CEE Legal Matters

Category: Contributors

  • Contract Drafting: A Stylistic Comedy

    When drafting an obligation in a contract, which of the following is the preferred format of your office?:

    1. The Seller is obligated to transfer possession of the Property to the Purchaser.

    2. The Parties hereby agree that the Seller shall transfer possession of the Property to the Purchaser.

    3. The Seller covenants and agrees to transfer possession of the Property to the Purchaser.

    4. The Seller agrees to transfer possession of the Property to the Purchaser.

    5. The Seller undertakes to transfer possession of the Property to the Purchaser.

    6. The Seller shall transfer possession of the Property to the Purchaser.

    7. The transfer of the Property’s possession to the Purchaser shall be carried out by the Seller.

    8. The Seller must transfer possession of the Property to the Purchaser.

    9. The Seller is responsible for transferring possession of the Property to the Purchaser.

    10. The Seller is required to transfer possession of the Property to the Purchaser.

    11. The Seller will transfer possession of the Property to the Purchaser.

    12. An obligation exists on behalf of the Seller with regard to the transfer of the Property’s possession to the Purchaser.

    When I run this exercise with lawyers, they always disagree on the right way to draft it. In the context of an actual contract, these sorts of disagreements can be time-consuming, frustrating, and damaging to your bottom line.

    In this article, you will (i) learn about three problems caused by not having an office policy on standard contract language (e.g., standard formats for obligations, rights, conditions, etc.). and (ii) receive some tips for setting up a contract style policy for your office.

    The Problems: Wasting Time and Annoying Clients

    First, if you are not certain about the right method for drafting standard provisions like obligations, it takes you a lot more time to create one. Don’t believe me? Just give your colleagues some client instructions and ask them to pump out some provisions. When I do this with my students, many of them fall into an endless loop of writing and rewriting provisions due to their uncertainty about the “right” language. (In fact, some don’t stop writing until either they run out of paper or I tell them to stop.) However, once they select preferred language formats for provisions, they quickly and confidently transform client requests into sophisticated contract provisions. They also write better quality provisions – since they no longer need to waste time thinking about minor matters like word choice, they can focus their energies on uncovering higher-value legal protections for their client.

    Second, clients find it annoying when key wording in contracts they are trying to understand changes from provision to provision. At most companies, you would get yelled at for writing complex instructions utilizing inconsistent language.

    Third, your firm’s branding takes a hit from inconsistent language. When you provide clients with a contract that incorporates drastically different drafting styles from provision to provision, you reinforce the feeling that your firm’s contracts are merely lazily slapped-together copy-and-paste jobs. By contrast, firms that take the time to harmonize contractual provisions via a drafting style guide make their contracts look more professional and organized.

    The Solution: Office Style Guide

    Creating a consistent style for your provisions does not mean you need to go crazy with writing a super style guide. You can accomplish a great deal by just standardizing the language for (i) obligations, (ii) rights to act, (iii) rights to receive actions, (iv) prohibitions, (v) lack of obligations/rights, (vi) conditions, and (vii) definitions.

    If you find yourself struggling to identify the right language for any of these options, I recommend Ken Adams’ A Manual of Style for Contract Drafting, which breaks down contract language into finite parts to help readers identify best practices for their provisions.

    Aaron Muhly is an American lawyer who has been training European professionals on clear writing and effective communication for over 15 years.

    This Article was originally published in Issue 7.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

     

  • Covid19 Strategy for Lawyers – Why Are Your Marketing Activities Not Delivering New Clients?

    There’s little doubt that when it comes to marketing, few industries have been as active in the last month as the legal profession. And to my professional eye, most of this activity has been focused on the acquisition of new clients. Unfortunately, as far as I can see, a lot of these activities have not delivered their intended business results. I believe the reasons are fairly clear. That is why I have put together some strategic insights that will help law firms and individual practitioners to rethink their Covid-19 marketing strategy for attracting new clients. I hope the following suggestions will inspire new ideas and approaches:

    1. It’s the strategy and not the action that delivers results. A popular way to attract new clients in the current climate is through webinars. This is essentially a good way to attract new potential customers to your services. However, have you considered how you will convert your webinar’s audience into actual clients? What will be your second, third, and fourth steps? Have you prepared an entire customer journey before launching a webinar? This is an essential consideration that will help you to increase your conversion rates. And this applies not only to webinars, your customer journey can start with a LinkedIn add, media article or even a radio interview.

    2. Optimize your content and use all the channels at your disposal to save your time. Once you have identified the topic that you are going to cover, don’t limit yourself to sharing it in one format only. Think about how you can adapt that content to other channels. You could maybe turn it into a personal email to someone, a live broadcast on social media, or an article for local media or blog on your website, etc. To increase your marketing reach, you can explore advertising opportunities, which makes sense especially now, when advertising price rates are going down.

    Social media advertising is a relatively simple and effective place to start. For example, with the investment of approximately 200 euros on promoting a post you can go a long way and put it in front of the eyes of 10K targeted decision makers on LinkedIn.

