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The importance of understanding business law

20 April 2017

No man is an island. And no business operates in isolation from external challenges. Business leaders are constantly required to make agreements and transactions that have legal ramifications, often without full comprehension or up-to-date knowledge of their parameters.

These parameters are typically considered externally and at the end of the business decision-making process. By contrast, business leaders with a firm grasp on legal knowledge at the outset can outpace their competition through an understanding of what makes a viable transaction.

Harvard Business School Professor Constance Bagley agrees that a thorough understanding of business law is not just for lawyers. “Managers must become more astute about the legal environment around them, and be willing to challenge and work with counsel to achieve best outcomes,” she told Sean Silverstone at Harvard Business School.

At a minimum, you need to know what conduct is legal and what is not. You should also be able to spot legal problems before they become an issue and identify opportunities to use the law to create value and manage risk.

Studying law – what to look for

Striking the right balance between business decision-making and legal implications requires an experienced approach. Aspiring business leaders should consider studying a Master of Business Law online that covers a variety of tools you can use to manage your organisation more effectively.

These tools can range from contracts (both formal and informal) that are used in just about every facet of business transactions, relationships, employment and shareholding concerns to various forms of intellectual property (IP) protection. In fact, IP law is a vitally important tool to understand invention patents, avoid IP infringements and the rules of tough, but fair, competition.

Other areas to consider include corporate and company law, which covers all aspects of business operating constraints as well as corporate structure. The course should also cover corporate governance, which details the rules, practices and processes to direct and control a company.

Legally astute managers are better equipped to convert constraints into opportunities because they recognise the enabling aspects of law and value of compliance.

Legal counsel vs. legal business knowledge

The goal of studying an online business law Masters is not to train to become a lawyer, but to equip yourself with the skills to know when to call a lawyer, as well as the confidence to engage expert counsel in deciding how to proceed with a particular course of action.

It is important to always remember there are legal dimensions to business and they, like the financial or IT functions, need to be managed. They are too important to delegate to lawyers who, while experts on the legal details, will not necessarily understand your broader business objectives.

To find out more about an online Master of Business Law at Southern Cross University Online, or to learn more about our other leading online programs, speak to one of our expert Student Enrolment Advisors today on 1300 589 882.