When managing a complex commercial transaction, in-house counsel are invariably faced with many competing demands for their time. The session debated how corporate counsel can take practical steps to ensure that transactions are managed as smoothly as possible; and the important issue of stakeholder management.
Project planning techniques
Although in-house counsel may regard complex transactions as “one-off” events, large companies may be involved in several major projects per year. To deliver these projects, many companies make use of established project management techniques, or employ dedicated project managers. Either of these resources could potentially assist the in-house lawyer.
Typically, major projects will be broken down into smaller, more manageable “mini-projects”, with personnel assigned to deliver them. Timetables will be drawn up to deliver specific elements, and the “dependencies” between these will be identified and mapped. Though it may come as a culture shock to some in-house counsel, they will be expected to fit their work into this structured framework for delivery.
In fact, counsel who have gone down this route say such techniques can be highly effective. Not only do these procedures allow them to manage the large number of people typically involved, they assist in reporting progress to senior management. And, by identifying “dependencies” between tasks, counsel can demonstrate to colleagues why it is important to contribute to the transaction’s overall objectives. “Since we began using these techniques, we’ve made more progress in the past six months than we had in the previous 12”, recalled one senior adviser. “When I first started, I couldn’t understand how the legal function fitted into the project plan”, confirmed another. “Now, I’m a convert.”
While complex projects can often be run from commonly available software, effective project management also requires dedicated personnel to act as “enforcers”, to ensure all stakeholders perform the tasks assigned to them. This can be a full time role in itself on large transactions.
Managing internal stakeholders
In any large transaction, in-house counsel will require input from a large range of internal stakeholders. Devising a detailed project plan will help them to manage this process, by forcing them to assign delivery of each task to a dedicated person or business unit.
The importance of identifying all relevant stakeholders was highlighted in a case history one participant provided. A proposed internal restructuring required the company to write to a large number of minor stakeholders in advance of the transaction. Because of an internal failure to keep comprehensive records, a significant number of stakeholders were not identified until hours before the crucial mailing was due. As a result, there was real risk that the proposed restructuring would not have been lawful.
“Although the legal team was able to get advice from counsel that it was OK to proceed with the mailing, this incident taught us an internal lesson in stakeholder management”, the adviser recalled. “At the outset, not enough people within the company had been made aware of what we were doing, and how important it was to identify correctly all the relevant stakeholders.”
Managing external advisers
In-house lawyers should recognise that specialist outside counsel are often more difficult to constrain within the project management process. As one participant said: “If your chosen expert is busy on another matter, they won’t always jump because you ask them to jump.” Factoring in a generous contingency timeframe where such counsel are involved will help manage expectations of senior managers, who are used to expecting immediate results from their employees.
On a major project it is essential that in-house counsel properly brief their external advisers of what is expected of them. In some instances it may be specific expertise not available in-house; in others, simply extra capacity, with no specialist insight required. However, one unifying factor for participants was that law firms should, as far as possible, be upfront and transparent about fees. One counsel voiced the views of many: “When I’m working on a project, I know how many versions of documents I will expect to produce, and how many one-day meetings I will expect to have. If a firm provides me with a woefully low quote for work, that’s no use to me.”
If foreign legal advisers are involved, in-house lawyers should not assume that they will be aware of critical legal concepts from a different state. One delegate recommended meeting them in person in order to judge their understanding. Language and cultural differences can also complicate matters. “I once tried negotiating with a Spanish party via simultaneous translation – never again!” said another. Nor were participants interested in advice that was unnecessarily academic.
Several speakers suggested that in-house lawyers should not be afraid to terminate relationships with external advisers who they felt were not performing adequately. “I decided I had to fire my original lawyer and engage another one”, said one. “In the end the transition was all pretty seamless – the new lawyer was up to speed in 3-4 days.”
Not surprisingly, several counsel at the meeting advocated the adoption of standard documents as a useful way of improving the efficiency of deal-making, not only in the consumer sector.
One counsel working in the “business to business” sector recalled how their employer was investigating standard terms and conditions as a practical response to the sheer number of parties he was now expected to work with. “At present, I’m dealing with more than 130 different organisations, which causes problems in terms of getting anything done. Although standard documents may slightly weaken our bargaining position in some instances, overall they should allow my company to achieve its end goals.”
On a slightly different tangent, establishing a risk profile of well-known contract terms can assist in-house counsel when their employers are bidding for major tenders. “In our business, you have to work within the standard terms that the tendering organisation provides you with,” said another participant. “However, it does mean that you can say to the organisation: ‘You can have that particular term, but it will cost you £X million’.”
Dealing with regulators
Many complex transactions require in-house counsel to seek approval from government regulators. Maintaining a positive relationship with regulators should therefore be a routine part of the in-house counsel’s role. This is particularly important where a deal requires the regulator to implement new and untested legislation, or deal with a matter that is politically sensitive. Several speakers around the table could recall deals that had been threatened because regulators had either demanded unduly onerous conditions, or changed the regulatory environment in which the deal would operate.
While there is clearly little that an in-house lawyer can do to overcome an overtly hostile regulator, several participants suggested practical measures to minimise regulatory risk. Most obviously, proactively “scan the horizon” for legislation that may impact on your employers’ business activities. This can often be achieved simply by requesting to be added to the mailing list for government consultations. “The trick is to know when in the legislative process you should alert management to possible regulatory changes,” said one counsel. “There’s not always any certainty that new proposals will actually affect your business.” Counsel should not be afraid of co-ordinating lobbying activities with their business counterparts – so long as they do not lapse into cartel-like behaviour.
However, in some transactions, in-house counsel should consider making a positive decision not to engage with government agencies or other external organisations, such as the media. For example, government agencies may ask companies to supply them with information about particular transactions that would effectively require the company to prejudge the outcome of ongoing negotiations, or reveal confidential or market-sensitive information. “We were asked to appear before a parliamentary committee, but in the end we wrote to them and said ‘Sorry, we won’t be coming’,” recalled another in-house. “In a high profile deal, it is too easy for you to become distracted. You need to focus on getting the deal done.”
- Make use of your company’s internal project management resources to aid you with complex transactions. With a little flexibility, the legal function can be made to work within a formal project management plan.
- Ensure you have identified all the key internal stakeholders that will be crucial to the transaction’s success. Ensure all stakeholders appreciate their importance to the transaction, and provide accurate and timely information.
- Ensure your external legal advisers are aware of their precise role in the transaction. It is acceptable to make allowances for exceptional specialists in high demand, but do not hesitate to dismiss advisers who do not add value to the deal.
- Standardising legal documents can make transactions run more smoothly, but may require a significant effort to implement. Consider whether implementing standard documents would be cost-effective in your business.
- Regulators can make or break a transaction, but they may also interfere in matters in which they have no legitimate role. Decide which regulators are crucial to a transaction, and which ones can be safely ignored.
- Consider playing a role in shaping new legislation by responding to government consultations, and working with your peers to devise common policy positions.
In this issue
- Sincere thanks are due
- From the grass roots
- Training solicitors and teaching law
- Survival of the fittest?
- A new print job
- Plenty more besides
- That's settled, then
- East meets west
- A shot in the arm
- Tapping into CPD Online
- Master trainee
- Glitch hunt, not witch hunt
- A caveat on witnesses
- Victories for tenants?
- On your marks...
- Big bill for business
- Ripple effect
- How fair is fair?
- Scottish Solicitors' Discipline Tribunal
- Website reviews
- Book reviews
- Spinning plates
- Sending the right signals