Dave Curran B.leaf post: Brightleaf and Foley Lardner Entrepreneurship Talks off to Great Start

March 31st, 2010

Here’s a b.leaf post from our Dave Curran about the very successful launch of the Entrepreneurship Talks program series with Foley Lardner..

Well it happened!  Gabor and I had a great first conversation during the launch of the Entrepreneurship Talks™ Program. (Click Here to download the recorded event) The time went by so quickly.  We got a bunch of questions but were only able to answer  a few of them.  The Program seems to have hit a nerve.  There are lots of people (more than 300 people signed up for the Program) in the Entrepreneurial ecosystem who are looking for plain talk about common and often bewildering issues – particularly core legal issues.  Interestingly, it’s not just business people.  Sometimes  advisors and mentors themselves find this area somewhat of thicket and will try to answer questions – not in their domain – so that the entrepreneurs keep moving. I’ve met many a lawyer will answer a question about marketing with a preface like “I’m not a marketing expert, but have you tried the following…”  This can sometimes be counterproductive and confusing to someone who’s got a great business idea but not necessarily deep experience in a particular area or market.

We got lots of comments from entrepreneurs who have been intimidated or unhappy about their interactions with lawyers.  Let’s face it, most lawyers didn’t go to charm school on their way to law school.  They’re often brilliant subject matter experts, but have some gaps on the interpersonal skills side.  That’s why I really enjoy working with Gabor.  He’s extremely knowledgeable, but also knows how to relate the legal world to the student who’s working on a very cool software business, or the inventor who’s developed an innovative tech solution for a business problem.

I’m a recovering lawyer who’s run several technology businesses; and I’ve also helped buy dozens of founder-based companies and tried to integrate them into larger companies (that’s the subject for a future blog because it hasn’t always been pretty).  In future Programs, we plan to share some real world experiences.  I like to think of it as land mine avoidance techniques that have been distilled from years of experience.  The goal is to give you enough information so that you can move forward prudently with your business. 

Watch this space for answers to questions generated by the Program. 

In the meantime, we’re gearing up for the next session – date TBD – that will focus on Intellectual Property.  So, if you have questions about trademarks, copyrights, patents, trade secrets; how to create them, protect them, license them, etc., please send them to me to include in the Program.  We’ll have a guest who’s run businesses and has grappled with real world IP matters. 

Talk soon.

Dave

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Jenga, the “Ellen” show audience, a 274-word charter sentence, and a wine that tastes like strawberries, asparagus, and Dutch cheese.

March 31st, 2010

Sometimes, something just jumps out from the background at you. Like a guy in an “Ellen” audience, even if there’s nothing technically wrong with it,  some stuff just feels anomalous–out of place–and it causes your subconscious to wake up and say, “Huh? What is that doing there?”

Which I guess is how I came to notice the sentence at the bottom of this post. Despite its relatively vanilla meaning, the sentence, from a Delaware corporation’s Amended and Revised Certificate of Incorporation, somehow managed to swell to include 10 commas, 23 references to existing defined terms, three newly defined terms, and a corpulent 274 words. 

 274. 

People…is this really necessary?

Now, I recognize that the language comprising a best practices charter document has built up by accretion over the years.  And I get that our profession’s reverence for precedent means that at bonus time your firm’s compensation committee won’t be parceling out Distributable Net Income based on terseness in drafting  (“Bravo, Smathers…wonderful show of concision this year. Keep slashing away at the thicket of multi-level qualifiers; you’ll make partner in no time!!!”).   Still though, the twin goals of drafting should be:

1. To cover content thoroughly and unambiguously, and

2. To ensure that you have covered that content in an efficient enough manner so that your intended readers can readily comprehend it in a consistent way and can then conform their actions accordingly. 

The 274-word sentence might technically satisfy criterium #1, but it’s a total architectural fail on #2.  At some point, as qualifiying subordinate clause piles onto qualifying subordinate clause, this swaying Jenga-tower constructions comes crashing down on its readers.  If you ask your clients what they think when you draft 274-word sentences, I’d bet a surprising number of them would accuse you of being needlessly (and perhaps, intentionally) arcane. 