    It’s important to note here that you shouldn’t play around with the content form too much. As I mentioned earlier, the most important consideration here is to understand at what stage of the customer journey this content will be used in. You need to always ask yourself the question, “What do I want this piece of content to achieve?” For example, is it just to hook interest, or is intended to provide a more concrete value for the customer, or to keep an existing customer loyal to your services?

    3. The visual quality of the content is important. When it comes to information, law firms tend to be particularly strong; this is, after all, the essence of their craft. Where the cracks start to show, however, is on the visual front. The truth is that the leading law firms in these circumstances put an extra effort into design and visual solutions to have the right finishing touch to the content. That is why currently having a poor or bland aesthetic will impede the potential reach of your content and will lag you behind in the market.

    4. Packaged solutions will help you to sell and make faster decisions for your customers. In today’s uncertain climate Business Executives need quickly to decide whom to delegate their legal tasks. This is where being able to offer packaged solutions will give you a competitive advantage. The Choice of 3 strategy is particularly suited to this case as each of three provided options have a clearly defined scope of work, fixed price and project timeline.

    I would like to emphasize that this strategy is most useful when it comes to attracting and onboarding new clients. You will find that once your new client is on board, you’ll need to customize your services to fit their exact needs.

    5. Well, and now a little extra for the smaller players in the market. If you haven’t formed a reputation in the market as experts in all fields so far, now it is definitely not the right time to start. This is the time, instead to concentrate on the industry sector (e.g., accommodation, catering, medical, industrial, retail, etc.) or practice areas (e.g. employment law, insolvency, data protection, etc.) where you are the strongest and focus all your marketing efforts on this. If your goal is to attract new customers –this will be your best option. That is my guarantee.

    Of course, I have put this together with the understanding that you are already taking care of your existing clients and providing them with all the information they need.  After all, they are the most important clients for you right now and the greatest business potential comes from them.  

    Neringa Petrauskaite is a business development and marketing strategist with 15 years of international legal service industry experience working both in-house and as a outsourced consultant.

     

  • The Confident Counsel: The Secret to Killer Presentations

    The Confident Counsel: The Secret to Killer Presentations

    It’s your time to shine. You have been chosen to present at your favorite legal conference.

    Naturally, you are a little nervous, but you expect your audience will start rocking once they warm up. As you get past five minutes, they are still not rocking. In fact, they look like dead fish with their mouths hanging open. This is not helping your confidence – you just want to get the hell out of there. So, you start to speed up your presentation, which confuses everyone … including you.

    If you found this description similar to your own experience presenting, you might appreciate knowing the number one technique for transforming a boring legal presentation into something that brings audiences to life.

    Step 1: Identifying the Benefits

    To deliver a presentation that interests your audience, you need to identify why they should be interested. Unfortunately, most lawyers find it difficult to explain besides: “It’s an interesting topic.” Do you often sit in on presentations simply to “hear an interesting topic?”  Probably not. More likely, you go to presentations to pick up a few insights that will help you with your work (i.e., to be enabled). For this reason, you should focus on trying to identify your audience’s WIIFY (“What’s In It For You”). In other words, how they will benefit from what you have to tell them.

    If you have trouble identifying the WIIFY for your presentation, try phrasing it as: “This presentation is important to you because [insert audience benefits].” For example: “This GDPR presentation is important to you because it will help you avoid the three most common compliance mistakes.”

    Step 2: Using the Benefits

    Once you identify the WIIFY, make it the heart of your presentation by promoting it via (i) your agenda, (ii) your slides, and (iii) your takeaways.

    Regarding your agenda, explain the WIIFY when you get to your “agenda” slide. If you watch audience behaviour, you will notice that most presentations are won or lost by the agenda. When the presenter fails to describe the benefits of the presentation at this point, you can see audience members drifting off (often, painfully, by checking their phones).  On the other hand, skilled presenters draw their audience in by using the agenda as a teaser for their presentation’s benefits.

    Regarding your slides, use the WIIFY to filter out bad slides and useless information. Lawyers often make the mistake of including too much – too many words, too many slides – in order to ensure that the audience gets all of the information that they might conceivably need. If you do this, you kill your presentation by forcing your audience to search for the information they need among all the other stuff they don’t. To avoid this mistake, use your WIIFY to examine each of your slides. Delete all slides that don’t promote your WIIFY. If you decide to keep slides, reduce the wording as much as possible so that you are only using the words that are crucial to communicating the WIIFY.

    Regarding your takeaways, lawyers oftentimes forget to put into their presentations any takeaways, such as links to websites or blog posts. Leaving this information out denies your audience the most important element for ensuring that they get a lasting benefit from your presentation. You can end your presentation with a powerful conclusion by listing three valuable resources that your audience can consult to learn more.

    My Takeaway

    Learn more about the WIIFY method and other valuable presentation techniques with Terry Weissman’s book Presenting to Win.

