Business Owners' / Managers' Playbook

July 2, 2021

Automate Repetitive, Error-Prone Deal Tasks, or Continue to Pay Junior Lawyers Hundreds-Per-Hour to Do Them Manually?

The Point

Factor is a prominent “alternative legal services provider”, or “law company”. That means it offers technology and workflow process professionals to support delivery of legal services; but, unlike a law firm, it has no attorneys who offer legal advice directly to clients. In June Factor announced a “Legal Transaction Optimization” service to automate routine transaction tasks for law firms that do complex corporate deal work:

“By unbundling transactional tasks from legal advice, law firm juniors billing at high rates are replaced with tech-enabled teams specialized in producing better output.”

This Matters

1. Factor’s service costs a lot less than what law firms have been charging for these transactional tasks (50% less in a recent reported deal).

2. Factor’s technology-enabled, automated process is likely to be more accurate than junior lawyers’ manual efforts at due diligence, document assembly, and other repetitive, error-prone tasks (for instance, see here). Continue reading

June 22, 2021

Fixing a Costly Management Fail in Legal: High-Priced In-House Attorneys Squandered on Routine Work

by Joel A. Webber

The Point

“Law department leaders report that one out of every five in-house [lawyer] hours is currently spent on low-complexity, repetitive or routine tasks, with 87% confirming that their department spends too much time on these tasks.” 2021 EY (Ernst & Young) Law Survey.

In Legal, as in any other corporate function, aligning talent with the work to be done is a task for a proven manager. Lawyers in-house and in law firms are not trained in this, and they’re not good at it.

This Matters

The corporate law function’s largest expense category is lawyer pay, so squandering 20% of costly in-house counsel time on “low-complexity, repetitive or routine tasks” is a major, self-inflicted setback to Legal’s mission.

Allocating complex work to expensive talent — and routine work to automated processes or to cheaper talent — is Management 101. It’s second nature to businesspeople. And the other corporate functions like finance, IT, or marketing have successfully done this for years. Not so, Legal. Continue reading

June 7, 2021

I Help CFOs Cut Legal Spending by Removing Fat and Building Muscle

by Joel A. Webber

The Point

Corporate legal costs have risen steadily for the last 40 years (including 2020 — and excluding the Great Recession of 2008 to 2009). Meanwhile, the legal system’s demands on business increase relentlessly.

So, CFOs, or other business executives, need to step in and impose spending discipline on the corporate law function. Because lawyers in-house and in firms have not.

February 11, 2019

Business Owners’ / Managers’ Playbook: No Such Thing as “Harmless” Legal Doc — Call Your Lawyer Before You Sign

by Joel A. Webber

There really is no such thing as a “harmless” legal document.

Yet we all from time to time get requests to execute paperwork that we’re told is “a formality” or “merely technical” or “just something the lawyers want us to sign”.

The urgency of circumstances, or peer pressure, or a misplaced inclination to do-it-yourself lawyering, can weaken our resolve to act wisely.

…

Sarah Bradley, co-founder of a private equity fund called Kainos Capital, LLC, claimed in Delaware Chancery Court two weeks ago that two of her fellow co-founders, aided by the fund’s chief financial officer, cheated her out of her ownership stake and management role in the fund.

Or tried to at least. That’s what her lawsuit contends.

Central to this, she argues, is the fact that they obtained her signature on a “Conversion” document whose terms said that she had thereby consented to converting the fund entity from a limited liability company (LLC) to a limited partnership.

Bradley alleges that her two co-founders got her signature on that Conversion document by having the fund’s chief financial officer tell her — “fraudulently” as she put it — that the document’s sole purpose was to qualify for specified tax benefits for all of the co-founders.

But in fact, her complaint states, execution of the Conversion document was part of a conspiracy to reduce or remove altogether her ownership interest, and to squeeze her out of her management role in the fund that she’d co-founded:

” … The purported Conversion [from LLC to limited partnership] would extinguish her LLC interest, deprive her of her participation in management, and subject her to a [limited partnership] structure that was fundamentally different than the one agreed to by all of the Kainos co-founders when starting the firm.”

And Sarah Bradley alleges that she was paid zero for giving up the rights that her co-founders sought to remove from her.

…

Even a casual reading of the complaint poses the question: Did Sarah Bradley ask a lawyer to advise her about her interests before signing this Conversion document?