This will be my last post of 2017. The year has certainly flown by! Thank you all once again for continuing to read the blog (going on four years now!), for sharing it with your friends and colleagues, and for your great notes and suggestions. I wanted to end the year with a discussion about an issue I think is of critical importance to any in-house Legal Department: getting rid of the perception of Legal as the place where deals go to die. Almost all in-house lawyers have heard this joke (thanks, mom) and almost all agree that it is generally an unfair label. That said, I have been doing this a long time and I have had many conversations with folks on the business side of the house and sometimes the concerns that they raise about Legal “blocking” deals are valid. Let’s face it, there are times when the Legal Department stumbles on this front. Sometimes we even fall on our faces. I have stumbled, fallen, and crashed to earth too many times to count. And, no matter how hard I try, I will stumble again. But, I always try to learn something from each lesson. Most importantly, I try to remind myself that I and the Legal Department are here to serve the business. As in-house lawyers, we have two goals: value creation (“Yes”) and limiting value destruction (“No”). The hard part is balancing these two goals, especially when it comes to things the business really wants to do or contracts they want to sign. A good friend of mine once told me that the hardest negotiation you will have as an in-house lawyer is usually internal. Over time, however, I have developed some guidelines that help me get to “Yes” far more than I get to “No.” This edition of “Ten Things” will share my list of things you can do to make Legal the Department of Yes.
1. Legal doesn’t run the business. At my first in-house job I was fortunate enough to occasionally attend the weekly meeting of the senior management. I was a back-bencher for sure, but I kept my eyes and ears open and my mouth shut. Two very good skills for any lawyer. I remember one meeting where one of the executives was explaining to the group why the company was not going to take some action. He went on and on about how Legal said we couldn’t do this and Legal said we couldn’t do that, and this is why the plan died. The CEO, who was starting to fume, looked at the executive and very loudly said “Legal doesn’t run the f*&^ing business. We do.” I have never, ever forgotten that moment. It is a very important thing for all in-house lawyers to keep in mind. Our role is to advise the business on risk and legal issues. The business ultimately decides what it wants to do with that advice. It might follow it, it might ignore it, it might do something in the middle. But, unless there is a crime being committed and people can go to jail, your job as an in-house lawyer is to make your points, but then ultimately accept the decision and do everything you can to make it so. It’s not personal. It’s not that anyone thinks you’re an idiot. It’s not an affront to your legal prowess. It’s just a business decision. Just because you’re a lawyer, doesn’t mean you’re the boss. Be an advisor and a counselor. Let the business people run the business.
2. Pick up the phone. I know I harp on this one all the time. So much that AT&T should probably give me a free phone or something. Email is a helpful tool but it sucks in terms of solving complex problems or tricky situations. If you have any type of deal or request that is not straightforward and simple, do not rely on email to get everyone on the same page. Moreover, since email cannot convey tone or nuance, you can quickly find yourself in an email war with the business. That will serve no one’s interest, especially that of the Legal Department. Trust me, the only loser in an intra-company email firefight is the Legal Department. We are a support group and (sadly seen as) a cost center, not the “deciders.” Stop the insanity. Pick up the phone and talk to your business colleagues. Take the time to truly listen to what they are trying to accomplish and what they need, and then take your time to calmly explain the legal side of the equation and what you need to best protect the company. The odds of Legal and the business aligning on the path forward are so much higher if you ditch email and pick up the phone.
3. Don’t sweat the small stuff. You know the adage “Life is short.” Well, it is. Just like your workday. So don’t waste your time fighting every battle or battles that are not yours. For example, you need to be able to look at a draft contract (or redlines to a contract) and figure out if the business can live with the wording proposed by the other side. If so, don’t wordsmith it. Don’t argue about it. Just accept it and move on. Generally, “good enough” is good enough. Additionally, always be realistic about risk. There are risks to just about everything you do on the contract side. But if a risk has a .1% chance of happening, think very hard before falling on your sword over it. Likewise, if the penalty for failure to do something is low (say $100), and the effort to comply is large, think about whether it is worth fighting over whether or not the company must take the action. A huge dose of “practical-ness” will go far with the business (and save you wear and tear as well). Your credibility with the business is always worth protecting and burnishing.
4. Learn the business. Your ability to be effective in drafting, analyzing and getting deals done goes up exponentially with your knowledge of the business. All successful in-house lawyers are curious by nature. Turn that curiosity toward learning everything you can about all of the different parts of the business. Ask the Marketing Department for materials explaining your products, go to your company’s website and read materials there (and watch any videos), ask for demos of products, read any available public filings about your business, read analyst reports if available, talk to different people in the business and get their take on the company’s business, and most importantly, understand how the company makes money. No matter how you go about it, everything you learn will make you more effective and your ability to demonstrate mastery of the company’s business gives your colleagues confidence in your abilities and in your advice. All of which makes getting to “yes” that much easier.
