Teamwork and Communication Versus Too Many Cooks in the Kitchen – Part 1 of 2

Team approaches in contract negotiations can be very effective. In fact, for some contracts, a team approach is essential – particularly when the contract will impact various divisions or facets of a company’s overall existing and future operations.

Consider hypothetical ABC Manufacturing Company (ABC) that has multiple divisions (including Aeronautics and Renewable Energy) operating independently, but within the same general industry groups. Further assume that ABC’s Aeronautics Division wants to license certain technology to Third Party Company (3P), but only for use in wind turbines – not in aeronautics or aerospace – because ABC has plans for use of the technology in those fields, but not in turbines. In this circumstance, it’s likely critical that ABC involve numerous parties in the contract process (although not necessarily in the actual discussions with 3P – see Part 2 on this topic). Who might those parties include, and why?

• Obviously, the heads of the Aeronautics and Renewable Energy Divisions – so that the precise scope and nature of the license can be considered, along with its impact on those divisions (now and in the future). Also likely those who are not division heads, but who may have a deeper understanding of certain products, projects and relationships.
• Research and Development – so that those negotiating the contract terms know what the current state of the technology is, where it may be headed, what rights are licensable, and what rights should be excluded/retained.
• IP – so that there is a clear understanding of what protections exist currently, who will be responsible for maintaining those protections, who has rights to derivative technology, etc.
• Strategic Planning – so that something that seems unimportant now doesn’t “unexpectedly” become important in the future – especially if there are parties within ABC who already knew it’s important.
• Legal – so that rights granted in this contract don’t conflict with rights previously granted to other parties, and the current contract ultimately says what the business people intend.
• Others – there may be any number of others that should be consulted or at least kept informed as to the discussions with 3P – accounting (budgeting and cost), marketing (brand and image), etc.

The point is, many contracts have far reaching and (sometimes) difficult to foresee implications for a company. Involve as many people and divisions as necessary to make sure you are aware of and consider all of these implications.

In Part 2, I’ll discuss the importance of speaking with one voice, notwithstanding the involvement of multiple parties.

Finance, Strategic Planning and the Practice of Law

As I spent most of my day today developing our law firm’s budget for the upcoming year – something I’ve now done 13 times – I thought, every business lawyer should go through this process at least once. And as we budgeted for items reflected in our firm’s strategic plan, I thought – every business lawyer should go through that process too. Finally, as we discussed overall firm management issues, I thought – every business lawyer should have the opportunity (and the responsibility) to be involved in and accountable for the management of a business.

Perhaps you’re thinking that I mean preparing a budget, participating in strategic planning and being involved in management would be beneficial to lawyers in better understanding their own firms – and of course they would – but actually, the reason I think all business lawyers should participate in these processes is to better understand their clients and their clients’ businesses.

All of our corporate clients must think strategically, operate on a budget, and confront management issues on a daily basis. Furthermore, those that have the deepest and most valuable relationships with their business lawyers directly involve those lawyers in these matters – treating them not as mere legal consultants, but as trusted business advisors and confidantes. How can a lawyer fulfill that role and justify that trust if he or she has never actually dealt with these issues in a real life situation? – where they not only have to makes these decisions, but also communicate them to their colleagues, persuade others to buy into them, execute them, and ultimately be accountable for the results – including business, financial and human consequences. That’s the experience I want my lawyer to have. That’s the experience I’m glad I have when advising clients.