We have a better idea for your resolution.

For people in business, the new year is also a great time to take stock of how the last year went, what things the company might want to change, and what successes it may want to continue. Law firms are no exception to this rule. Indeed, now that law firms have wrapped up their fiscal years and tallied everyone’s billable hours, it’s a festival of bonus announcements and end of year reports on the legal blogs.

Many firms are struggling to come to terms with the fact that the boom years of the mid-2000′s are simply not coming back. We keep looking for years when everyone is billing 2400 hours, and you close one deal only to have two more waiting in the wings. But in reality, all points indicate that 2012 was pretty good, but not awesome. So assuming 2013 is reasonably similar, how can firms ensure that they keep up with ever-increasing competition and pressure on their profits?

It’s no secret that we advocate document automation as a way for firms to appear more tech savvy to their clients and more money savvy to their CFOs. And we hear a lot of people agree with us that, “hey, this is a good idea.” But the next question is often “so what should I do with this new and exciting technology?” Fear not;we have some answers for you.

We present to you our list of 5 new documents you should automate in 2013. Think of it as a simple list of resolutions to make your drafting smarter, more efficient, and interesting for your clients all at the same time. And you’ll really get bonus points if you make some Leaflets with these documents. But one step at a time for now.

1. Commercial Real Estate Lease – These can be long and complex, but they don’t always need to be. Once the basics about the property are covered, standard provisions on liability, insurance and services provided can be swapped in and out from a clause library.

2. License Agreement – Who owns the code? What kind of indemnification should be used? Questions like this can be set out in a simple questionnaire, and provisions tailored to meet the needs of the license being granted.

3. Terms of Use and Privacy Policy – Here you get a two for one. Start with two basic forms, add in additional provisions from a clause library, and you’re off.

4. Employment Agreement – Answer questions like does the employee get severance, what will their benefits look like, and more with a questionnaire designed to address the needs of each of the company’s hires.

5. Stock and Option Grant Agreements – Stock and Option Grants are simple as pie and shouldn’t be negotiated. Make sure the information is correct and simply fill in the relevant information for the grantee with templates for ISOs, NQSOs and Restricted Stock Grants.

See, wasn’t that easy? Now give us a call and we can help you get these documents started.

Law firm competitors can work together happily

In the current month’s ABA Law Practice Journal, Susan Saltonstall Duncan of Rainmaking Oasis wrote a nice, concise commentary about Pfizer’s relatively new model for engaging outside counsel.  While other corporate legal departments have branded their particular models for internal operations (DuPont) and engaging and paying for law firm representation (FMC Technologies’ ACES program), Pfizer seems uniquely committed to inter-firm collaboration.  In multi-jurisdictional litigation, where poorly coordination between multiple local counsel can create enormous liability, all corporations naturally want this collaboration.  But Pfizer seems to want it all the time, on a broad range of matter types.

Pfizer creates teams consisting of personnel from multiple firms.  Pfizer appoints a senior in-house resource to manage the team.  Regular light-medium-heavy meetings occur at weekly-monthly-yearly intervals, respectively.  Everyone of the team gives 360-degree reviews of everyone else on the team. Everyone shares resources. Nobody keeps timesheets: firms are compensated on a retainer model (ostensibly, with some sort of overage calculation for out-of-scope work).

Unsurprisingly, Pfizer likes the model.  Why?  Well besides the usual suspects–lower costs, more predicable costs, etc.–by placing attorneys from multiple firms on the same team, Pfizer creates a array of less-quantifiable benefits: shared best practices, smoother hand-offs, and continuous I-can’t-let-that-guy-outperfom-me competitive benchmarking.

But according to Duncan, participating firms also see benefits (besides the obvious not-getting-fired-by-Pfizer one).  And interestingly, the first two listed benefits are:  (1) predictability of workflow, and (2) shedding the cost of serially pitching clients for new work.

This makes total sense.

