Most clients (internal or external) are great to work with and provide invaluable help when negotiating and closing deals. However, there are times when some clients unintentionally create obstacles attorneys must anticipate in order to be an effective partner. Here, we cover ten do's and don'ts to help anticipate and avoid these situations.
1. Do: Manage client expectations.
Clear communication is important to manage client expectations regarding timing, likely outcomes, legal counsel's availability and capacity, the client's responsibilities, and the time commitment they will have to undertake in connection with completing the deal. Attorneys often have varying degrees of authority within their organizations. Accordingly, it is important for the client to understand the extent of your authority to make decisions regarding the legal terms.
2. Don't: Accept unrealistic deadlines.
Internal clients sometimes give unrealistic deadlines (e.g., ask their attorneys to review and negotiate a complex set of agreements shortly before the deadline for execution, and sometimes months after the client knew about the transaction) that do not allow for sufficient time for adequate legal review. These problems can be exacerbated when internal clients do not provide their attorneys with the information or documents the attorneys require in a timely fashion, fail to get all relevant stakeholders involved early in the process (e.g., accounting, finance, legal, management), and move up deadlines as the negotiation process is ongoing. It is important for the attorney to let the client know up-front whether the client's desired deadlines are realistic.
3. Don't: Allow erroneous client perceptions to remain uncorrected.
Complex deals can have many moving parts that are often not immediately apparent to the business team, who may think that most of the work is done after they have completed negotiation of the business terms. As a result, attorneys are sometimes viewed as impediments to, rather than enablers of, business. Internal clients are also sometimes not fully aware of the legal complexity of the deal. Attorneys can mitigate some of these issues by keeping clients apprised of the number of outstanding legal issues to resolve at each stage of the negotiation process.
4. Do: Train clients in advance.
It can be very helpful to train clients in advance on legal issues that arise in agreements. These trainings can be formal and focus on specific issues (e.g., data issues), or more general issues (e.g., how to review and analyze agreements at a high level). Trainings should also deal with the structural and logistical issues associated with agreements and the negotiation process. Finally, informal trainings and discussions should also play an important role, as such interactions can build rapport and provide an opportunity for your client to ask more specific questions.
5. Do: Coordinate and cooperate sufficiently.
Attorneys and their internal clients sometimes fail to coordinate and cooperate as a team. In the absence of a healthy cooperative relationship, clients sometimes provide incorrect or conflicting information to their attorneys and disagree with their attorneys on calls with the other side. Many times these individual clients' motivations differ from those of their attorneys. In some cases, clients may hold calls without their attorneys that their attorneys should be on. Clients may also send emails that inadvertently undermine their company's or their own attorneys' positions, or forward their attorneys' internal emails to the other side. These client behaviors are counterproductive to the negotiation process. The next few points can help avoid these behaviors.
6. Do: Get to know the clients in advance of working with them on any contracts and have them recognize the benefits of legal counsel.
Attorneys should attend certain business team meetings and take advantage of other opportunities to get to know the clients before working with them on a deal. These interactions can not only help clients recognize the benefits of legal counsel, but also convince them that legal personnel are part of their team and necessary to negotiate a contract effectively. An attorney can also provide descriptions of ways that legal counsel will help the clients and the process. For example, counsel should be upfront about some of the ways in which they will provide value to the process and insight for the clients (e.g., how you will handle data issues), and explain how working closely together in a collaborative relationship delivers the best and quickest results (e.g., provide positive examples of how this has worked in the past with other clients). It is also important to help clients understand that, as one in-house counsel perfectly put it, legal seeks to provide "options, not obstacles." The client's perception of legal counsel is critical to the success of the project.
7. Don't: Let obstructive opposing counsel impact your client's perception of the legal team.
Internal clients are often upset when significant progress is not being made and may believe that it is the "lawyers' fault." In these cases, the internal clients may not be focusing on the fact that it is often the opposing attorneys who are the obstacles. Opposing attorneys can add obstacles for numerous reasons, including lack of experience or knowledge, unavailability, personality flaws, and counterproductive negotiation tactics. It is important to discuss such issues with the client. In some circumstances, the internal client can help by addressing these issues directly with the opposing side's business team.
8. Do: Have a procedure in place to define when and how attorneys get involved, and what information they will need up-front.
At the beginning of the negotiation process, it is important for the client to provide the attorney with sufficient background information. This information includes the identities, backgrounds, and roles of the individuals who will be involved in the negotiation; the relevant documents and facts; the key business terms; the history of agreements with the other side; and anything else that is pertinent. The negotiating team can accomplish this in a formal "kick-off" meeting, or in a more informal fashion. Some attorneys require clients to fill out intake forms or some other type of checklist. Regardless of the formality, it is important to have a process in place to ensure that you have all of the information you need before expending significant effort.
9. Don't: Let clients have too much or too little involvement.
Overly-involved internal clients can cause problems by, to name a few examples, pre-negotiating items with the other side that attorneys must ultimately unwind; drafting language and then becoming defensive when that language must be modified; and insisting on taking risks that company management will not accept. This dynamic can put the attorney at odds with their clients. Whenever a situation like this arises, it is important to maintain open lines of communication and help the internal client understand the basis for your concerns.
Although too much involvement can be a problem, too little involvement can be a problem as well. Internal clients sometimes "throw the contract over the wall" and expect the attorney to complete the deal without any further involvement from the business stakeholders. In these cases, internal clients may not provide legal counsel with the necessary background, facts, or documents, or may not be available when necessary or are unhelpful when contacted. In some cases, internal clients have not worked through many of the basic business issues with the other side, or may even change transaction fundamentals entirely, while still expecting the deal to get done immediately. As is the case when there is too much client involvement, maintaining open lines of communication and helping the internal client to understand your concerns can be helpful here.
10. Do: Adopt default parameters for legal terms.
Many legal departments convince their companies to adopt standardized language for certain terms, such as indemnification, warranties, and limitation of liability, and to agree on what typical variances on such terms will and will not - be permitted. Determining these issues in advance can facilitate the efficient negotiation of otherwise time-consuming items.
This checklist was prepared by Arent Fox.
For more information on Arent Fox, go to www.arentfox.com
. If you have any questions about this checklist, please contact: Alan Fishel, Partner, Arent Fox LLP, 202.857.6450, firstname.lastname@example.org
or Nicholas Lawson, Associate, Arent Fox LLP, 202.350.3706, email@example.com