Over negotiating a contract can make the business suffer and not negotiating a contract properly can expose the company. It is undoubtedly a skill that an in-house counsel must have to maintain the fine balance consistently in all transactions. Negotiating a contract in the right areas is the key and identification of such areas require a deep understanding of the business. The job of an in-house counsel cannot be evaluated on holding only legal acumen in today’s world. Mitigation of risk is not the only role an in-house counsel must play in business. They must also be assessed on how they facilitate the business and bring value to the transaction. This part has many dimensions to it. The role of “facilitator of business” does not come naturally to an in-house counsel. Many struggle to acquire this skill and most of them fail at it which thwarts their growth in companies.
In a series of articles under the section “Introspection”, Mr. Khosla will illustrate the challenges of an in-house counsel role and decode the qualities, traits, skills, and attributes that make a lawyer business friendly. This is the fourth article of the series. The first three articles of the series can be accessed at the author’s Linkedin profile and at www.riteshkhosla.com.
What makes a lawyer business (un)friendly’ is a series of articles that identifies the qualities, values, attributes, and traits of corporate lawyers which make them stand out as business-friendly lawyers and help them win accolades, both inside and outside the company. I started this series by illustrating, essentially, how two lawyers, working in the legal team of the same company approached an important ‘revenue transaction’, and more importantly, a prospective new client who had the potential of giving large business orders to the company. In part 2, I talked about a conflict that lawyers face which creates a paradox – all lawyers are inherently business unfriendly. With this backdrop, the following articles in the series are designed to highlight certain qualities, values, attributes and traits of corporate lawyers which, in my experience, help them become accomplished and gain ‘success’ in every sense of the word. I started with ‘communication’ in part 3 which I shall conclude in this part of the series.
I know there are companies which keep the role of their lawyers restricted to ‘backstage’ work. Their work is restricted to providing legal inputs and communicating them to the commercial and business folks. In extreme cases, I have not even seen the lawyers copied on emails on which the contracts are typically negotiated after the closure of commercials. One may say that such companies are not confident of lawyers steering the legal negotiations and therefore give the autonomy to their business and commercial teams to act as postmen and even take calls on pure legal points of which they have no idea whatsoever. I wonder if such companies realize how critical is the role of lawyers in steering legal negotiations and holding an interface with the opposite party, especially in transactions involving IPR. On the other side of the spectrum, the leading companies in their respective industries have built or are in the process of building a culture wherein the legal team is considered instrumental in spearheading legal negotiations, to such an extent that the commercial team has no authority to interfere or influence such negotiations. This confidence in lawyers exuberated by such companies, which forms the bedrock of their culture, could not have been possible if they did not hire business-friendly lawyers. This confidence flows from their HR practices and hiring methods. In such companies, the legal team is given creative names – ‘Deal Team’, ‘Negotiation Team’, etc. External communication is the cornerstone of a corporate lawyer’s job. It ranges from liaising with external counsels, vetting PR messaging, dealing with potential clients and vendors, contract negotiations, shareholder interaction, lobbying and representation in industry forums. The lowest common denominator in all such categories of external communication is ‘representation of the company’. Therefore, external communication is considered critical. Some of these communications may be based on articulated company policies and therefore the corporate lawyer has a critical role to play. I also consider external communications as opportunities for
Corporate lawyers to build a profile, do networking and establish rapport with the external world!
There is a singular rule that I consider most important for external communication: choice of words which must bring the desired tone in the message, gets the things done and done expeditiously with the desired outcome. Of course, the approach to such communications and relationships is important but it’s mainly the play of words that influences the desired outcome. This one I place a few notches above than speaking and writing effectively, which I talked about in the case of ‘internal communications’ in the previous part 3 of this series.
Words chosen by a lawyer bring the tone to the message. The tone plays a pivotal role in communicating. Selection of tone requires an in-depth understanding of the situation, perhaps transcending to analyzing the psychology of the intended audience, the objective to be realized out of such situation and how that objective needs to be realized. And the key is how quickly it can be done.
Communication in industry forums should be advanced after getting due inputs from all internal stakeholders. The lawyer must play an important role to help the organization define the objective for participation in industry forums (where skills of internal communication play a role), which exist mainly to deal with issues faced by industries such forums represent. And these issues mostly relate to and emanate from tax and regulatory. The position to be taken has to be relayed in a manner that influences others since others’ position on matters of common interest might be different. A communication that does not influence others in such forums inaligning to objectives that you see as important for the industry (and from your company’s perspective) will be useless. Taking a position is one thing but articulating, influencing and defending others in the industry is altogether another.