The traditional law firm economic model suffers from what other businesses would call excessive inventory carrying costs. Because they each have their own idiosyncratic ways of performing work, and because they rely so heavily on highly skilled labor to do that work, firms can’t efficiently ramp-up and ramp-down capacity to meet the ebb and flow of demand cycles.  They overhire and overfire associates, responding in gross to fine fluctuations.

That same economic model also suffers from a bad ratio of client acquisition costs to client switching costs.  Think of all the things a firm does to bring in a client: discounted loss-leader work up front, websites, RFPs, CLE, whitepapers…not to mention the extremely expensive branding practices of hiring by pedigree (“She went to Princeton; he went to Michigan….please pay us $450 per hour for their time!!!”) and measuring your exclusivity by the fact that you pay as much to your first-year associates as the big firm in the next skyscraper.

Now think what it costs a client to bolt for another firm.  Practically nothing.

So, maybe having a sigificant influx of predicable work–work that exposes you to best practices and insulates you somewhat from market demand fluctuations and requires little in the way of serial acquisition costs–maybe that’s worth the lower per-hour payment on that work.

Like we said above, it makes sense.

What is Brightleaf Personal you ask? Great question! Brightleaf Personal is the flexible, mobile version of our legal document automation platform.  Through secure individual accounts, we give lawyers free access to automated libraries of industry-standard forms.  Those lawyers instantly create matter-specific deal documents—on mobile devices, from anywhere—by clicking and completing Leaflet™ guided interviews.

Even better, we’ve provided two robust libraries of documents that you can automate right away. First, the startup forms library includes the TechStars Seed Bridge Financing Documents and the Y Combinator Series AA Equity Financing Documents. So for early stage companies, you can immediately tailor debt or equity financing documents to suit your clients’ needs.

Second, we’ve automated the most up-to-date NVCA Series A Financing Documents – in two distinct forms to accommodate simple and complex deals. This includes the NVCA Term Sheet and all seven of the NVCA transaction documents.

We think you’ll find these tools easy to use and helpful in your practice. And if you find you’d like more, you can simply reach out to us to upgrade to Brightleaf Publisher, which will enable you to create your own automated questionnaires and individualized forms or packages of forms  using simple tools integrated with  Microsoft Word.

So take a look and let us know what you think! Happy drafting!

Corporate transactions need not be zero-sum

This past weekend, the new Massachusetts Benefit Corporation statute went into effect, making us the 11th state to enact such a law.

Benefit corporations are structured like traditional C-corporations.  They have Articles of Organization (what we in the Bay State call your Certificate of Incorporation).  They have by-laws.  They’ll likely need all the usual business formation documents: incorporator consents and initial board of director votes.  They should probably start off with the usual employment agreements and intellectual property assignments that their C-Corp siblings favor.

But there’s one big exception:  where the directors and officers of a C-Corp carry a fiduciary duty to—within the limits of the law and subject to their good faith business judgment—maximize investor returns, Benefit corporations are permitted to emphasize the social and environmental impacts of their activities.

Both entities can arrive at the same noble place.  A C-corporation may decide to use all-organic ingredients or 100% recycled packaging, but it’s supposed to do so because it believes that decision gives it some market advantage.  Maybe it thinks that it can extract a price premium from socially conscious customers.  Maybe it wants to distiguish itself from less circumspect competitors.  Maybe it just wants to avoid bad PR. But at its core, the C-corporation has to believe a decision is good for its investors.

Benefit corporations have more latitude.  Instead of just considering what is best for investors, these directors and officers can—and in some areas are actually required to—consider how their actions and decisions will impact employees, clients, the communities where the company works, near-and-global environments, both the short and the long term interests of the corporation, and specifically identified items of public good (helping low-income persons, environmental conservation, promoting arts and sciences, etc.).

So when is consideration of public benefit a “can consider” and when is it a “must consider” for an officer or director of a Benefit Corporation?  According to the new Massachusetts G.L. ch. 156E, these officers and directors SHALL consider:

• shareholders
• employees
• the interests of customers or clients…or of the general public
• community and societal factors
• local, regional and global environments
• both short-term and long-term interests of the company
• the company’s stated beneficial purpose or the specific items of public good I identified above

They MAY also consider

• the interests of the economy
• other pertinent factors or relevant group interests

Maybe your first thought it reading this list was, “Whoa.  That’s a lot of divergent interests that  director has to keep happy.  It’s tough enough just navigating between the needs of majority and minority shareholders.  Now they have to worry about these other constituencies?

