In the wake of the implosion of Enron and WorldCom in 2001, Judge Stanley Sporkin famously asked, “Where were the lawyers?” Section 307 of the Sarbanes-Oxley Act of 2002 imposed new duties on in-house counsel to report up violations of law. Yet, we still had the LIBOR and foreign-exchange...

This article, from The Oxford Handbook of Dynamic Capabilities (David J. Teece & Sohvi Leih, eds. 2016), describes the construct of “legal astuteness” and explains why it is a valuable dynamic capability. It also examines the systems approach to law and strategy, which embeds the top...