Here’s what it’s like…Remember the first wine-tasting in the movie “Sideways,” where Paul Giamatti’s cranky connossieur character described one offering as tasting like strawberries  but also having ”just like the faintest soupçon of like asparagus and just a flutter of a…like a,…a…a nutty Edam cheese?”  Put aside for a moment how unappealing this combination of tastes might actually be (“Seriously? Strawberries, asparagus, and nutty, waxed Dutch cheese?  Together? In a drink? Yummers.  I’ll take two cases!”).  Here’s the lesson to take from this scene:  sometimes experts, in trying to express their expertise with exacting specificity, totally foresake comprehensibility and accessibility.  Your clients do not want to read 274-word sentences any more than they want to drink wine that taste like it has asparagus and cheese in it. Lawyers, like Giamatti’s connossieur, can get a little word-drunk on their own capacity for complexity. 

[My almost-totally facetious solution?  Let lawyers bill by the sentence.  Let them charge more if they can split their thoughts into smaller and more digestible pieces.  In no time you'll have a generation of AmLaw Hemingways dropping their lean, hard prose into charter and transaction documents everywhere. ]

Here it is:

“In the event of a Deemed Liquidation Event referred to in Subsection 2.3.1(a)(ii) or 2.3.1(b), if the Corporation does not effect a dissolution of the Corporation under the General Corporation Law within 90 days after such Deemed Liquidation Event, then (i) the Corporation shall send a written notice (the “Redemption Notice”) to each holder of Preferred Stock no later than the 90th day after the Deemed Liquidation Event advising such holders of their right (and the requirements to be met to secure such right) pursuant to the terms of the following clause (ii) to require the redemption of such shares of Preferred Stock, and (iii) if the holders of at least a majority of the then outstanding shares of Preferred Stock so request in a written instrument delivered to the Corporation not later than 120 days after such Deemed Liquidation Event, the Corporation shall use the consideration received by the Corporation for such Deemed Liquidation Event (net of any retained liabilities associated with the assets sold or technology licensed, as determined in good faith by the Board of Directors of the Corporation), together with any other assets of the Corporation available for distribution to its stockholders (the “Available Proceeds”), to the extent legally available therefor, on the 150th day after such Deemed Liquidation Event (the “Redemption Date”), to redeem all outstanding shares of Series B Preferred Stock at a price per share equal to the Series B Liquidation Amount, of Series A Preferred Stock at a price per share equal to the Series A Liquidation Amount and of Series A-1 Preferred Stock at a price per share equal to the Series A-1 Liquidation Amount.”

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Foley & Lardner Partners with Brightleaf’s Dave Curran on Entrepreneurship Talks

March 1st, 2010

Foley & Lardner announced today that it was lauching an online teaching series called “Entrepreneurship Talks: An Interactive Learning Audio Conference Series Focused on Emerging Companies and Start-Ups.”   From the official release, it looks like there will be at least four separate talks in the series, starting off with March 23rd’s “You’ve Launched Your Business…Now What??“

Even better, Entrepreneurship Talks will be hosted by Foley’s Gabor Garai and Brightleaf’s Dave Curran.  Gabor’s absolutely undoubtedly one of the best attorneys in Boston, and he speaks with clarity and insight about issues facing new businesses. Dave is a multi-talented business executive with deep and uniquely diverse experience in the business and law of growth-stage companies (and we’re not just saying that so he’ll be nice to us in the hallways).

It should be fascinating.  Be sure to sign up and listen in.

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Posted in Early stage company law, Legal document automation, The Future is Now, law firm economics | No Comments »

Some lawyers are paid to get deals done; others (at NBC) are paid to get them undone

March 1st, 2010

[Author's note:  While I pretty clearly have a side in the topic debated below, I'm not in a position to discuss any inside information.  Instead, I'm just pointing out some of the underreported facts that have--finally--bubbled up to the surface.]

The Conan O’Brien-Jay Leno contretemps seems to have settled somewhat:  Leno’s off the air until after the Olympics; Conan’s off the air until…well. at least until his non-competition agreement expires in September.  So, what better time to look back at one of the many factual issues that the new media got wrong during this whole mess: namely, what if anything that Conan’s contract said about when “The Tonight Show’s” timeslot.