That’s probably why 156E insulates decision makers from monetary damages and gives them wide discretion in choosing how much relative emphasis to place on each benefit. If they’re actively working to keep the environment clean and make enough money to stay in business long term, you probably can’t successfully challenge their decision to lay off half of the Worcester office and replace them with cheap temp labor.

So what’s to stop a company from using Benefit Corporation status as a PR shell while they soullessly pillage the environs like their black-hearted C-Corp brethren?

As with shareholder derivative suits, Ch. 156E creates a mechanism (called a benefit enforcement proceeding) by which the corporation itself directly, or a shareholder or director or other named person acting derivatively, can bring an action to force compliance with the entity’s beneficial objectives.

Supposedly, ten companies were queued up this weekend to become the first Benefit Corporations in the Commonwealth.

[NOTE: Statutory Benefit Corporations are not the same thing as B-Corps.  B-Corps are entities that have been certified by Philadelphia-based B Labs as being sufficiently beneficial to the greater good.  They do not have to comply with any particular statute or regulation, other than the usual ones prohibiting businesses from misrepresenting themselves.   Also, it’s be a bit confusing to have C-Corps be entities organized under Mass. G.L. 156C and B-Corps be entities organized under Mass. G.L. 156E.

And Benefit Corporations not the same as a non-profit corporations organized for the furtherance of some public or charitable benefit (and therefore eligible for tax-exempt status).  Benefit corporations can be for-profit; they can use their excess cash for corporate gain instead of public benefit.  They just have to make the public benefit calculus before they do so.

Australian in-house counsel hiring: flatter than week-old lager

International legal recruiter Taylor Root is out this week with its annual survey of the General Counsel and in-House Legal Department job market in Australia.  Summing the report up in one sentence?  In-house lawyers Down Under are under increasing pressure to do more with less.

In-house hiring is flat.  The number of companies who recruited attorneys at all during the last twelve months was half the number who did so in the previous twelve months.  Only 8% of companies reported an increase in the size of their legal departments.  The vast majority reported no plans to add to their staff in the upcoming twelve months, with 90% citing cost containment and budgeting constraints as the reason.  Secondment–the practice where outside counsel temporarily park personnel at in-house departments so that those in-house departments don’t have to hire permanent staff–is up.  Taylor Root even reported a net migration from in-house back to private practice, reversing the trend of the past several years.

In some industry sectors–Construction Law, Energy Law,  IT/Technology Transactions, and Start-ups, the scenario is a bit brighter.  But the overal trend is flat for the foreseeable future.

At Brightleaf we see quite a bit of this.  Budget constraints suppress legal staffing while the pace of business and the costs of compliance  create more demand for legal services.  In-house departments use our legal document automation platform to get more work done more quickly with fewer resources.  From contract assembly and automated drafting tools to online document generators to advanced mark-up and negotiation modules to mobile client collaboration accounts, Brightleaf has a lot of ways to make legal departments faster and more efficient.

We don’t know from Taylor Root whether the aggregate compliance costs that Australian business face is rising faster than their in-house legal budgets.  But we’re volunteering to head over there for a month or so to find out.

The first, and really important, development in this area was the proliferation of model documents for Series A transactions by the NVCA. Then came the seed financing documents – some from TechStars and others from AngelList. But of course, form documents can only go so far. It still takes time to draft them and when these deals don’t bring firms a lot of money, they are often a sore spot on the balance sheet.

So when Brightleaf came along, we sought to add some efficiency to the game, but using technology to make drafting emerging company documents faster and smarter. Whether you’re on the company or the investor side, Brightleaf can help get documents done up to 80% faster than traditional methods. And if you’re a lawyer, that 80% time saved can lead to more deals getting done, more quality time with clients doing things they appreciate, and more business development efforts.

