* New Legal Mindset for a New Millennium

By Roger Glovsky, Esq.

By Roger Glovsky

First published 12/7/2016; YearOfDisruption.com; publisher: GiantPeople.

The new millennium is just 16 years old, but In many ways, the practice of law has not changed since the start of the last one. Despite the advent of technology, super fast computers, broadband, and social media, most lawyers still practice law the old fashioned way. A client walks into their office. They have a problem requiring legal knowledge and they ask a lawyer for help. The lawyer sits down with the client gets the necessary background information and then sets off to find the answer, draft an agreement, or follow the necessary legal procedures.

Lawyers are problem solvers. They are smart independent thinkers, trained to research, write and negotiate. By nature, lawyers tend not to be collaborative. Perhaps, it is the complex nature of the legal system or the rigorous courses they need to pass in order to graduate law school. Perhaps, it is the cerebral nature of legal subject matter. Or perhaps, it is the competitive nature of getting into law school, graduating top in the class, and then vying for partnership in a traditional firm. Whatever the cause, collaboration is not highly valued or refined within the legal profession.

In contrast, teamwork is highly valued in business today. Clients expect lawyers to work as part of their “outside team” of advisors just the way their inside management team must work together. The last thing they want is to pay a lawyer huge sums of money to do research, write memos, and create documents only to find that they don’t work for the specific situation. It is not just about interviewing clients prior to starting the work (always a good practice) or having them fill our endless questionnaires designed to address every possible scenario. It is about adopting a new mindset.

The way lawyers were trained in the last millenium did not engender a collaborative mindset, which is essential for the next 1000 years. The new mindset requires that lawyers work as part of a team. Everything thing we do needs to be reengineered to be more collaborative. How do we streamline our processes to work with clients not just work for clients. How do we integrate clients into the legal process? How do we design legal systems that are more interactive? How do we think differently about legal practice?

Progressive Disclosure

The old way was to either assume the lawyer knew everything or to do extensive interviews to gather all the information a lawyer needs before going off to do the work. A different approach is one I call “progressive disclosure”. What information is needed from the client first? How can we respect the client’s time and ask them to provide only the information needed when it is needed? How do we avoid requesting the same information multiple times?

Standard Forms

Historically, lawyers would draft agreements from scratch. Even big firms with “form libraries” often create one-off agreements or customize existing forms to the point they are unrecognizable. This slows down the process and increases the costs. Today, many areas, such as residential real estate, have standardized forms. What if we developed standard forms for every practice area? What if we developed client-specific forms or industry-specific forms for everything we do?

Automation

Standardization is not enough. In order to truly streamline processes, we need to automate. Today, clients have access to more automation than their lawyers. Any business owner can use sophisticated document assembly tools by going online (e.g., LegalZoom or Rocket Lawyer). However, these one-size-fits-all legal systems don’t work for most lawyers. Instead, we continue to produce documents through a manual process of “cut and paste”. How can we as lawyers develop more automated legal systems tailored to fit our individual law practices?

Educated Clients

As a business lawyer, I learned “a sophisticated consumer is my best client”. Clients who have some legal knowledge tend to be easier to work with and get better results. It is up to us as legal experts to share our knowledge in new and innovative ways. Whether it is writing a blog, tweeting relevant articles, or building a knowledge base, our new mindset must embrace the fact that it is our duty to make clients smarter about their legal issues. If not, then we will be challenged to achieve the best results.

With the advent of the internet, attorneys are no longer the “gatekeepers” of legal knowledge. There is much we can do today that will disrupt the status quo. Technology is the obvious answer, and will play a big part of it. However, we must guide technology with a new mindset, one that will enable lawyers to work more collaboratively with clients and achieve better results. How has your mindset changed? What do you plan to do differently?

Roger Glovsky is a business lawyer who believes legal documents should be accessible, affordable and comprehensible. He coaches business owners how to draft and negotiate their own contracts through workshops, teleseminars and online programs.
Roger Glovsky is a business lawyer who believes legal documents should be accessible, affordable and comprehensible. He coaches business owners how to draft and negotiate their own contracts through workshops, teleseminars and online programs.

* Advisory Board Agreements – Three Deadly Landmines

David Leffler maintains a law practice representing business owners in New York City and can be reached at dleffler@lefflerlawfirm.com.
David Leffler maintains a law practice representing business owners in New York City and can be reached at dleffler@lefflerlawfirm.com.