It was generally reported last month that NBC was able to push Conan out of TTS’s traditional 11:35 airing and past midnight because his contract didn’t specify that he was entitled to any particular timeslot.  This tidbit was reported over and over again and was basically accepted as gospel truth by all media outlets. While it might initially seem peripheral, this was actually a  critical inflection point for the outcome of this entire debacle:  if NBC was free to move Conan’s show, then Conan would have been in breach of his contract by failing to accede to any such move.  But if Conan had a contractual right to 11:35, then NBC would have been in breach if they forced one.  

So, when NBC basically had to pay out the entire value of the contract and only got a meaningless seven-month noncompete in return (meaningless in that it would take more than seven months to get a new show together, so the non-compete wouldn’t actually slow anything down at all), it probably should have served as a pretty strong signal to the press that Conan indeed had a contractual right to keep his timeslot.  Instead, the press all whiffed on this…

…until this article came out the other day.  Written by Matthew Belloni, legal correspondent for The Hollywood Reporter, it contains the first public screening of the actual contents of Conan’s contract (at least in so far as they pertain to the timeslow issue).  Here’s Matthew’s scoop:

 1956-present:    The Tonight Show airs immediately after the late local news. 

Pre-2002:             Conan’s contract  as host of the 12:35 “Late Night with Conan O’Brien” defines “Late Night” as “the second show” after the late local news (The Tonight Show being the first)

 2002:                     Conan signs an amendment to that contract, which promised that he’ll succeed Leno as host of the Tonight Show whenever Leno stepped down.  The amendment expressly defines “Tonight Show” as that thing that airs on NBC at “11:35 PM.”  So, Conan’s contract now contains two separate references that place TTS at 11:35.

2004:                     Conan signs another amendment saying that he’ll take over “The Tonight Show” in mid-2009.  This amendment doesn’t mention timeslot at all, leaving the existing references intact.

2010:                     NBC is forced to cancel ‘The Jay Leno Show’ (where they had parked Jay after Conan took over TTS) by an impending affiliate revolt.  But, Jay’s contract specifies a $150M liquidated damages payment if NBC doesn’t keep JLS on the air at least two years.  So, NBC has to pay him or appease him.   And for appeasement, Jay selects “I’ll go back to 11:35.”   (Do not get me started on his “I had nothing to do with this decision” act).  To accomodate this, NBC tells Conan that they’re moving himand TTS  past midnight.  Conan says that he’s less than wild about the idea.  NBC responds that because the 2004 amendment didn’t mention the timeslot subject at all, they are free to place TTS wherever they want. 

So, basically, NBC was arguing that that when a contractual amendment is silent on an issue, it somehow by that silence invalidates all previous definitions in that contract or any if that contracts earlier earlier amendments.  Also, the silence invalidates 16 years of custom-and-usage dealings between the parties and  54 years of widely-held general cultural understanding about when the Tonight Show aired. 

Legal drafting experts everywhere still haven’t stopped throwing up.   Course of dealing?  Gone.  Ambiguity construed against the drafter?  Gone?  Plain meaning?  You’re outta here.  Consensus ad item?  See ya’ later. 

NBC’s logical position translates to this:   the law of the land is that amendments to any base contract must restate all the defined terms within that contract and all defined terms within any earlier amendments or those defined terms will be invalid. 

As it turned out, their near-total capitulation during separation negotiations shows that this position was basically a (pretty lame) bluff. 

Wonder what happens next???

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I’m no fulltime trademark attorney, but…

February 17th, 2010

…the news today that Bolivian president Evo Morales planned to launch his own soft drink called “Coca-Colla” and to market it in a red-black-and-white with swooshy lettering, kind of jumped off the page at me.  With Latin American countries starting to move towards adoption of the Madrid Protocol, maybe President Morales saw this as his last best chance to infringe on the world’s fourth most-valuable brandname.  Or maybe he assumed that there would be some some sort of head-of-state exemption granting him “diplomatic” immunity from prosection for any of his crimes against intellectual property.  Or maybe, since his drink contains actual coca leaves, maybe he was going to argue descriptiveness for the word ”coca”  and seek to inviolate its registrability in connection with cola drinks (hey…buena suerte on that one there, Evo).

