My client was an Amsterdam-based investor who wanted to build an aviation services business in the United States.
As a corporate and commercial lawyer whose practice largely emphasized the transportation sector, I needed to get this client the best advice possible on positioning its new business from a U.S. federal income tax perspective.
This meant choosing between tax attorneys who practiced in a law firm versus tax accountants who practiced in an accounting firm.
Minimizing tax and keeping the IRS off their back was not just a “legal” problem. It was more like a business problem that had a legal aspect.
For their business savvy, tax law expertise, familiarity with how the IRS treats such foreign investors — and a cost advantage — I recommended a regional accounting firm instead of tax attorneys in a law practice.
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A truck carrier client in the Midwest decided to begin shipping freight commodities covered by the federal Hazardous Materials Regulations.
(In case you’re wondering: Yes. I strongly urged them — unsuccessfully — to avoid this market. Given the regulatory and liability risks relative to other opportunities, I advised that this course was a bad bet.)
How best to position my client to escape the catastrophic litigation and regulatory blowback to which this new operating environment would expose them? How best to avoid being dragged into court or being attacked by regulatory agencies?
This would depend primarily on the drivers, warehousemen, and loading dock personnel who would actually handle the hazardous materials. Together with lower level employees in modest offices who would keep the all-important records and respond firsthand to recurring U.S. DOT audits.
Of course, lawyers would have to be a part of the answer — but not nearly as important as the performance of these rank-and-file employees.
Again, my client’s entry into the dangerous context of the Hazardous Materials Regulations was not simply a “legal” problem. It was more like a business problem that had a legal aspect.
For that, my client required help from people who were experts — not just in Hazardous Materials Regulations technicalities — but in the truck carrier operations to which those technicalities would apply.
So I recommended — not a law firm — but a transportation consulting firm: J.J. Keller & Associates, Inc. — which had done this sort of work since 1953.
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Clients need legal services but not necessarily lawyers.
Here’s how Jeffrey Carr, Senior Vice President and General Counsel of Univar, a Fortune 500 global distributor of industrial and specialty chemicals, put it this morning:
“Legal services & providers of those services are ever more important—lawyers, however, are not.
“Relevance requires transition from lawyers as inefficient operators of legal processes to owner/designers of systems operated by others.
“It’s not — just the business model — it’s the role.”
Put another way: The best person for some legal services task is not necessarily a lawyer.
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Carr was responding — in part — to Mark Cohen’s piece in Forbes last week entitled:
“Clients Need Legal Services But Not Necessarily Lawyers”.
Both Jeffrey Carr and Mark Cohen are accomplished business lawyers. But each has — also — been general manager of a company (other than a law firm).
Each has proven himself at the highest and most prestigious levels of law practice. But just as important — perhaps more important — each has mastered the practicalities of running a (non-law firm) business according to the P&L.
Mark Cohen in Forbes:
“Corporate legal buyers are increasingly asking, ‘Who is doing what and who should be doing it?’ They are—or should be– questioning whether, when, from what delivery model, with what other resources—human or machine—and at what cost lawyers are needed. Disaggregation of ‘legal’ tasks has morphed … to a seismic shift in how lawyers function and what skills, value, and cost legal buyers expect them to provide. This has produced migration of work from law firms to ‘alternative legal service providers’ (ALSP’s), in-house legal departments, and other law-firm alternatives.”
In Part 2 I dig into Mark Cohen’s take on the process management and technological benefits of “disaggregating” what law firms and in-house counsel traditionally have viewed as “legal” tasks.
Because: Clients need legal services but not necessarily lawyers.