With all those benefits, why wouldn’t a firm use Brightleaf? We really don’t know. But if you’re not quite convinced, take a look at our new strategy brief, called “How Progressive Firms Are Using Document Automation to Speed Up Emerging Company Transactions.”

Sound interesting? We’ll happily send you a copy. Just say hi to Jeff Turner and ask him for one. You can find him at jturner@brightleaf.com. Or you can give him a call at 888.489.1800.

Dealbook editor Andrew Ross Sorkin penned one of the articles, titled:  BigLaw Steps into Uncertain Times.  In the article, Sorkin runs briefly through several familiar memes–some high-profile firms have collapsed, new-model firms like Axiom (whose website touts in simple, huge typeface “WE DO LEGAL WORK EFFICIENTLY“) are expanding rapidly, etc.

Then he settles on a culprit: an industry-wide fixation on profit per partner.  Too much PPP, as a measure of firm health and primacy, leads in Sorkin’s mind to a divergence between client and firm interests. It also creates a treadmill that can be difficult to get off.

Sorkin cites Michael H. Trotter, partner at Taylor English Duma in Atlanta, and author of the book Declining Prospects:  “There are only a few ways to increase profit per partner. One way is for firms to “charge their clients more for what they do”; another is for them to “do more work for their clients by working more hours or using more lawyers”; a third is to acquire more clients; and the last option is for firms to “reduce their overhead by paying less rent, restraining the compensation of their lawyer-employees and other personnel.”

In the above list, Attorney Trotter runs through much of the business playbook for boosting profits:

1. Raising prices
2. Increasing production or productive capacity
3. Focusing on new client acquisition
4. Cutting costs

But he leaves out a few glaring ones:

5. Elevating efficiency
6. Boosting perceived quality
7. Developing new client channels
8. Improving efficiency/productivity

If you look at these two lists, Trotter’s and ours, and you find yourself thinking that #1-#4 sound like the sort of thing your firm traditionally does when concerned about profits, you should probably contact us.  Because #5-#8 is what Brightleaf is all about.

So, kudos to The Times for raking these recurring themes into one big pile.  Maybe it’s appropriate that it’s the special Fall Dealbook.

Because the season seems to be changing.

As an older brother, I’m even happier and less surprised when they name my kid brother Justin partner, as they did this past month. [quick sidenote...Justin didn't work there back when I hired the firm].

Great firm.  Great lawyer.  Not a bad sibling, either…

Congratulations, Justin!

The organization has been producing with Global Insight a report (called Venture Impact) that measures the jobs produced by VC alum companies that have gone onto merger or IPO.  The names aren’t surprising–Intel, Genentech, Facebook, Microsoft, Starbucks and FedEx.  But the fact that they account for 11,900,000 jobs (11 percent of our economy’s total  and $3.1 trillion of revenue (10% of total economy) might be.

This is a pretty neat idea as far as we’re concerned, and seems like a natural extension of the push several years ago to standardized Series A financing documents by the NVCA. This does beg the question, though, as to whether seed financing, and early stage company law in particular, are being pushed into a direction of more standardized (and therefore, less lawyer involvement and lower revenue for firms).

In a thoughtful blog post by Jose Ancer, a startup lawyer in Austin, he talks about how startup law might change over the coming years, and how changes like the AngelList platform might play a role in that. He sees the future of startup law being more like a freemium software model, with larger firms pushing to provide these services to startup clients and using larger deals to subsidize this work. He says there are several themes that are moving this kind of practice in that direction – contractual (the documents themselves), technical (products like Brightleaf and electronic signature software), and operational.

It’s clear that firms are moving in this direction – many offer to defer fees for startup clients – largely because they can afford to do so because the other groups do complex deals and costly litigation that provides room on the balance sheet for these “lottery ticket” clients. We’re certainly big fans of technology helping to advance this trend. And from the response to the AngelList announcement, it sounds like companies are pretty happy too.