At any rate, it’s a nice little reminder that the law can become so ingrained in our everyday lives that we take it to be part of the metaphysical underpinnings by which our world works…unti we realize that that law ain’t necessarily the law everywhere.

So until Madrid comes to La Paz, Evo, keep the Cacacha y Coca-Colla flowing.

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b.leaf: Microsoft GC calls for “national conversation” on cloud computing

February 15th, 2010

From Eric Sinrod’s Technologist blog: 58% of the general population and 86% of senior business leaders are excited about cloud computing technology, but the majority require some convincing about it’s security.  Microsoft GC Brad Smith calls for a “national conversation” on the subject to increase confidence and allay concerns.

Each month, we get fewer and fewer questions from prospective clients about our SaaS delivery model.  Perhaps they recognize that Software-as-a-Service is no less (and in all likelihood, far more) secure than their existing systems. Or, perhaps the benefits and flexibility are outweighing the perceived concerns.  But it is palpably less of a concern to major law firms than it was several months ago.

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A Drunkard’s Walk: how our brains are lying to us about the numbers around us.

February 15th, 2010

Perhaps because of Brightleaf’s cool Interpreter technology, we’re fascinated with the science of pattern recognition. 

If you’ve ever gotten this piece of junk email, and were able to comprehend it quickly, you’ll probably agree with me when I say that our brains are basically big, whompin’, lightning-fast pattern-matching engines. 

“Aoccdrnig to a rscheearch at an Elingsh uinervtisy, it deosn’t mttaer in waht oredr the ltteers in a wrod are, the olny iprmoetnt tihng is taht frist and lsat ltteer is at the rghit pclae. The rset can be a toatl mses and you can sitll raed it wouthit porbelm. Tihs is bcuseae we do not raed ervey lteter by it slef but the wrod as a wlohe….”

While it has been widely debunked that this email actually originated from any “Elingsh uonervtisy rscheearch,” it does point out something very interesting about how we recognize patterns:  we cheat.  In the interests of speed, our brains employ sets of heuristic processes—shortcuts designed to accelerate processing time—so we can make our identification and move onto the next task.

Evolutionarily speaking, this probably got us to where we are today.  Back when your ancestors were little baby humanoids, huddled in the tall grass of some prehistoric African veldt, nothing was as important to them (and by progeniture, to you) as being able to evaluate the facial curves and planes and topography of the nearby larger humanoids and to discern Mommy from not-Mommy quickly…because Mommy would feed you and not-Mommy would eat you.  Perhaps for this reason, huge portions of our brains engage when we perform any kind of facial recognition task (One interesting note, described here:  boys use the right hemispheres of their brains to recognize faces; girls use the left).

But as demonstrated by the jumbled text of the debunked email above, we’re often too good at pattern recognition…we tend to over-recognize; we ignore mistakes and omissions; we jump to conclusions that really aren’t supported by our observations.  This is certainly true when it comes to the visual topography of words and faces, but it’s also true in a larger sense.  In our heuristic rush to make sense of the environments around us, we cheat.  We create patterns where statistically none exist. We confuse weak correlations with strong ones; we mistake correlation for causation altogether.

Here’s a simple example.  Growing up, how many times were you told that if you went outside when it was cold you would catch a cold?    (I can still hear my mother saying to me, and the echoes of her mother saying to her, “Put on a coat…you’ll catch your death of [insert name of largely defunct malady here]).  It seems likely that this is where the affliction got its name:  you caught a cold by being cold…a correlation completely unsupported by any medical research.  Lower temperatures don’t cause colds, rhinoviruses do.  About the closest you can come to an actual nexus between temperature and disease here is that when it’s cold, it tends to be dry…and when it tends to be dry your nostrils become irritated and run more, making you a more effective vector of viral retransmission.  Also, when it’s cold, you stay inside more, in closer contact with other people, raising your chances of exposure to whatever they’re carrying.  So because it’s cold outside, we become statistically more likely to exchange viruses.  And yet when most of us get sick during the winter, we still blame the temperature.