By David Leffler, Esq.

You’ve accepted some invitations to serve on the advisory boards of promising startups and now have only to share a few pearls of wisdom before the stock options you agreed to in payment will be worth millions.

But wait, what about that advisory board agreement? Did you read it before signing? Did you have a lawyer review it? You may be getting a lot less than you think. In fact, you may be walking into a legal landmine.

Advisory board agreements are more than boilerplate – they have real world consequences. You may be in trouble when you violate an overly restrictive non-compete provision. Or you may find yourself without any compensation after years of service because of esoteric compensation provisions that permit the company to cancel your options.

Many problem provisions exist in advisory board agreements today. I have found one or more of these provisions in almost every advisory board agreement that I have reviewed. Don’t sign an advisory board agreement until you have checked for these and any other potential problems in the document.

Landmine #1: Advisory board agreements often contain a non-compete clause. A non-compete clause limits your activity outside of your advisory board role. In very broad terms, it prohibits you from competing with the company that you are advising.

Some non-compete provisions are relatively benign, but many are overreaching and have terms that almost guarantee a violation. You may discover that you will lose your entire compensation even with a single violation of the advisory board agreement, and the non-compete provision can be a real minefield. For example:

“Consultant agrees that during the term of this Agreement, Consultant will not engage in any employment, occupation, consulting or other business activity directly competitive with or related to the Company’s businesses, and will not assist any other person or organization in competing with the Company or any of its parent, subsidiaries or affiliates or in preparing to engage in competition with such businesses of the Company or any of its parent, subsidiaries or affiliates.”

What is wrong with this? Plenty. The provision is so extraordinarily broad that it would be hard not to violate it. First, what does “directly competitive with or related to the Company’s businesses” mean? Let’s say that the Company is in the business of media production. Does that mean the advisor is prohibited from working with any company that engages in media production? Odds are that this individual was chosen to be an advisor because he or she currently works at a media production company or as a freelance consultant in the industry, which puts the advisor at great risk of violating this provision.

What if the Company only engages in media production for online children’s films? If there is going to be a non-compete clause, shouldn’t it be limited to this area of activity? And perhaps it should be limited even further to the specific market in which the company does business.

Finally, what if the business of the company changes during the term of the advisory board agreement (commonly two years)? It is not unusual for a young company to “pivot” upon discovering that it misjudged a market. As written, the non-compete will cover that new area of business as well, something advisors don’t even contemplate.

Landmine #2: The company you’re advising ends up owning your inventions.

What if you serve as an advisor to a company doing business in the field where you have an established reputation and attained considerable success in growing companies and coming up with innovative techniques and applications? If you continue your work during your time as an advisor the agreement may require you to hand over any inventions you develop during that time.

Don’t believe me? Here’s a provision from an advisory board agreement that may raise the hairs on the back of your neck:

“During the term of this Agreement, Consultant agrees that all inventions which Consultant makes, conceives, reduces to practice, develops, establishes or contributes to and which (i) relate to the business of the Company or any of the products or services being developed, manufactured or sold by the Company or which may be used in relation therewith, (ii) result from task assigned to the Consultant by the Company or (iii) results from the use of premises of personal property (whether tangible or intangible) owned, leased or contracted for by the Company shall be assigned to the Company. The Consultant hereby assigns such inventions to the Company.”

The clauses numbered (i) through (iii) are separated by “or” which means that all the advisor has to do is satisfy one of these provisions to be obligated to assign over any rights to inventions that he or she may have developed. The first provision only requires that the advisor come up with an invention that relates to “the business of the Company or any of the products or services being developed, manufactured or sold by the Company or which may be used in relation therewith” to be required to assign all rights to the Company. It doesn’t matter that the advisor may have developed the invention on his or her own time with his or her own resources, or even when working for another company. The advisor still is obligated to assign the rights to the invention to the Company.

By signing the agreement, an advisor may unknowingly have handed over inventions worth far more than he or she would have earned from the advisory board position.

The lesson here is never to agree to such a provision, and only agree to assign rights to inventions that the advisor has developed specifically for the company he or she is advising.

Landmine #3: Compensation for advisory board members typically is not paid in cash, but in some form of equity compensation. The devil, however, is in the details.

One form of equity compensation is a profits interest, which gives the advisor an interest in the company’s profits on a going forward basis. On the date of issuance, profits interests are worth nothing, so the advisor earns no income and no tax is due.