    Aaron Muhly is an American lawyer who has been training European professionals on clear writing and effective communication for over 15 years

    This Article was originally published in Issue 6.12 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • The Confident Counsel: Escape from Reverse – Delegation Land

    The Confident Counsel: Escape from Reverse – Delegation Land

    In our new The Confident Counsel feature, prominent CEE law firm consultant Aaron Muhly will share his thoughts and suggestions on ways lawyers in the region can communicate more effectively, and more profitably, to clients, colleagues, and peers.

    Have you ever delegated a writing assignment to a colleague, but when you received his work-product, it was so awful that you completely rewrote it? The fancy word for this is reverse-delegation, and it’s not good.

    When you allow your colleagues to re-delegate work to you, you are acting like a CEO who happily accepts a mop from the cleaning staff and starts wiping the floors. You are not fulfilling the supervisory role expected by your firm’s management, and more importantly, you risk upsetting clients by billing for junior work at an inflated rate.

    There are ways, however, to escape the nightmare of reverse-delegation, by providing feedback that delivers long-term results.

    Beware the Red Pen

    You don’t always rewrite the work of your colleagues. Instead, you probably sometimes engage in the “Red Pen Method.” 

    I had the pleasure of experiencing this method while working as a law firm associate in Chicago. For every writing assignment, I had to provide my supervising partner with a printed-out draft. He would take his red pen and cover my drafts with so many comments and corrections that the paper looked like it came from a crime scene. After he was done, he would toss the paper on my desk and gently remind me “not to be such a jerk to his clients.”

    Although you can use this method to help your colleagues fix the problems in current writing assignments, this method isn’t very effective for avoiding problems in future assignments. Imagine that you are an associate receiving a draft email covered in red. You will see that you have some problems to fix, but you probably can’t see which of these problems are the most important (i.e. the problems that you should focus on in future assignments). As a result, you are likely to re-commit the same major mistakes next time.

    To avoid this trap, go beyond the red pen and focus your colleagues’ attention on the most important problems in their writing. In other words, sit down with them and point out the specific mistakes driving you crazy. This sounds time-consuming, but in the long run it’s more efficient than doing their work for them.

    Choose Mistakes with Solutions

    When you pick a mistake, make sure you can provide a practical solution. Supervisors often provide ambiguous and unhelpful solutions to recurring mistakes. For example, have you ever told your colleague that her sentence is too complex? Although your comment might be correct, when she goes back to her desk, how exactly should she solve this problem? 

    Let me demonstrate how to provide a more practical solution. Read the following text:

    If there are creditors’ claims reported within the 40-day period following the publication of the commencement of the liquidation in the Company Gazette, the Opening Balance Sheet must be adjusted accordingly (the “Adjusted Opening Balance Sheet”). New receivables and liabilities, deferrals, valuation reserves, provisions, write downs, adjustments and extraordinary depreciation may also be accounted for in the Adjusted Opening Balance Sheet.

    Although you had little problem reading the first sentence in that passage, you didn’t feel good about the second sentence (e.g., you felt lost). With English writing, readers typically get confused if you start your sentence with new or unfamiliar information. To correct this, try starting the second sentence with something familiar, such as an important actor or some words from the previous sentence. If applied to the example above, that leads to this: 

    If there are creditors’ claims reported within the 40-day period following the publication of the commencement of the liquidation in the Company Gazette, the Opening Balance Sheet must be adjusted accordingly (the “Adjusted Opening Balance Sheet”). The Adjusted Opening Balance Sheet may also account for new receivables and liabilities, deferrals, valuation reserves, provisions, write downs, adjustments and extraordinary depreciation.

    Much better.

    Give a Roadmap

    Once you help your colleagues understand their major problems and solutions, you want to ensure that they will follow your advice back at their desks. For this reason, give them a roadmap that tells them what to do, step-by-step. For example, tell them, before they push the button to send you a draft email, to take five minutes and do the following:

    Identification: For each sentence, underline the words up to your first verb. Did you underline information that is familiar to your reader (i.e., an important actor or words that you discussed in the previous sentence)?

    Solution: If your answer is no, do the following: If you are using the passive voice, try using the active voice to place an important actor at the beginning. If you can’t get an important actor in the beginning, search for the words in your sentence that link back to the previous sentence (i.e., words you used in the previous sentence). Restructure your sentence to move these words to the beginning.

    Aaron Muhly is an American lawyer who has been training European professionals on clear writing for over 15 years.

    This Article was originally published in Issue 6.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • Partner Nightmares: Trapped by the Cap

    From GC Nightmares to Partner Nightmares

    In our previous article, we addressed the frustration of general counsel regarding external lawyers pushing against their caps, and we provided some tips for how to defuse this tension. (See Evelaw. GC Nightmares: Assaults on the Cap).

    In this article, we examine this problem from the perspective of law firm partners and suggest some steps for handling cap issues in an effective manner.

