In the last couple of months, I wound up on an incredible
roller coaster of a deal which involved countless stops and starts, multiple parties and lots of lawyers from “big name” firms in town. I am thrilled that my client’s vision is finally taking shape, despite many painful hurdles. Less thrilling though was the pain it took to get the deal closed because it was so much more expensive than it needed to be. Why? There was no effective QB running the document side of the deal.
Let me set the stage. I represent the company as outside general counsel. I’ve been with them from the start, helping get their entities formed, doing their contracts, assisting with securities help to get initial investors in the door. I know their business because I have been in the trenches with them for the last few years. But this time, when the client found itself doing a very different kind of deal, they needed a certain kind of expertise and went with a group that came highly recommended. From the get-go, it would have made the most sense for me to be the QB but these lawyers were wildly uncomfortable that I was on the scene at all, choosing instead to treat me as an annoying “extra” presence.
With my client’s support, I politely continued to insert myself, pushing them to make the documents work together and within the framework of the existing business. When that went over like a lead balloon my client assigned me the role of “bad cop” and we insisted in an uncomfortable call that these lawyers quarterback. Ultimately, that didn’t work either, save for an amazing paralegal who shuttled the docs seamlessly in the last week. Now, setting aside how truly angry the whole thing made me personally, and how that firm’s “view” will limit their business opportunities going forward, let’s get to the crux of the business problem.
Just like in football, an effective deal QB runs the plays. She sees the whole field and does what it takes to get all the parties on the same page. Document flow goes more smoothly. There is a single point of contact. There is no redundant work.
Remove the QB and chaos ensues. The players don’t know which way they are running (you know left hand, right hand stuff), you miss opportunities, the costs go straight up and the deal…. paaaaainful for all involved.
Now, complicated deals often require a variety of expertise. That is, after all, how big firms win business -- with their promise of a “one-stop shop”. But in my experience, you don’t need to pay the inflated hourly rate of a large firm to put a team of experts together who can deliver the deal and manage the fees.
This is where having a general counsel on retainer helps. Not only do they know your business, but they don’t want you to overpay and can actually work with outside counsel to pick up some of the slack and manage the legal spend appropriately. If you hire a firm and assign your GC to be the QB and the firm balks, you need to find a different firm. Period. Team members should respect any other team member’s duties even if they see it as “competition”.
Some of you might be thinking… what you are talking about? A middle man--an “extra” lawyer and that will just be a double fee, right? But this thinking is wrong. First, you don’t necessarily need a lawyer to be the QB. Maybe the QB is your CFO with your outside GC as a backup, running point on the lawyers. Second, even though it may seem counterintuitive, an outside GC acting as a QB can and will save you money if you put the game plan in place from the start.
You already know I believe in project scopes and budgets. Business owners are uncomfortable pushing too hard on fees, but I don’t have that squeamishness at all. You give me a budget and I promise I will work within it and make sure other counsel I’m hiring do as well.