Hedge Fund Investment Tip #1
September 30, 2005 | Filed Under In the News
Meet the CEO and CFO personally before you and your friends invest $450 million:
Source: Seattle Times.
Note: CFO pictured above may be played by Jeff Garlin in the forthcoming HBO movie:
Good Results from Bad Deals
September 30, 2005 | Filed Under Tactics, Managing
Are there any do-overs in corporate law?
Professor Jeswald Salacuse writes in Harvard Working Knowledge on the subject of renegotiation–needed perhaps because an agreement could be improved or circumstances that have changed.
Any lawyer with an active transactional practice can tell you 3 things that would be different today if there could be another kick at that contract finalized yesterday.
The good professor offers 4 things to do before the deal breaks down and a healthy 7 things to consider after. One of my favorites in the post-break down phase is number 1–avoiding hostility. Is there any among us who hasn’t had a client who wants to “teach them a lesson” or “fight to the last” or the one I fear most–”this thing is a matter of principle.” Clients who think they want to fight over principle feel a bit different the day before their deposition is taken. They start to feel way different the day before they are to testify at trial.
For large disputes, I like to let a law firm involved in the transaction know that they will likely not be the firm involved in the litigation.
What this issue ultimately comes down to on mission-critical agreements is that you have to choose counterparties partly on integrity–are they in it for a long-term relationship or a short-term win? The former become valued business partners, the latter become plaintiffs.
Multitasking While Rome Burns
September 28, 2005 | Filed Under Technology, Managing
If you ever feel like the harder you work, the worse things get, there is some good news.
You’re not alone.
An excellent team article from BusinessWeek Online lays out the case-in chief:
Honk if this sounds like you: While much of America is watching Jon Stewart, Letterman, or Leno, you’re stumbling out the office door into a car-service Town Car or groping for the clicker to the BMW in the company parking lot. Once home, you slug down a beer or the last of a bottle of white wine on the door of the fridge, stuff some leftovers in your mouth, and collapse into bed beside your sleeping spouse. A half-dozen hours later, you crawl to the shower, throw on a clean shirt, pour some coffee down your throat, maybe drop a kid or two at school, and jump back on the frenetic work treadmill that you can’t shut off.
True, it’s just another thing to read. But worth it. (Note that you can stop reading after you hit “…and what you can do about it” on the jump page–the editors have repeated the intro. Sort of ironic in an article about information overload).
A final thought to ponder:
Many of the most overloaded managers are not yet at a level where they have the luxury of controlling their schedules or dispensing with unproductive e-mails, pesky voice mails, and interminable meetings. But in terms of reducing work overload, perhaps the biggest and most difficult step will be for corporations to give their knowledge workers more freedom over their own time. “The Industrial Age approach to management dies a pretty tough death,” says Babson’s Davenport. “Even today people end up being evaluated not only on how much they produce but also on how many hours they are in the office.”
Hours in the office important in the legal community? You’ve got to be kidding…
Offshoring by the Numbers
September 27, 2005 | Filed Under New Services, In the News
Sometimes it’s difficult to find hard numbers to assess the use of offshore legal services.
Yesterday’s Washington Times provides some details.
The article quotes offshore service provider Evalueserve:
About 1,300 Indian workers provide services for U.S. lawyers, generating about $52 million in revenue, according to Evalueserve, a business and legal research firm with more than 800 employees in India.
By 2015, their billings to U.S. firms would increase to $970 million at the current growth rate.
One cost comparison struck me as a bit light was when it was noted that Indian firms could do legal work for about $40 an hour, whereas a U.S. firm might charge $120 per hour.
$120 per hour? U.S. law firms? Even for research you’d likely double that.
But the $40 per hour? The savings at that rate would start to add up fast.
The article mentions that certain corporations such as United Technologies Corp., Oracle Corp. and Bayer AG outsource legal work, but that officials at those companies did not return calls and e-mails for comment. Given some of the political overtones of the outsourcing/offshoring debate, this reluctance to talk on the record doesn’t surprise me. What’s the upside? Just deliver bottom-line savings, which speaks for itself over the long run.
