and also with respect to their clients (and entities on the other side, as they may have acted for them previously).
However, to be clear, the commercial decisions are always with the client.
Regarding the broader role of "consultants" - they may simply be involved in a limited capacity, such as providing a tax review, or technical review, etc. This is often accompanied with a reliance letter (similar to how law firms provide legal opinions or diligence reports), which is solicited by the client. Therefore, it's important to think beyond typical business and management consultancies, and tax advisors (e.g. PWC), but also about specialist firms like Wood Mackenzie, etc.