Liaising with external counsels is again an important aspect of an in-house counsel. Calls are always better than emails but where communication needs to be in writing, it must be crystallized in unambiguous instructions and identify areas clearly where advisory is required. Don’t hesitate in communicating your take on legal aspects and when you do that, it must be backed by your legal and industry knowledge, the objectives you want to realize in the matter at hand and what’s in the best interest of your organization. A lot of lawyers struggle to do effective communication on the foregoing parameters and defer it completely to the external counsels. That’s when the legal bills of external counsels swell up and the outcome is not what one wished entirely!
Written communication is the hardest, especially in contract negotiations, since the recipient is not able to see your facial expression, body language, and tonality of your words. Therefore, the words so chosen by the negotiator in email provide contours for the recipient to imagine and react. A lot of people fail to define the right tone in their messages. Emails are often misunderstood and unexpected reaction from the other party complicates the transactional matters. But writing emails is what we must do to negotiate and therefore we must strive to direct our tone meticulously. Where required, the negotiations must be backed up by conference calls to ventilate the right messaging in such negotiations.
Contract negotiation is an art is what I believe and it has to be learnt! The possible tests to determine effective negotiation in a transaction are: (a) whether the safeguards are built; (b) the desired level of risk mitigation is undertaken, and (c) is there any value addition on the commercials by the negotiator (I consider this important); and (d) lastly and quite critical, whether the negotiation has been expeditious in consummating the transaction for commercial exploitation. Yes, the foregoing aspects are linked to drafting and reviewing but it’s the negotiation which upholds the review and drafting. The modern corporate world is headed towards constituting egotiation teams which are different from contract drafting and reviewing teams.
Effective external communication cuts through many other qualities and attributes of a business-friendly lawyer, viz. an understanding of the business and industry to which a transaction belongs, the attitude of the corporate lawyer negotiating a transaction and approach in contract negotiations, etc. These are important qualities which define a corporate lawyer and takes him to the realm of business friendliness. I shall be writing about these topics in my following articles.
Though it may not be a culture of many companies to encourage commercial and business departments to sensitize themselves with legal nuances, corporate lawyers should nevertheless take these ‘initiatives’. It helps to establish an understanding between legal and commercial departments when they together represent the company in contract negotiations. The commercial department appreciates when they are able to understand the nuances which at times become sticky legal points. Further, the business teams keep such nuances in their mind while negotiating the commercials and tend to involve legal at the commercial negotiation stage itself. This really quickens the process of concluding contracts in a most efficient manner.
It is not advisable to internally forward the judgments and external advices as is. Instead, a succinct summary should be sent highlighting the legal issue or legal point having a bearing on the transaction or on the organization. Many lawyers make this mistake and in my firm belief, such communications have no impact. The business teams are not conditioned to read lengthy judgments or complicated advisory from external counsels, let alone understanding them. If the matter is critical from an organization standpoint due to any regulatory change (proposed or promulgated) or there is a judgment which is likely to impact company’s business (adversely or favorably), the corporate lawyers must conduct simplified presentations or in-person meetings with the internal stakeholders. Emails are least effective in such cases.
I have observed that legal teams have a tendency to circulate do’s and don’ts of contracts, laws, and regulations on long emails and what is worst is these summaries are laced in legalese. I particularly consider this as one of the biggest mistakes of corporate lawyers. These are fundamental things that have a bearing on company’s business and operations and incumbent lawyers cannot discharge their function by sending onlylong and complicated emails. Presentations and meetings, as many as required, ideallyrepeated at a defined frequency since people leave organizations, are an effective way of ensuring compliance and realignment of company’s operations. There is a need for corporate lawyers to imbibe these trainings as part of “initiatives” to be taken by them in organizations.
A lot of companies have made mandatory for the employees to undertake POSH, FCPA/anti-bribery, Code of Conduct (if they have one) trainings and the onus is generally on the legal team to do these extremely critical trainings. These compulsory trainings are exhaustive and sensitize the employees on scores of areas, which can become overbearing for employees without a legal background. Are these trainings simplified by lawyers? If not, then I would imagine that the employees would just be putting a tick in the box by attending these trainings. Such a case cannot augur well for companies and in a way defeats the purpose of such trainings. The corporate lawyers can play an important role here by making these trainings interesting and interactive. It requires effort and that effort will not flow if the lawyers do not take an initiative to communicate effectively.
To summarize: a lawyer is said to hold good communication skills if his legal work demonstrates qualitative differentiation between drafting & writing on one hand and presenting & speaking on the other. Negotiation is a unique skill completely different from speaking or presenting.
Communication is the brand of corporate lawyers and they need to use it to their organization’s advantage and to leverage it to establish their identity.
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