The article gives good ink to the Venable law firm, allowing Jim Shea, its managing partner, to observe that “Clients are entitled to get these things done in an efficient way.”
Twelve words that beat a glossy brochure any day.
Lastly, a few final numbers caught my eye: legal work outsourced to India could take up 2 percent of new legal jobs in the U.S. over the next 10 years at current growth rates.
Something to think about for law firms–and potential law students.
Updates (28 Sep 05): I noticed this morning that Robert Ambrogi spotted this story first.
The Wall Street Journal also reports ($) today on this trend; a few numbers from that article:
So far, outsourcing has created as many as 12,000 legal jobs world-wide, according to Forrester Research. The Cambridge, Mass., firm predicts that number could shoot up to 29,000 in 2008, with most of those jobs going to India.
One lure of the Indian legal market: the sheer number of lawyers it offers. More than 200,000 Indians graduate from law school there every year — five time as many as in the U.S. — creating an enormous pool of talent to tap.
The WSJ also notes two potential roadblocks raised by offshoring critics: liability issues and attorney-client confidentiality. Sounds more like wishful thinking from those that benefit from Fortress Legal America.
The ship has sailed on offshoring. Just wait to see what 2006 brings.
Corporate Responsibility - International Style
September 26, 2005 | Filed Under Governance, In the News
Can you open your sales efforts to international markets and close your eyes to the legal system when you get there?
Recent events in China and Russia show some of the challenges for American companies doing business abroad. They also may cause shareholders and other stakeholders to raise their level of scrutiny on what companies do when responding to international legal issues, particularly where the rule of law is not developed or respected.
Legal Blog Watch editor Lisa Stone recently covered Yahoo’s decision to turn over e-mail information that was involved in a proceeding that led to the imprisonment of a journalist. Ms. Stone linked to a Washington Post story that quoted Yahoo co-founder Jerry Yang:
“To be doing business in China, or anywhere else in the world, we have to comply with local law,” Yang said, responding to a question about his company’s role in the case. “We don’t know what they want that information for, we’re not told what they look for. If they give us the proper documentation and court orders, we give them things that satisfy both our privacy policy and the local rules.”
Like most mail providers, Yahoo has terms of service that you could drive a truck through (see #6 and #7 therein), and rely on the procedural orders from a court–not the substantive issue behind it. Others disagree with this approach. Business Week sides with Yahoo.
Interestingly, China announced yesterday restrictions on the dissemination of news over the Internet. Yahoo last month paid $1 billion for a 40 percent stake in Chinese web commerce portal Alibaba.com.
In other legal news from China, the government recently freed lawyer Zhu Jiuhu, who had been jailed for four months. The offense: organizing a class action lawsuit against the government of western Shaanxi Province on behalf of investors whose private oil wells were seized in 2003. I understand there are some U.S. companies that may find jailing class action lawyers attractive at first blush. The Baltimore Sun reports on this story and others in more detail.
Then in the last few days, Russia has shown contempt for to the rule of law by seeking the expulsion of Canadian lawyer Robert Amsterdam, counsel for imprisoned Yukos Oil founder Mikhail Khodorkovsky. Prosecutors are also seeking to have the law licenses revoked from some members of Khodorkovsky’s defense team. Mr. Amsterdam left Russia Friday.
So what is the right course for an American company doing business in countries like China or Russia? Ignore opportunities completely? Turn a blind eye and forge ahead?
I would say “no” and “no.” In the short run, Yahoo’s Jerry Yang is correct that companies must observe local laws if they want to do business in a host country. But once they decide to invest there, they are now part of the system. If that system does not comport with basic levels of individual and property rights (and due process), they should work with others to let host governments know that continued investment is contingent upon change. Yahoo may have a different view down the road if one of its lawyers in China is jailed for seeking to enforce legal rights against a recalcitrant government ministry over content restrictions on Alibaba.com (this; not this, by the way).
This isn’t just altruism, either. Concerns about host country legal systems are really part of enterprise risk management.
Companies owe it to their shareholders to seek new markets to grow earnings. In doing so, however, they will likely find that corporate social responsibility does not end at the water’s edge.
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