A little distance is healthy. The client is not always right.

The problem with lawyers, say some, is that they are too different. They are ‘clever’, use Latin terms and long words, wear dark suits and ties, and are aloof. They draft long, obscure documents, they take too long to complete work, they won’t give a simple yes/no answer to questions, and they get in the way of my deal. They aren’t team players. They are stand-offish, and their values are different from the rest of us. They cost too much and they earn too much. If only they would stop being like traditional lawyers, we would all get along much better.

How much of this description do you recognise in your lawyer, or in yourself? If you substituted ‘oncology consultant’ for ‘lawyer’ in the previous paragraph, would you still recognise some of these faults, and would they be any more acceptable? Would you rather be treated by an incompetent consultant with a great bedside manner, or a highly competent one with only passable social skills? And if you are the patient, do you have any obligations to meet the consultant half-way, to stop smoking or turn up on time for appointments?

Perhaps the analogy is pretentious? We accept things when they are a matter of life and death that we don’t accept in a business relationship? I am the customer, therefore I am right, what I say counts, and I shouldn’t need to meet my lawyer half-way?

In IP Draughts’ view some of the ‘features’ mentioned in the first paragraph are lawyerly faults and the lawyers among us should recognise them and try to do better. But some of the other qualities are either neutral (and irrelevant) or commendable. The client is not always right, and there are situations where the lawyer should maintain a healthy distance from the immediate desires and preferences of one’s paymaster. This is as true for in-house lawyers as it is for external counsel.

Sometimes, the right course of action is obvious – as when criminal offences are being committed or contemplated – the lawyer should at the very least advise against such conduct, and may have a legal duty to report the activity that overrides any duty to the client.

In other situations, there may be shades of grey, and judgment may be required as to whether to treat the proposed action as within a client’s prerogative or something to stand firm against; whether to gently nudge the client but accept his ultimate decision, or be very blunt and direct. Judgment comes from experience, and advice may need to be sought from a more experienced lawyer or from one’s professional body. In some cases, the client may be hopeless at recognising the dangers or at taking the point seriously. Lawyers are, or should be, good at standing back from a situation and looking at it objectively; this can be a great benefit to a client who is ‘too close’ to the issue.

Not a great outcome when Sir Thomas More fell out with his client, Henry VIII

Part of the lawyer’s skill-set is to provide a good service and work closely with one’s client, while retaining objectivity and a professional set of values. Sometimes, it is impossible to reconcile these objectives and the lawyer either gets fired or suffers professionally. Sometimes, the fall-out is greater. Though the circumstances were all very different, IP Draughts is reminded of what happened to Sir Thomas More, the Enron lawyers, and the most recent, acting Attorney General in the USA. The recent dismissal of the Director of the FBI is in a different category, as the President of the United States was not his client, though by some accounts the President thought he was.

So, IP Draughts would put the ‘faults’ described in the first paragraph into different categories:

  1. Must try harder. As a lawyer one should try to be responsive, listen hard to what the client is asking for and provide it, communicate well, provide as simple an answer as is possible in the circumstances, and generally try to be user-friendly and provide an excellent service.
  2. Up to a point, Lord Copper. There may be situations where a lawyer could try harder to fit in with the prevailing values of the client, eg by ditching the suit and tie, or by providing a short memo of advice, subject to caveats, rather than write a long essay. But the lawyer should ensure that this fitting-in doesn’t result in becoming a yes-man on points that matter, as described in the next paragraph. He should also keep in mind whether the person instructing him is reflecting the overall wishes of the organisation that he represents. For example, is that person keen to see the deal go through, no matter what the long term risks to the organisation?
  3. You say tomato… Increasingly, lawyers are under legal duties to act in ways that their clients may not like, such as reporting suspicions of money-laundering (in the EU) or corporate fraud (in the USA, eg under the Sarbanes-Oxley legislation). These duties are in addition to longstanding legal and professional duties to the court, to uphold the rule of law, to act ethically in one’s personal dealings, and so on. Even if there is no legal or professional duty, a lawyer may serve his client’s best interests by maintaining a degree of objectivity. For example, when advising on the strength of a case, it is very easy to be swept along by the emotions of one’s colleagues; it is important to keep a clear head and be prepared to articulate an unpopular message. In other words, it is not only acceptable, it is sometimes necessary for a lawyer to take a different line to one’s client, and the mindset that goes with these duties is likely to involve a certain degree of distance from purely commercial priorities, though the degree of distance will depend partly on the client. It should be possible to do this with a light touch, though.

In summary, provide a good responsive, user-friendly service. Try not to be too lawyerly. But keep enough distance to be objective and fulfil your legal and professional obligations.

 

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When is a technology start-up like a law firm?

What does a technology-based start-up company have in common with a young, commercial law firm?

Clearly, it depends on the company and the firm. IP Draughts has seen dozens of start-up companies at close quarters, some of them at very close quarters as a virtual, in-house lawyer. He has observed them grow in various ways – through self-financing, through external investment, through listing on Stock Exchanges in the UK and overseas, and through acquisition by larger companies. He has seen some of them fail, when their business model is flawed, when their products in development don’t make it to market, or when they run out of money.

He only has experience of running one young, commercial law firm. Anderson Law LLP has grown steadily from one lawyer to 11 over 23 years. Six of them trained with the firm.

The business model of a start-up company is typically more ambitious than that of a law firm. Many companies want to scale-up to the point where the shareholders make a large return on their investment. Many law firms, by contrast, are closer to the ‘life-style companies’ so despised by the investors in Dragon’s Den – typically, a lawyer sells his time, and the opportunities to scale that up are limited. The lawyer may eventually manage a team of lawyers and generate profit from their time, but there are natural limits to the scale of this activity. Attempts to monetise law firms through outside investment have, so far, largely failed.