    The Scoping Dilemma for Partners

    When we consult with law firm partners about scopes and caps, we frequently hear about the problem of matters that have gone way beyond scope. This problem leaves the partners with a wonderful choice. They can simply keep their mouths shut and later fight with their partners over profitability and write-offs. Or, they can start arguing with the client over the need to expand the budget and risk losing the client down the road. In the latter situation, the partners also face the chance of losing all the time and resources they spent on acquiring the client in the first case.

    In this article, partners can discover tips for limiting the risk of scoping disputes. In particular, we discuss methods for improving the scoping process via the collection of important information at three stages of the matter acquisition process.

    The Challenges of Scoping

    Before we introduce our proposed solutions, it’s important to understand the underlying expectations and challenges of scoping.

    Clients understandably expect law firms to take responsibility for scoping matters because the external lawyers are deemed to have the expert knowledge for handling a matter. 

    However, law firms suffer two major disadvantages when dealing with matter scoping. First, many partners are not comfortable with scoping due to:

    • Their lack of skills in project management;
    • Their firm’s failure to collect historical information about similar past matters to help with the scoping; and
    • The mere fact that scoping involves a great deal of uncertainty, thereby making it impossible to completely reduce the risk of going beyond scope.

    Second, law firms typically do not have access to all the client information that would be necessary for properly scoping a matter.

    Law firms cannot solve the first disadvantage in the short term as it takes substantial time to develop the skills and collect the data in order to make partners comfortable with scoping. However, law firms can still make substantial improvement in the short term if they focus on improving their collection of crucial scoping data from clients.

    Enhanced Scoping via Data Collection

    Law firms can best collect data if they not only focus on the types of questions they ask clients but also address the timing of such collections. In our experience, this question of timing should focus on the following three preliminary stages:

    • Pre-Pitch
    • Pitch
    • Kick-Off Meeting

    In the below explanations, we focus our advice on the situation of law firms responding to RFPs. However, law firms can apply a similar approach when independently pursuing work from a client.

    Pre-Pitch

    Once a law firm receives an RFP, they should immediately start to conduct a preliminary scoping of the work. As part of the preliminary scoping, partners should respond to RFPs by contacting the client to ask questions regarding not just the content of the RFP but also the background business drivers for the needed work. For example, you should probably investigate the following questions:

    • How does the proposed work relate to the client’s strategy?
    • What business goals are the client looking to achieve with the proposed work?
    • What issues/concerns does the legal department have regarding the project?
    • Who are the key decision-makers? What are their roles in the RFP decision-making process?

    Pitch

    If the client permits the law firm to make its pitch in person, the law firm should use this time to not only introduce itself but to also impress the client by engaging in a further discussion about the matter’s scope. This discussion should focus on major issues that are likely to be of concern to both the client and the firm. For example, we encourage firms to investigate the following topics:

    • Are there certain activities that are especially important to accomplishing the client’s goals? Who will be responsible for these activities?
    • How does your firm envision the timeline for its work, including intermediate timelines for each stage? How do your timelines match the envisioned timelines of the client?
    • Does the client require any special resources for the matter? 
    • Does the client face any particular constraints (e.g. obtaining difficult approvals) that will substantially affect the matter?

    If possible, the pitch team should also develop customized questions for each of the key decision-makers. These questions should be aimed at trying to uncover the goals of each decision-maker and the work required to reach such goals.

    Kick-Off Meeting

    As a final step, law firms are advised to have one final scoping discussion prior to starting work in order to (i) confirm the client’s understanding of the matter’s scope, (ii) ensure that all project members are on the same page regarding the scope, and (iii) agree on procedures for effectively resolving potential scoping disputes. For this purpose, we recommend that the firm organize a kick off meeting with all of the participants who will work on the matter. 

    During this discussion, the external lawyers might find it useful to clarify with their internal counterparts the following work-related topics:

    • The main stages of the project, including the deadline for each stage.
    • The tasks for each stage, including the responsible party for each task.
    • The deliverables for each task.

    Furthermore, the participants should work together to set up a crisis communications plan for identifying and addressing potential disputes. This plan would address the following topics:

    • For each side, the responsible person for discussing scoping issues.
    • The triggers for discussing potential issues. For example, the parties can discuss the main scoping risks for the matter and select triggers based on the likelihood of such risks.
    • The methods for discussing scoping issues. For example, should the discussion be over the phone or in person? How frequently should they be discussing matter scope developments?

    Conclusion

    We hope that our above scoping tips will help partners sleep a little better at night – not only because they will have less concerns about scoping disputes but also because they will become more successful in their pitching due to their ability to better address major client concerns about scoping.

    By Aaron M. Muhly, Founding Partner of Evelaw

    Aaron M. Muhly is a co-founder of Evelaw, an advisor to European law firms on marketing, client development, and business communications. To learn more, visit www.evelaw.eu.

  • 5 legal marketing trends for 2018

    Every year legal marketing professionals try to define the key trends and predictions for the upcoming year – so do we. Most tools and solutions have been around for some time, we just have to adjust them according to our experience and global trends. 