The best book I’ve read in a while, “A Drunkard’s Walk,” by Leonard Mlodinow, follows the history of the developments of probability and statistics.  It makes the case that while valid statistical evidence permeates every aspect of our lives, we treat that evidence much the same way that we treat the words in the debunked email above, by skimming over it and making unsupported conclusions from it, ascribing patterns where there is only randomness.  If you meet twenty people on the street of a town of 30,000, and all twenty of them tell you that they are voting for John Smith for Mayor, you invariably think that Mr. Smith is riding a tsunami of universal support all the way to City Hall.  In fact, your woefully inadequate empirical sampling makes your survey close to meaningless.  (Mlodinow terms this “The Law of Small Numbers,” the tendency for people to give disproportionately large impact to small sets of data).

Mlodinow goes on, pointing out over and over how our innate innumeracy gets in the way of our understanding of how the world around us really works.  Check out “A Drunkard’s Walk.”  It’s fascinating, much more so that you might think possible for a book on how the disciplines of probability and statistics came into existence.  

I’m 95% sure, with a margin of error of +/- 40%, that the 80 percent of you will really like it.

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ABA Journal – Revenues will drop though demand will pick up

December 14th, 2009

As a sign of fundamental economic change, per the ABA Journal…Citi Private Bank surveyed 131 firms and estimates that revenues will drop even though demand for those firms’ services seems to be picking up. Firms may also begin to shed equity partners.

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b.leaf – movin’ on up…

December 14th, 2009

Hey…brightleafcorp.com is on the move. Check us out next week at our sweet new address–www.brightleaf.com–which I have to admit has kind of a nice ring to it.

We’ll see you there!

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Lean Six Sigma in the AmLaw 100

December 14th, 2009

Seyfarth Shaw is not your typical 739-lawyer firm.   For one thing, in the midst of an economic downturn, and in the face of what the Association of Corporate Counsel terms a “slow-motion riot” by corporate clients everywhere, Seyfarth reported gains in gross revenues (+ 5.5%), net profits(+3.5%), and profits-per-partner (+5.5%) last year.  (Check back here though for follow-up on the firm’s all-associate conference call today)

In an AmLaw Daily interview several months ago, Seyfarth’s chairman, Steve Poor, attributed the firm’s performance to its clear-eyed recognition of fundamental flaws in the large-firm economic model and the anticipation of what might happen to that model should the rising revenue waters recede.  Poor stated, “Everyone loves rate-insensitive work,” he says. “But we realized several years ago: That model is fundamentally flawed. We realized a day like [the downturn] would come.”  Armed with that realization, the firm redoubled its efforts to provide more cost-effective services. 

At last week’s “Controlling Legal Costs” conference at Manhattan’s Harvard Club, Seyfarth stole the show with a stunning presentation by Boston-based partner Lisa Damon about the depths of its dedication to process improvement and cost-cutting through Lean Six Sigma methodologies.

Six Sigma process management, for those of you who haven’t encountered it, is a management philosophy that rigorously defines and measures and refines a business’s core processes and maps them back reiteratively to that business’s conceptualization of “success.”  As Damon put it, this type of thinking has traditionally been “anathema” to lawyers.  Lawyers have not been interested in process-based efficiencies, she noted, because we have made so much money from inefficiency.  The more inefficient a process is; the longer it takes.  The longer it takes; the more hours we bill the clients.  The more hours we bill the client; the more money we make…up to the point when the client fires us.

Probably true…but Seyfarth is through the looking glass now.  As part of their Lean Six Sigma implementation, their internal Green Belt teams precisely map out each discrete step in their standard processes (say, for example, filing a single-plaintiff employment lawsuit in New York) and then rigorously work to eliminate any unnecessary steps while smoothing the necessary ones.   Then they constantly re-examine and refine those process maps.

How is this working for the firm?  Damon reports unprecedented cost savings and sharp increases in customer satisfaction.  And the firm’s overall numbers show how economic robustness and resilence can grow from a focus on efficiency.

Now…if they added a little document automation platform into the mix, I wonder how much further they could go?

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Posted in Legal document automation, Processes, law firm economics | No Comments »

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