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PRACTICE SKILLS 實 踐 技 能 T he practice of law demands that a lawyer knows the law (at least in the jurisdictions and the practice areas in which he specialises). But increasingly clients expect their lawyers to know and understand the business of the clients, and the wider industry or economic markets in which their clients operate in. What does "business knowledge" mean and how is it critical to your practice? What is business knowledge? In this article, business knowledge broadly refers to the knowledge of: a) the client's business; b) the industry within which the busi- ness operates; c) the developing trends in the industry; d) market drivers for the industry; and e) external trends (economic or other- wise) that may impact on the indus- try. Illustration For instance, you are a lawyer looking to build relationships and get work from an international energy company (the Company) that has business in the oil and gas sector in one part of the world, and invests in profitable power generation assets using renewable energy in other environmentally suitable jurisdictions. What would you find out about the Company to get instructions from the Company? Some possibly useful facts may include: • In the oil and gas business, the Company's business focuses its investments in the downstream sector and is consolidating its positions in upstream crude oil but investing more in e.g. upstream LNG. • As for the renewables business, the Company focuses on offshore wind farms and solar parks. • One developing trend that impacts on the Company's business is clean en- ergy, which is good for the renewables business but not necessarily all parts of the oil and gas business. • Another trend is the downward pres- sure on oil prices, which means the Company is more reluctant to invest in upstream drilling for crude oil (partic- ularly offshore, because it costs more), and instead focuses on increasing margins in the downstream market. • Like most other international energy companies, the Company serves cor- porates and retail customers in the oil and gas business. • It sells power through power purchase agreements with governments in its power generation business. • The Company faces external pressures from uncertain political situations in one or two jurisdictions, increased enforcement of anti-bribery and an- ti-corruption laws, governance of data privacy and managing cyber security risks. Gleaning from the illustration above, business knowledge can be broken down as follows. 1) Knowing the business means un- derstanding what kind of work the specific business is involved in, how the specific business makes money from the work that it does, and the jurisdiction(s) in which the business operates. 2) Understanding the industry within which the business operates means how the business fits within the in- dustry (e.g. upstream or downstream supply chain) and who its competi- tors are. 3) Being aware of the developing trends in the industry informs you of the di- rection that the client's business may be taking in the future, as the client's business will invariably be impacted by trends that shape the growth of the industry. 4) The market drivers for the indus- try refers to the demands for the industry: why does the industry exist, and what kind of customers does it serve? Market drivers may also refer to government policies that either encourage or inhibit the development of the industry. 5) External trends (economic or other- wise) may impact on an industry (and hence your client's business). Knowing what you do not know By Katie Chung, Of Counsel Norton Rose Fulbright 74 www.hk-lawyer.org •  January 2018

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