    1. Digital marketing 

    It’s had an important role in law firms for some years, but we are seeing more and more firms finding the need to go through a rebranding process. This affects their website, their thought leadership initiatives, their content marketing tools, and also their back office – with updated CRM systems which are now connected to billing, time tracking and marketing and business development processes. 

    2. The change of media

    The PESO model in PR says that there are 4 types of media: Paid, Earned, Shared and Owned. Media is constantly evolving, and marketers have to adapt to these changes. Old-media forms, such as newspapers, magazines and mainstream news portals are not the ideal platform for law firms. They are expensive, not targeted enough to be cost effective and results prove hard to measure. Law firms need to build their own media platforms with the use of blogs, social media platforms like Facebook and LinkedIn, or creating their own events and meet-ups. These are the ESO in PESO. 

    Nevertheless, paid media is still largely appreciated, but it needs to be highly targeted. Law firms should not pay for wide reach, but for laser-focused professional media-platforms. The potential clients don’t want to read every single news outlets; they do not want to shop around different portals either. Clients will look for information on their interests in smaller circles. And law firms have to be present in that circle.

    3. Personal branding

    Law firms are building their brand but also young attorneys are building their personal brand. The Y generation is starting to take senior positions. By Y generation, we generally mean those people born between 1978-1994. The Y generation has a rather different mindset from the earlier generation: they change jobs easily and they are not attached to their firms emotionally; they write professional blogs and client alerts; they hold presentations and meet-ups; they network extensively and are very active on social media. Content marketing is their number one tool developing their personal brand and carrier path. 

    4. Pro bono and CSR activities 

    Companies are more and more green, eco-friendly, with CSR (corporate social responsibility) programs and initiatives, locally and globally. And they expect their law firms to share their outlook. A law firm has to stand out from their competition. All law firms may have the same level of expertise, but they can project very different messages. A pro bono or CSR initiative can place their brand in a more outstanding and relatable position. It is important to remember that GCs and CEOs tend to choose a firm they can relate to. 

    5. Emotional selling

    People like to take rational decisions in life – especially in a business environment. As decision makers are human, their decisions are unavoidably affected by their emotions. Law firms should use this knowledge. The purpose of every PR activity is to build a positive brand. A positive brand is a likeable brand. But how a firm can achieve this like-ability? Easy: when the law firm connects with their clients, or when clients receive more than expected. This can include free expert content in a blog or a newsletter, a free seminar, pro bono work for an important cause, a nice client event…. Law firms need to do everything they can to improve their communications strategy in 2018. 

    By Mate Bende, Partner, Pro/Lawyer Consulting

    With 10 years of legal communication experience, Mate Bende started his legal consultancy firm, Pro/Lawyer Consulting in 2015, with the intention of, helping lawyers and the legal industry reach their business goals. In 2017, he worked with 15 law firms and 3 legal networks in the CEE region. His main focus is on PR based business development solutions which include branding, online presence for law firms, social media trainings and legal ranking consultancy as well. In 2016 and 2017 Pro/Lawyer won a Hungarian B2B communications award, both times with a campaign in the legal business sphere. From 2018, the firm is a member of the Nextlaw Global Public Affairs Network, powered by Dentons.

  • GC Nightmares: Assaults on the Cap

    Why can’t you sleep?

    When we ask general counsel the question “What keeps you up at night about law firms”, many gnash their teeth about a problem with fee caps. In particular, they express their frustration with law firms requesting cap waivers based on the belief that the matter’s scope has been exceeded.

    This situation frequently forces general counsel to confront a no-win situation. Either they are pushed into an uncomfortable battle with the law firm over scope analysis or they have the pleasure of fighting with their financial department for extra funding. Even worse, when such disputes lead to the general counsel not using the law firm for any follow-on or repeat work, the legal department will have to waste future resources on bringing in a new law firm to “reinvent the wheel”.

    In this article, general counsel will learn how to minimize the risk of uncomfortable scope disputes with law firms by ensuring that the firms are fully engaged in the scoping process. This minimization involves general counsel dealing with the following topics:

    • The limitations of using law firm pitches to set the scope.
    • The benefits of engaging in a shared scoping process.
    • How to head off conflict by planning for scope issues in advance.

    Pitches Ain’t Scopin’

    Do you treat a law firm’s pitch as setting the scope for your matters? If so, you are just asking for trouble.

    When law firms make a pitch, they are oftentimes working off of insufficient information to properly scope the matter (e.g. a bare-bones RFP). In other words, they are submitting a pitch budget with the prayer that nothing too bad will pop up. 

    Even worse, during the pitch preparation, all too many firms fail to explicitly list the assumptions that form the basis of their proposed budget. As a result, when that badness does pop up, they can’t rely on their assumptions to protect themselves (i.e. justify their arguments for a change in scope). 

    To avoid these types of issues, you definitely want to involve law firms into a shared scoping process.

    Shared Scoping

    In our experience, both general counsel and law firms can best anticipate and resolve scoping issues by dealing with them at the outset of the matter. In particular, we recommend that they meet for a Kick-Off Meeting to make best efforts at setting a shared scope for the matter.

