Author: Bagley, Constance E.
Source: The Aspen Institute Business and Society Program
The full version of this document is available for download below to all CasePlace.org users. The options backdating scandal is but the most recent example of the perils of failing to manage the legal and ethical dimensions of business. Meeting legal and ethical challenges requires the development of a managerial capability I call “legal astuteness.” Legal astuteness is the ability of managers to communicate effectively with counsel and to work together to solve complex problems and to protect and leverage the firm's resources. Legally astute managers have the ability to identify and pursue opportunities to use the law and the legal system to increase both the total value created and the share of that value captured by the firm. By being proactive, they can often forestall more onerous business regulation and convert regulatory threats and constraints into opportunities for value creation and capture. Conversely, managers who lack the ability to integrate law into the development of strategy and of action plans can place the firm at a competitive disadvantage and imperil its economic viability.