It may seem like a “no brainer” that understanding our legal system is beneficial to a business owners, but I couldn’t tell you how many business owners I’ve met who are unknowledgeable about laws and legal codes outside of what pertains to them.
The two most common reasons I’ve seen business owners shy away from learning about law is because first, they have already learned what directly applies to them (such as a contractor understanding how to get permits) so they are reluctant to learn about new opportunities or better ways of doing things. Secondly, is because the law can be quite complicated and frankly people are scared, and they would rather hire a professional to handle their legal issues. Both of these reasons business owners use to avoid researching and understanding our legal code are toxic to their own efforts and may cost them more than they planned in the long run.
A rule of thumb that I try to encourage regarding knowing the law is “the more the better”. Using an analogy with a Construction Company, they would not only need to know how to obtain permits and respect regulations to perform their job, but would also have to know how to avoid general lawsuits on the job, avoid employee/employment contract issues, file their taxes, marketing regulations, and much more.
The reason hiring others to “take care” of any of these sectors completely, is because the relationship would rely solely on trust; there would be no way to verify that you aren’t being scammed by the employee or company that you have outsourced this work to. Great leaders are informed in every area of their business and know for a fact that they are going in the right direction, and are not losing money in one of their departments- not only for the sake of their own work efficiency but for the sake of every other department.
The best way to begin studying the law is to start with Case Analysis. Begin with general cases that everyone knows, such as “Marbury vs. Madison”, and read beginner analysis of these cases (which can be found using a simple online search). Then, read about cases that pertain to your industry.
The US legal system is engrained in what is called “Case-Law”, where previous cases help establish future rulings so that those conducting business can expect consistency. Begin with general cases that everyone knows, such as “Marbury vs. Madison”, and read beginner analysis of these cases (which can be found using a simple online search). Then, read about cases that pertain to your industry.
Reading and learning about these cases is one thing, but learning to truly analyze the lessons provided by previous court decisions can be what separates one business-person from another.
The IRAC Case Analysis is a widely known system used by law students and professionals to analyze and share analysis of cases.
Issue – Identify the legal issue(s) in question. What is the central legal question that needs to be answered?
Rule – State the relevant law or legal principle that applies. This could be a statute, case law, or regulation.
Application (Analysis) – Apply the legal rule to the facts of the case. Explain how the law applies, considering different arguments or interpretations.
Conclusion – Provide a clear conclusion based on the analysis. What is the likely outcome based on the application of the law to the facts?
Understanding the law of the land can be intimidating simply because of the fact that it is A LOT, and as an already busy business owner we are tempted to focus on what we know we’re good at while letting a “professional” handle the other stuff. When things start to get big enough, those who don’t protect what they have in business, lose it.
I write this post in the hopes not that I scare people, but that I encourage people to study their local and federal laws and regulations so that they know they are maximizing their efficiency. A business run the law/legal code in mind reaches the top much quicker than one that avoids by means of ignorance or outsourcing.
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