    During this meeting, the parties should discuss the typical scoping topics of Legal Project Management, including:

    • The main project phases and the tasks for each phase
    • The deliverables required for the successful completion of each task
    • The responsible party for each task
    • The fundamental deadlines of the matter

    Further, general counsel can also greatly assist the scoping process by sharing with law firms valuable information regarding the matter’s (i) business background and (ii) important stakeholders.

    Business Background

    In our experience, law firms are much more likely to understand scoping issues when they get the big picture about the company and its matter. In this case, the big picture involves how the matter interacts with the business goals of the company. To help firms grasp this picture, we recommend that you try to address for them the following questions:

    • What does the outcome of this matter mean to your company? (E.g. How does it affect your company’s business strategy?)
    • What does your company view as the best case outcome for your matter? (If possible, also discuss the worst case outcome.)
    • What are the most important things to consider when managing this matter? What are the least important things?

    Key Stakeholders

    As you will definitely need to deal with various stakeholders throughout the handling of the matter, it’s a good idea to enlist the assistance of external counsel in managing these stakeholders by providing them with some background on the key stakeholders. When law firms better understand the key stakeholders, it’s much easier for them to anticipate and address potential scoping issues.

    When you discuss the key stakeholders, try to address the following questions:

    • For each key stakeholder, how will he/she be affected by this matter?
    • For each key stakeholder, what is his/her main concerns involving the matter? (E.g. revenue, risk, reputation)
    • Will any key stakeholders be negatively affected by the successful resolution of this matter?
    • Which key stakeholders have decision authority over the matter? What are the procedural obstacles that need to be navigated in order to obtain such authority?
    • Are there any external stakeholders that might create problems (e.g. law firm competitor, community group)?

    Anticipating Conflict

    Although the parties will greatly benefit by using the above shared scoping approach, they should not sweep under the rug everyone’s hidden concern – “What if we still have a problem with scope?” Therefore, as a final step, we encourage them to openly discuss and agree on two final issues:

    • What uncertainties are we still facing? (In other words, what are our Red Flags?)
    • If we hit a Red Flag, how can we address it in a constructive manner?

    Setting Red Flags

    The parties can best anticipate Red Flags for their matter if they openly discuss and document each side’s assumptions for the matter. As some lawyers are not comfortable with discussing their assumptions, it’s useful for general counsel to get the ball rolling by first discussing their assumptions for the matter. For example, you can increase the comfort level of the external lawyers by explaining your assumptions about what work falls outside the law firm’s scope due to the following reasons:

    • the work is unnecessary for the success of the matter;
    • the work can be excluded due to your company’s risk tolerance; or
    • the work can be more efficiently handled internally (or by a another vendor).

    Once both parties have had the opportunity to discuss their assumptions, they can identify many Red Flags by reanalyzing the other party’s assumptions and asking themselves the following two questions:

    • How likely it is that this assumption will prove to be untrue?; and
    • If it does prove to be untrue, approximately how much additional work will be added to this matter?

    Resolving Red Flags

    As a final step, general counsel can reduce the likelihood of unnecessary conflict down the road by laying out the potential options for addressing Red Flag situations. This step is important as it helps law firms avoid applying a narrow focus on simply demanding a cap waiver.

    When brainstorming potential options, general counsel might find it useful to think about the following questions:

    • Can the in-house team off-set the additional workload of the law firm by taking on responsibility for other work from the law firm?
    • Can the general counsel partially compensate the law firm for the additional workload by giving follow-on work or unrelated legal work?
    • Is the general counsel willing to compensate the law firm in future matters by using the Red Flag as a basis for either adjusting the scope and/or increasing the matter budget?

    By examining and discussing these options with the law firm, general counsel can not only reduce the likelihood of the law firm applying a narrow focus on cap waiver demands but also encourage the law firm to search for its own creative solutions to scope problems. As a result, both sides will be in a better position to resolve Red Flags in a manner that addresses their shared interests.

    Conclusion

    We hope that the above article will help General Counsel sleep just a little better at night. In our next article, we will try to improve the sleeping patterns of law firm partners by addressing this cap nightmare from their perspective.

    Aaron M. Muhly is a co-founder of Evelaw, an advisor to European law firms on marketing, client development, and business communications. To learn more, visit www.evelaw.eu.

  • Legal Marketing Trends in Hungary

    Until 2009 legal marketing was overregulated in Hungary. Since then lawyer ads are basically allowed, but they have to comply with the Hungarian Bar Association’s guidelines. 

    Everything is Online 

    There are around 12,000 active attorneys in Hungary, and still only a small fraction of them have an online presence. Although in the US and the UK law firm websites are obvious tools of the practice, in Hungary we are still behind in the penetration of online tools. Obviously, the top 50 law firms in the country (including the international and large locals) have nice websites, and most of them are active in social media (mostly LinkedIn) as well. The problem starts with smaller law firms and solo practitioners, who make up 95% of all Hungarian attorneys. Most of them don’t have a website, and those that do exist are usually outdated. Around 100 of them have a Facebook page, but most of them are inactive or have an average of only 200 followers – mainly friends and family. They use hardly any online marketing tools like AdWords, Facebook ads, or even banners. 