5. Tone is everything. It’s not what you say, it’s how you say it. The right tone can go a long way in your working relationship with the business. Yes, there will always be a group of total knuckleheads in the business who can barely tie their shoes, let alone negotiate a contract, but your pointing that out to them gets you nowhere. Likewise, lecturing or coming across as the cranky old man telling people to get off your lawn is another way to go backward fast. I know how hard it is, but the first rule has to be service with a smile. There is a great line in the movie “Roadhouse” where Patrick Swayze tells his team the secret to being a good bouncer — be nice. For once, in-house life is just like a movie! A positive attitude, a willingness to help the business understand the issues (even the non-legal issues) will all reflect favorably on you and the Legal Department. The Department of Yes stands ready to help, always keeps its cool, even brings a laugh or two to the table.
6. Refresh your contracts (and relationships) with the business regularly. Contracts are the grease on the skids of business. And in-house lawyers are the chief skid greasers. Stated bluntly, the highest and best value of an in-house legal department is ensuring contracts get done. If it’s been a few years since your Department has refreshed its contracts, now is the time to plan for that process (and then calendar for regular reviews and refreshes of your contracts going forward). The easiest way to get to “yes” with contracts is to start out with a fair and balanced agreement. If your contract is one-sided, with ridiculous asks around direct and indirect damages, limits of liability, payment terms, indemnity, etc., you will find yourself in long and painful negotiations with customers. And there is nothing the business hates more than long and painful negotiations. Look at what your competitors are doing with their contracts, talk to your business partners about what provisions cause them the most friction with customers, try to remove superfluous and redundant language, make your contracts shorter and easier to read and understand. All of these are things you can do to help get to “yes” faster. Likewise, be sure you keep and maintain solid relationships with the various business units and business leaders you support. Talk regularly with your business clients and ask to attend meetings (e.g., sales kick-offs, staff meetings, etc.). Being there in real time is the best way to learn what your unit needs and also raise your profile within the unit so that they know their lawyers are on the team. Just being there and being a good listener goes a long way in developing a better working relationship with your colleagues.
7. Be flexible and creative. You didn’t go to law school to be an office drone, cranking out boring template contracts five days a week, eight hours a day. I’m betting you went to law school because you like to solve problems. The hairier the problem the better. If so, then never run from a challenging deal or problem. It’s rare that the answer to a challenging problem is “No, we can’t do that.” If that is the limit of your imagination, then you’re in the wrong job. Instead, the answer is more likely, “No, we can’t do it that way. But, here is an idea that might get both sides what they need.” The key word here is “need.” You can’t always get what you want. But it’s usually possible to get what you need (Sorry, Mick Jagger). There are many paths that can take you to the place you need to be. Always lead with creativity and flexibility. I enjoy getting in a room with the business team and/or other lawyers and just brainstorming on how we can solve a particularly tricky contractual problem. While it’s not always possible, more often than not you can come up with something that works. And if you find a solution while working directly with the business, you not only get their buy in to the idea (which makes them more motivated negotiators), you get their admiration and their belief that they have a lawyer who isn’t locked into “no,” but is locked into “how.” The latter is where you want to be.
8. Know who to loop in. Another key necessity to getting deals done is ensuring that all of the right people in the business are in the loop and have signed-off on the contract. Sometimes the business folks think that if that working with Legal is the only step. It’s not, of course. Most deals require input from Finance, Tax, CTO, Information Security, Customer Support, Delivery, etc. No surprise here but the business will typically say “yes” to just about any customer ask. Want us to change our SLAs? Sure! Want instantaneous notice about a suspected data breach? You got it! Want to sign a deal now that says we’ll figure out the real terms down the road? Yes, sir! Your main office is in Cuba? No problem! We’ve all seen it. That’s why it’s a great idea to create your own checklist about who at your company needs to be looped into the contract review and approval process. Make sure your business counterpart knows that there are usually a good number of other people who need to be involved in the contract process and must agree to any non-standard provisions. That way there are no surprises. While technically it should be the responsibility of the business person to track down and obtain all the necessary approvals, we all know that’s not how it always happens. So, be ready and willing to “help” here. Knowing how to shepherd a deal through the review process is an excellent skill for an in-house lawyer.
