Accounting / Accountants, In-House Counsel, Money, Tax Law, Wall Street

Moonlighting: Things Not to Say In-House - 'I'm Bad at Math'

By  
on

It’s one of the biggest cons going around. I cringe whenever I hear it. A lawyer laughs and says, “I’m not good with numbers — that’s why I became a lawyer.”

On the surface, it seems to make sense; it sounds like it should be true. For some, it might even be true. After all, the last time we used quadratic equations was back when loafers on bare feet were considered desirable footwear (thanks Don Johnson).

In-house lawyers should never, ever say they’re bad at math — even those who really are. After all, business people are preoccupied with numbers. As an in-house lawyer, telling a business person that you’re bad at math is like telling them you don’t care about the most important thing that everyone else in your company cares about, and if your company is publicly listed, what every investor in your company cares about — the company’s numbers….

This kind of statement makes lawyers look naïve and not savvy at all. It’s like working for the President and not caring about elections. Or like working for Greenpeace and not caring about the exotic, spotted, one-toed, three-eyed tree frog that lives in Omaha, Nebraska. Or like working for Above the Law and not caring that the Biglaw bonuses are exactly the same as last year — it’s just madness, I tell you!

As an in-house lawyer, the more senior you become, the more you’ll need to become friendly with math. Math for in-house attorneys includes reviewing budgets and financial statements, managing outside counsel spend, considering tax and accounting issues, understanding financial analyses performed for agreements and projects and acquisitions, understanding accruals vs. forecast vs. budget, etc. There are lots of color-coded spreadsheets with explanatory footnotes involved.

It’s easy to gloss over financials and metrics and assume that the business folks who’ve prepared them will understand them and get them right. But in order to have a good sense of where we stand in the company, we need to know how the revenue that’s generated by our work ties into the company’s overall revenue. Talk to any senior business person, and you’ll find that they seem to think and talk exclusively in numbers. It’s like they’re obsessed — you know, with like, making money or something.

Sponsored

How to get better with numbers? Educate yourself and ask questions. There are no dumb questions! (Except the truly dumb ones — don’t ask those.) When financial analyses are available, read and try to understand them, row by row, column by column. I keep a notebook of financial terms and acronyms that people throw out during meetings, so that I can ask later. There are also “accounting and finance for lawyers” books and classes, as well helpful websites. Investopedia.com, for example, is useful for basic definitions of financial terms (go here first for the truly dumb questions). Meet with people in finance of all levels over lunch and ask them to explain their work and perspectives.

Also, for each matter you work on, consider the financials. How important from a numbers perspective is the contract or deal? When evaluating options, one of the first things you should consider is: how much can this cost us — what are the upper and lower limits? And what are different ways we can remodel or approach this issue or project to minimize our financial risk?

More often than not, lawyers don’t provide numbers when explaining legal risk to business people, who often find this frustrating. All other areas of the business seem adept at providing calculations and metrics relating to their work product, so why not legal? I actually think the business people are probably right in this regard. Lawyers don’t usually provide numbers mainly because we’re just not used to doing it, not because it can’t be done.

As an in-house lawyer, you don’t always have a ready idea of how much has been paid out in similar cases lost by other companies, or how much state or federal fines are for non-compliance with particular regulations. We encounter too many different issues too frequently for it to be practicable to perform this kind of research or analysis each time. But we could probably counsel our clients a lot better if we did have this kind of information consolidated in some kind of file or database. With this magic database handy, we would be able to provide advice with more clarity and evaluate risk on more than just a subjective whim of what we’ve personally experienced or believe is the norm. If I were an attorney with lots of free time, I would probably look into creating a business out of a database like this (and then offer the product for free to a certain cute, ATL in-house writer — no, not Mark).

Finally, it helps that most of the math concepts that in-house lawyers need to know don’t involve trigonometry or calculus. They’re basics you learn in elementary school — addition, subtraction, multiplication, division, and some percentage calculations here and there. Studying the colorful spreadsheets, calculating different permutations for the formulas in your contracts, plus chatting with business people to get their perspectives on the company’s business, equals a numbers-friendly lawyer who won’t need to worry that the statement “I’m bad at math” may be true.

Sponsored

Are there other tips you can share for getting better at math on the job? Feel free to email them me at SusanMoonATL@gmail.com.

Susan Moon is an in-house attorney at a travel and hospitality company. Her opinions are her own and not those of her company. Also, the experiences Susan shares may include others’ experiences (many in-house friends insist on offering ideas for the blog). You can reach her at SusanMoonATL@gmail.com and follow her on Twitter at @SusanMoon.

Topics

, , , , , , , , , , , , , , , , ,