Despite these differences, there are some lessons that are common to both types of enterprise.

  1. Provide a good product or service that people want. Without this element, the business will automatically fail. Many start-ups fail because they don’t understand the market or their place in it. Some founders are brilliant in their own way, but lack commercial astuteness. Our law firm is never going to be instructed on the merger of GSK with AstraZeneca, but we have our own set of skills and scale, and we try to match them with client needs.
  2. Develop the market. For a company selling widgets, this may mean finding new customers or developing new products, or both. For a law firm like ours, we hope to have a long-term relationship with clients and get repeat instructions. But inevitably some clients disappear or move on to other firms, and we are also ambitious to grow; the more lawyers we employ, the more work we need for them. Therefore, we need to have a pipeline of new clients over time. In our case, these mostly come from referrals and long-term reputation, rather than advertising or promotion.
  3. Hire good people. Preferably, hire people better than yourself. Finding good people who are self-motivated, and a cultural ‘fit’ with the organisation, is an essential part of growing a business. What can you offer them, to make them want to join a technology start-up or small law firm? In our case, we can offer high-quality work, working with high-quality colleagues, without the pressures of a City law firm.
  4. Create an environment where people want to work. Once you have hired good people, you need to keep them. Have you created a collegiate working environment, where people feel that they are valued, and where they are able to develop their careers and do good work? Regrettably, IP Draughts has seen some organisations where employees are treated as commodities, or where the employee is under pressure to justify their existence, and this is not the type of environment in which he wants to work or employ others to work.
  5. Be clear on your objectives and values, communicate them well. These are two separate points, but both need to be communicated to staff and to the outside world. The organisation needs both a set of values, and a direction of travel for its business. The organisation’s leaders need to establish these and keep communicating them through words and deeds. Some technology start-ups are actually very good at this, particulary when led by a charismatic founder. In our law firm, the values include a strong ethical base, a commitment to technical excellence, and a pragmatic and creative approach. The direction of travel includes developing long-term relationships with clients, maintaining high levels of service, and steadily building the size and reputation of the firm. There are both modern and traditional elements to this mix; some start-up law firms seem so keen to emphasise their difference from what they perceive as ‘stuffy’ traditional law firms that they are in danger of throwing the baby out with the bathwater. Some elements of UK law firms are best-in-class, though it is fashionable to denigrate them.
  6. Plan for growth. The company or firm needs to think about the long-term and not just the day-to-day business of making sales. How are the leaders going to grow the organisation, what people and resources does the organisation need, and how is it going to position its public communications to reflect the longer-term aspirations? Technology start-ups tend to be better than the average SME at doing these things. In our case, moving to Oxfordshire and building new offices, 15 years ago, provided us with the space to grow. Taking on trainees periodically has helped us to develop our complement of staff; there is no immediate financial return from such hirings, but they are an investment for several years ahead.
  7. Succession planning: avoid ‘founder’s syndrome’. Linked to the previous point, the structure of the organisation needs to keep adapting as the organisation grows. There is a phenomenom known as founder’s syndrome, which refers to the problems that can arise where the founder of an organisation becomes a liability as the organisation grows. Some technology start-ups initially need the energy and drive of their technical founder, but later need a professional manager and a more ‘organised’ way of working.  A related issue for law firms is what happens when their founder retires – do his clients stay with the firm, and does the firm have the right management structure to continue without him? In IP Draughts’ case, though he is not planning to retire for many years yet, he has tried to ensure that all clients are used to working with younger members of the firm, and that the partnership includes people with different skills (including management skills), but with all of them being engaging, pragmatic, ethical, technically-excellent lawyers who contribute to the future direction of the firm.

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Backdating contracts can be a crime

This very old golden oldie came into IP Draughts’ mind today as a result of a news report in today’s Law Society Gazette that a solicitor had been struck off for backdating a document. So there is another reason for not misdating contracts!

IP Draughts

A BBC report on the Dominique Strauss-Kahn story today states:

Mr Strauss-Kahn’s apparent decision to fight the case echoes an earlier episode where he chose to tackle a legal problem head-on.  In 1999, he resigned as France’s minister of economy and finance, to focus on his defence against an accusation that he backdated documents to justify his consultancy fees for work on a student health insurance fund.  He was acquitted in 2001.

Further information on this story appears in a Los Angeles Times news report here.

IP Draughts is unfamiliar with the French law on backdating documents, but can provide some insight into English law in this area.  Section 1 of the Forgery and Counterfeiting Act 1981 provides:

A person is guilty of forgery if he makes a false instrument, with the intention that he or another shall use it to induce somebody to accept it as genuine, and…

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Incorporation by Royal Charter: more classy than a conventional company

This week’s golden oldie is about bodies incorporated by Royal Charter. A practical tip for these, is that when they execute deeds, they need to apply their seal, unlike Companies Act companies and individuals. This is sometimes overlooked in the draft deeds of assignment that IP Draughts receives from City law firms.

IP Draughts

IP Draughts’ attention has recently been brought to a fascinating document: a complete list of the bodies incorporated by Royal Charter in the United Kingdom, as set out on the Privy Council website.  Thanks to Sean Cummings of Keltie and Tom Sharman of Reddie and Grose for pointing out this list.

To his shame, IP Draughts was surprised to discover that the Privy Council has a website, and even more surprised to find that it provides commercially-useful information in a convenient, spreadsheet format.  In IP Draughts’ mind, the Privy Council is associated with the court of Henry VIII or Elizabeth I.  It jars to think of such an august and ceremonial body making use of modern technology

The information is not as arcane as it may seem. Most, if not all, of our UK university clients are incorporated by Royal Charter.  When entering into a contract, it is important…

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