9. Educate the business. To paraphrase: if you give a man a contract, he can get that deal done. If you teach a man how contracts work, you can save yourself a lot of time! Seriously, one of the best things you can do as an in-house lawyer is teaching your business colleagues how contracts work, what the different provisions are designed to do, and where the company has flexibility from its standard clauses. Start with creating as many form agreements as possible. To the extent the business can use templates that do not require additional input from Legal you are well on your way to “Yes.” Likewise, an easy to use playbook that informs the business users how the form agreements work, what the different provisions do and why they are needed, and acceptable “fallback” positions, i.e., changes that are acceptable without additional legal input is invaluable. If the business team understands the “why” and you give them talking points to use with potential customers, they typically become advocates for the company’s standard forms and positions. Otherwise, what you typically get is a salesperson who advocates solely for what their customer wants, giving you two parties to negotiate against! Ideally, teaching can be in a group setting so you get maximum bang for your time. Sales orientation sessions for new hires is a great place to start. Look for opportunities to present at staff meetings or large gatherings of the sales team. Of course, one-on-one works well too, it just takes a lot of time. If one-on-one is your only option, focus on the managers as they can pass the knowledge down to their teams. Another thing to put in place is a deal review process where, on a weekly basis, a cross-functional gathering reviews and approves (or rejects) on contracts that deviate from certain standards. Such a process a) puts pressure on the sales team to try to get the deal done within the company’s standard forms, and b) takes pressure off of Legal as the “deal killer” because multiple business units and support groups are present to approve or reject the proposed contract.
10. Be available. I saved the most important one for last. The Department of Yes is open 24/7/365. Does this mean you need to work 24/7/365? No, it does not. But, the legal team needs to be available 24/7/365. This means that regardless of whether you and your team are out for the holidays, on vacation, or busy on other matters, whenever the business contacts you, there needs to be a response from the Legal Department. Silence is not acceptable and nothing pisses off the business like not hearing back from Legal. For example, the upcoming Christmas season is not a holiday in many parts of the world. How does your Legal Department plan on dealing with matters involving customers for whom Christmas is just another work day? You need to have a plan in place to deal with issues like this. Most likely this means just working out expectations in advance with your business clients. It’s far easier to let them know your availability then it is to have them frantically trying to track you down or stew in anger while they wonder why they are not hearing back from you. Likewise, whenever anyone is out on vacation, etc. they need to set an out of the office message on their email and be sure to include an emergency contact number. Odds are very low that you’ll be disturbed but if needed, it’s there. As General Counsel, you have the ultimate liability to ensure that if the need arises, someone is covering legal issues, especially contractual issues – even if that is you. Usually, matters can wait until someone is available, but sometimes they cannot. These “can’t wait” matters are usually high profile CEO-level deals. And sometimes, the reality of in-house life is you have some late nights and some weekends. There is nothing unusual about this. If you have an in-house counsel job that ends at 5:00 p.m. and never intrudes on weekends, holidays, or vacations, congratulations — you are one of five! For the rest of us, it’s just part of the deal. This doesn’t mean you have to work all the time, but you do need to be “available” when the real need arises.
I know it’s a tough balance between protecting the company and serving the demands of the business to get deals done. Everything starts with ensuring the business knows (or reminding them) that the Legal Department wants to get deals done – just as much as the business and that the in-house team is doing everything it can get to “yes.” But, if the company just wants to accept any and all terms tossed over the transom by the customer then they don’t need a Legal Department, they need a pen. Regardless of how many of the things above you and your team do, there will always be those who are not satisfied and will talk about Legal in terms of blocking deals. That’s normal. Focus on the things you can control, keep pressing on with your plans to help the business get deals done, and keep the lines of communications open at all times. The Department of Yes keeps pushing forward no matter what.
Wishing everyone all the best for the holiday season and for a safe and prosperous 2018. Lots of great stuff coming down the road. See you next year!
December 22, 2017
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Sterling, very well written. I cannot agree more. Looking forward to your 2018 blogs. Wishing you Merry Christmas and Happy New Year.
Thank you and Merry Christmas!
Hi Sterling! I agree on 99% of your post. But wonder how #1 and #7 work together … I believe Legal’s job is to look for the “how” (if possible) of any given or possible business decision; to legally “support” or “straighten” business decisions. Don´t you agree?
Hi Rafael – thank you for reading and for taking the time to send a comment. I think 1 and 7 can live together. No. 1 is just the reminder that ultimately, the business decides what it wants to do with your advice. Legal doesn’t have a “veto” over business decisions (unless it’s a crime). No. 7 notes that too many in-house lawyers stop at “no” – taking the easy way out of solving problems. I am advocating that in-house lawyers make their first thought “How” can we do that. It’s really just an attitude. But, as you note, helping the business get to yes through your legal skills is the same as “straightening out” decisions. I hope that makes sense. Best regards – Sterling
Hi Sterling, wanted to thank you for another fantastic article. Really brilliant advice.
Thank you, Michael! I appreciate you reading the blog and for taking the time to post a comment. Rgds
Thanks for reading, sharing, and commenting!
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Thank you! Appreciate the kind words and feel free to pass along the blog to your readers or anyone you think might be interested. Regards