    Why do I start with their online presence? Because in 2017 online is everything. Potential clients search for lawyers on Google or at least use the website to verify that they are really experts in their fields. If the lawyer doesn’t even have a professional website, the client will find one who does. 

    Content Marketing is Still the Thing

    Since Hungarian lawyers are traditionally not comfortable with regular advertisements, content marketing is a perfect solution for them. A well-written and -told story sticks harder and longer in the heads of potential clients than any slogan, offer, or discount. The legal environment is in a constant state of change, so this provides many opportunities for lawyers to comment on the changes, to provide expert analysis, or simply to blog about fresh legislation. The trend in the marketing world is towards graphic content, especially infographics and video – probably the most visible tools in communications arsenals. Only a few law firms in Hungary use these kinds of tools at the moment, but I predict a huge increase in their use in coming years.

    PR and Marketing for Everyone

    Most of the top 50 law firms in Hungary are active in public relations (PR). More and more firms are working with outside experts to plan and execute their communications strategies. They use all of the classic PR tools like press relations and brand image campaigns to increase visibility, sponsorships, and employer branding. Last year there was a day when four law firms issued press releases on different legal topics! 

    On the marketing side they create and publish press articles and even print and online ads. The large, multinational firms have strict and centralized policies and international know-how regarding the perfect usage of these tools. But more and more mid-sized locals are implementing these solutions and competing with their larger competitors. Recognizable branding, a strong presence in the business press, newsletters and office management tools for leads conversations, and CRM systems are all part of the arsenal of this new breed, which are typically spinoffs from larger firms, and which therefore have the client management attitude of an international firm but the flexibility and pricing of a local law firm. And they do this on a quite impressive level: for example, one of our campaigns for a Hungarian law firm won a B2B marketing award in November 2016 – so legal marketing is becoming a recognized specialty of professional marketers as well. 

    The trend in coming years will be that all firms will acknowledge the importance of PR and promote themselves in their own way. Responsive webpages, search engine optimization, AdWords, social media (LinkedIn and Facebook especially) – these don’t require significant extra effort or a dedicated budget but are nonetheless a critical part of the day-to-day business of a 21st century law firm. Modern solo practitioners, especially outside of Budapest, could have a huge advantage over their competitors with the smart use of online tools. 

    And a Word on Legal Directories 

    The above-mentioned top 50 law firms are the ones present in the usual international legal rankings. In recent years more and more firms have started to submit to these publications, even though we learned from CEE Legal Matters’ Corporate Counsel Handbook that GCs are more than three times more interested in a firm’s brand and track record than they are in its legal ranking. Still, law firms spend serious time and energy on these submissions instead of building a strong and recognizable brand for themselves. 

    By Mate Bende, Managing Partner, Pro/Lawyer Consulting

    This Article was originally published in Issue 4.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.

  • Corporate Governance: How Does Ukraine Fit Into EU Models?

    Corporate Governance: How Does Ukraine Fit Into EU Models?

    For the last couple of years the issue of attracting foreign investments into Ukraine has loomed large. However, attracting such investment is hardly possible without creating the proper investment climate and implementing necessary reforms. One necessary step is transforming Ukrainian corporate law.

    Mate BendeIn the article below we will briefly compare the Ukrainian model of corporate governance with relevant models across the European Union. We also provide examples of recent developments in Ukrainian corporate legislation aimed at adapting it to the legislation of the EU. 

    Board Structure: One-Tier or Two-Tier Model?

    It is commonly known that board structures, on the whole, can be divided into two groups: One-Tier and Two-Tier boards. Under a one-tier board the shareholders directly appoint the management board which is responsible to them. Under a two-tier board the shareholders appoint a Supervisory Board, or Non-Executive Directors, which, in its turn, forms the Board of Directors (Executive Directors), to actually manage the company. Executive Directors are responsible to the Supervisory Board and/or to the shareholders, if the articles of association so provide. 

    There is no unified approach to board structures in the European Union. Some member states, such as Germany, Poland, Austria, and the Czech Republic, make the two-tier model mandatory, whereas in Great Britain, Spain, and Sweden only one-tier boards exist. The majority of member states, however, allow for a choice between the two models. The same approach is reflected in the Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE), which introduces the concept of a common legal entity across the EU. 

    Ukraine is one of the countries that provides for flexibility between one-tier and two-tier boards in joint-stock companies. According to the Law of Ukraine “On Joint-Stock Companies”, the Supervisory Board must be created only in those companies where there are 10 or more shareholders. Members of the Supervisory Board, should such a corporate body be created, are appointed and dismissed by the shareholders. The Executive Directors are appointed and dismissed by the Supervisory Board, provided this is not set out as the competency of the General Meeting of Shareholders in the company’s articles. 

