The Business Of Corporate Lawyers Waiver Clauses

Thursday, May 1, 2008 - 00:00

Introduction

All too often, corporate lawyers are branded as "paper pushers," engaged by their clients merely to "paper the deal." Well world, wake up! This misbranding leads to a real inferiority complex among those of us with thin skin. We are more than minions chained to our desks anxiously waiting by the phone for the order to draft bulletproof prose in 10 minutes or less with little or no context. We are more than the miracle workers who, 15 minutes before the clock strikes 5 (a.m.) and dueling parties are ready to walk away from the table, swoop in and draft the language that makes the parties wonder (over some tired giggles), "Why didn't we think of that?" Oh no. We are those things, but we are so much more.

We would like to see emerging, growth and even mature companies more actively engage their outside corporate counsel as sounding boards, equipped with unique perspective independent from, yet understanding of, the day-to-day operation of the business. We would like to become more intimately involved with the business of our clients. For the cynics among you, the foundation of this goal is not a desire to generate increased fees, but rather to provide better service to our clients and improve relationships that are often underdeveloped due to the stressful circumstances under which they are consistently cultivated.

Although we're endlessly entertained by some of the myths out there about us and what we do, we must try our best to bust the myths about our kind to get where we want to go - trusted advisor and confidant. We hope that, through this exercise, entrepreneurs, principals, executives and companies will see us in a different light and unlock opportunities to engage their outside corporate counsel as resources for valuable, often inexpensive or free advice that can save management time better spent doing what it does best - growing the business. Let's get started.

Myth 1: We Know The Law, Not Business

Well, we'd better know the law. It's our job. Ultimately, the buck has to stop with us when it comes to legal matters. Potential clients or new clients generally will call and start out laying the framework of the relationship by educating us about what's happening in their industry. We encourage and revel in the discussion. Many are surprised at our willingness to dedicate time and effort to listen to their needs. They are even more surprised, however, when we are usually able to actively participate and add substance to this dialogue. In fact, if we don't know or are unwilling to learn about your business, find new counsel! Good outside counsel not only know the business of their clients, but also become engrossed in that business - constantly on the lookout for valuable information and business opportunities our clients can use. Understanding our clients' business, following trends in the marketplace and appreciating each client's particular risk profile allows us to effectively negotiate on behalf of and advise that client. If we do our homework, listen to our clients and understand their business, we save our clients time and money. We know that long lessons mean lost revenues.

Myth 2: We Will Not Listen Because We Have All The Answers

If you did not read the preceding paragraph, you may still believe this myth. But, no matter how much experience we have with a particular issue, it is imperative that we listen to our clients' needs, desires, goals and objectives, as well as those of the regulators or adverse parties with whom we are negotiating. Only after we have surveyed the playing field, listened to the needs of our client and taken the pulse of the situation can we effectively begin to advise on next steps. The path is treacherous and each step must be made methodically. This can only be accomplished if we understand the environment in which we are working. If your outside counsel always has all the answers before hearing your story, you can do better.

Myth 3: We See The Glass As Half Empty

Not so fast. Although we want to protect you at every turn to insulate you from liability, we understand that risk and reward must be traded and balanced to achieve business and financial success. We strive to protect our clients in a manner that supports and furthers their goals and objectives. As business lawyers, we want to make the deal happen, to give our clients support and direction and to tell them what they can do - not what they can't. This balance can only be achieved through dedication and hard work, understanding your business and listening to your needs - and sometimes through a little creative thinking.

Myth 4: We're Black And White

Believe us, there are hundreds of shades of gray. Although creativity is a trait for which many lawyers are not known, it is an indispensable attribute for the good ones. A true business counselor must be able to think and negotiate creatively - some may say "outside the box." Our clients know this, but many businesses may not. Even if you think you know what your lawyer will tell you when you reach an impasse or are faced with a challenging situation, you should reach out and call anyway. Maybe we will see things through a different lens. You may be surprised to hear that we see that impasse as an opportunity.

Myth 5: We Are All Business

Attorneys get a bad rap. Some think that we're hermits who only find time to socialize with our limited inner circle consisting of accountants and, of course, other lawyers, right? While this may be true in some cases, we have found those cases to be rarer than many outsiders may think. We want to get to know our clients socially. In fact, many of our client relationships are the result of years of social relationships, through sports or charitable organizations. While searching for and serving clients, we oftentimes will travel to the ends of the Earth with them to forge long-lasting, exciting relationships, both professionally and personally. In the course of our social and professional travels we inevitably run into many other folks. In our quest to offer our existing clients and potential new clients the best service, we actively engage these other folks - including entrepreneurs, senior management, investors of all shapes and sizes, financial printers, due diligence data room providers, investor presentation specialists and other service providers. The list is diverse and endless. We maintain these social and professional contacts and keep in touch with those we feel share our high standards for client service. You may not call us social butterflies but, in any event, you should call us when looking for a new contact. We may be able to help even if you wouldn't think of us first.

Myth 6: We Look to Run Up The Bill

This just isn't the case. We want to be your business partner and work with our clients cost effectively. By investing time and effort in understanding who you are, and what your business objectives are, we can be more efficient. But the value of such relationships can only be realized if both sides are equally invested. Unfortunately, many companies engage counsel too late causing expense and heartache that could have been avoided. Sometimes management, with the good intention of saving the company money, will attempt to "go it alone" at the early stages of a transaction or negotiation. But these early stages are the foundation - the critical element - of structuring the deal. All too often, this "go it alone" scenario produces unfortunate results. When we are finally engaged after a letter of intent is executed (which is too late), generally the client has lost significant negotiating leverage and we spend our time and the client's money trying to restore that leverage. Although companies don't necessarily need their outside lawyers turning drafts and negotiating in real time early on, companies should at least use their outside counsel as a sounding board for both business and legal issues that arise as a transaction takes shape. Ultimately, being involved from the outset enables us to more efficiently represent our clients as the deal progresses.

Conclusion

Many business people see their outside lawyers as disinterested, self-serving, negative and profit-hungry necessary evils. Nevertheless, as we hope we've successfully demonstrated, the good corporate counselors know the business of their clients, listen to their clients, think creatively, provide tremendous legal and non-legal resources and handle matters efficiently. If your advisor does not meet most or all of these criteria, you may need new counsel.

John C. Cushing and Timothy R.Bowers are corporate attorneys in the Boston office of Kirkpatrick & Lockhart Preston Gates Ellis LLP. Mr. Cushing, a Partner, focuses his practice on corporate and securities law, including mergers and acquisitions involving private and public companies, private placements of debt and equity securities, SEC compliance, corporate governance, entity selection and formation and general corporate matters. The clients he has represented span a variety of industries including manufacturing, high technology, software development and information technology, e-commerce and e-solutions, consumer and professional services and healthcare. Mr. Bowers, an Associate, counsels companies in various stages of development (from entrepreneurial start-ups to Fortune 500 publicly traded companies) in the areas of mergers and acquisitions, venture capital financings, strategic alliances, joint ventures, outsourcing transactions, securities, business formation and general corporate matters. The clients he has represented operate across many industries, including consumer food products, alternative energy, software, manufacturing, medical devices, education and biotechnology, among others.

Please email the authors at john.cushing@klgates.com or timothy.bowers@klgates.com with questions about the article.