    In addition, Ukrainian corporate law provides for a special body – a board of auditors – which supervises the business activities of the company. The board of auditors is appointed and dismissed by shareholders. Although the board of auditors is not very common among EU jurisdictions, the corporate body can be created according to corporate legislation of Italy and Portugal. In Ukraine, creation of the board of auditors falls within shareholder discretion in joint-stock companies, whereas limited liability companies are required to create such boards, according to effective legislation. 

    Shareholder Influence on the Company Board

    Shareholder influence on the company board may be of big importance in terms of management of the company. Changing the board composition ad hoc may make the company more vulnerable to outside pressure, including pressure from shareholders who are only interested in short-term gain. 

    In April 2013 the London School of Economics published a Study on Director Duties and Liability prepared for the European Commission, where all EU member states were categorized into one of three groups depending on the right of shareholders to dismiss members of the board.

    The countries classified into the first group provide maximum protection to the board. The laws of such countries do not allow shareholders to dismiss executive directors before the end of their terms in office without reason. Germany, Austria, Poland, Estonia, and Latvia are among the countries falling into this group. 

    The jurisdictions included into the third group, by contrast, provide shareholders with the widest authority for board dismissal. Under the laws of such countries, shareholders may dismiss a member of the board any time without reason. In addition, companies in such countries are more shareholder-centric and do not provide for an employee representative on the Supervisory Board. Italy, Spain, Portugal, and Cyprus have chosen this approach. 

    The second group consists of those countries, such as France, Sweden, the Czech Republic, and Slovakia, which cannot be easily classified either into the first or third groups. 

    In our view, Ukraine should also be assigned to the second group. Under the two-tier board structure, the General Shareholders Meeting can terminate the authority of any member of the Supervisory Board at any time without reason. At the same time, grounds for dismissal of Executive Directors may be established by law, a company’s articles of association, or by contract with an Executive Director. The authority of an Executive Director can be terminated by the Supervisory Board or by the General Meeting of Shareholders where the articles of association so provide. 

    At the same time, Ukrainian legislation does not provide for an employee representative on the Supervisory Board of a company, and, therefore, it is more shareholder-oriented. 

    Recent Developments in Ukrainian Corporate Law

    Derivative Action

    On 1 May 2016 the Law of Ukraine “On Introduction of Amendments to Certain Legislative Acts of Ukraine Regarding Protection of Investors’ Rights” No. 289-VIII dated 7 April 2015 came into effect. This law, in particular, introduces the notion of a derivative claim. This instrument allows shareholders to file a claim in the interests of a company against its management for damages suffered by the company as a result of management actions or failures to act. Any shareholder who holds at least 10 percent of the regular shares of the company is entitled to file such a claim. The same threshold – the highest in the European Union – also exists in, among others, Austria, Sweden, and Greece. 

    Ukrainian law does not provide for any additional requirements in order to file a derivative claim – it is sufficient to concentrate the minimum amount of shares required. The same approach has been adopted in most EU member states. 

    Squeeze-Out / Sell-Out

    The draft law “On Introduction of Amendments to Certain Legislative Acts of Ukraine with respect to Stiffening the Level of Corporate Governance in Joint-Stock Companies” was registered in the Ukrainian Parliament in May 2015. This draft law proposes to introduce squeeze-out and sell-out mechanisms into Ukrainian corporate law. These instruments are envisaged, in particular, by Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids, and aims to protect the rights of minor shareholders in the course of takeover procedures. 

    If the draft law is adopted, minor shareholders will be entitled to require a shareholder who has concentrated 95 percent of the shares to buy their shares as well at an equitable price (i.e., a “sell-out”). The shareholder who concentrated 95 percent of the shares, in turn, may also require minority shareholders to sell their shares to him (i.e., a “squeeze-out”). 

    Conclusion

    The Ukrainian model of corporate governance combines the features of various European jurisdictions.

    Ukrainian legislation, just like the legislation of most EU member states, allows for a choice between one-tier and two-tier board structures. Ukraine’s Corporate law also provides for a specific corporate body: a board of auditors. Although not typical across the EU, a similar corporate body can be created in companies subject to Italian and Portuguese laws. 

    Whereas the Supervisory Board of Ukrainian companies is wholly dependent on shareholder will, and shareholders may remove Non-Executive directors before the end of their term with no reason, the Board of Directors enjoys higher degree of insulation. The grounds for termination of Executive Director authority are envisaged by law, the articles of the company, or the terms of the relevant contract with an Executive Director.

    Corporate law of Ukraine continues to develop. This is connected with implementation of the Association Agreement between Ukraine and the European Union. The notion of a derivative claim was introduced this year, and a draft law introducing squeeze-out and sell-out mechanisms in the course of takeover procedures is now being considered by the Ukrainian Parliament. All these recent developments gradually approximate Ukrainian law to the standards of the European Union, which will have a positive effect on the investment attractiveness of Ukraine. 

    By Artem Frolov, Lawyer, Alfa-Bank Ukraine