But besides the risk that the company may never make any profits, what if the bus pulls away and leaves you by the roadside?

Startups often begin as limited liability companies but convert to a corporation prior to a financing. If at the moment of conversion the company has not been profitable, unless otherwise provided, the profits interest ends and there is no payout. That is the party bus pulling away, leaving you by the roadside.

Imagine putting in a couple years of advisory work only to learn that your compensation, a profits interest, evaporates just before the next round of financing. Don’t agree to accept a profits interest unless you have a clause in the advisory board agreement stating that the company will carry the profits interest over to the corporation should such a conversion take place.

There are a couple of reasons why these inappropriate provisions are pervasive in advisory board agreements.

First, they may be lifted wholesale from employment agreements and inserted into advisory board agreements even though the relationship of an advisor to a company is quite different from that of an employee. Also, compensation for advisory positions typically is paid in equity, not cash, so the advisor will have to pay a lawyer out of pocket to review the agreement, which often means legal vetting does not occur. Finally, receiving equity makes the agreement somehow seem less serious and less in need of scrutiny by a professional third party. Nothing could be further from the truth.

Advisory board agreements contain many substantive provisions. Give them serious consideration before signing.

David Leffler maintains a law practice representing business owners in New York City and can be reached at dleffler@lefflerlawfirm.com.

* Would you put ads on your law firm website? On your legal blog?

Why or why not?

By Erik J. Heels

First published 11/1/2016; YearOfDisruption.com; publisher: GiantPeople.

Student questioning teacher: They found a way to cram advertising into verbs now?!

A disruptor recently asked me:

By the way, did you know that Davidson.com/patents is advertising on your site? Why have someone take your traffic?

My reply:

Putting ads on the site is an example of the disruptive thinking I’m going for. I don’t care if a competitor advertises on any of my sites, both because I get ad revenue from their ads and because I’m not afraid of the competition! There’s an article right there!

It’s true, we’re allowing ads on the Year of Disruption website. See our Advertising Transparency page for more info on that.

I my case, I have two companies: my law firm – for the left/logical side of my brain, and GiantPeople (the publisher of this blog) for the right/creative side of my brain. This is how my mentor structured his businesses: one for law practice, one for not law practice. And it is how I structure mine.

So it’s easier to contemplate putting ads on my blog (not owned by a law firm, not subject to various bar ethics rules) than on my law firm website.

But what about taking it to the next level? What about putting ads on your law firm’s website? Would any law firm dare to do so? What about for one month just to experiment? What about next month?

With that, I hereby challenge any/all takers to put ads on their law firm website and and their legal blog for the month of December and to report back on what you find.

Is that disruptive enough?

* YoD Disruption News #5 – The Best-in-Breed, Core, Thought-Leader, Uber of Disruption

Don’t tell me what words to use and not to use.

By Erik J. Heels

First published 10/27/2016; YearOfDisruption.com; publisher: GiantPeople.

Business meeting: So we've got our core competencies, core products, core business, core customers, and no one is to use the word 'core' for at least a month.

Before the start of every semester at MIT, I had to visit my “advisor” to him sign off on my chosen classes for the semester. When he saw my schedule for my final semester (which included two core EECS classes plus my thesis, among other things), he shook his head and said, “There’s just no way.” And, in case I missed it the fist time, he repeated, “There’s just no way.” “Well, this is what I need to do to graduate,” I replied, “and I really don’t want to get enlisted in the Air Force if I fail, so sign here.” That semester’s GPA was my best ever (all As and one C). And when I got my MIT diploma, I wanted to slap my “advisor” upside the head with it. I still do.

Now you know why “advisor” is in quotes. And why I not a big fan of being told what I can and cannot do. So we’ll keep on disrupting, thank you very much.

All the news that disrupts (see if you can spot the parodies):

* New Company Aims To Explore Intersection Of Technology, Other Thing (2016-10-26)
“Explaining how their company was poised to usher in a bold new era of innovation, founders of local startup Intuihub told reporters Wednesday that their mission is to explore the intersection of technology and another thing.”
http://www.theonion.com/article/new-company-aims-explore-intersection-technology-o-54533

* The Inventors’ Dilemma: Drafting Your Own Patent Application When You Lack Funds (2016-10-22)
“Obviously, if you can afford competent legal representation that would be the best path to take, but entrepreneurs, and inventors, rarely have the funds available to do everything that really needs to be done.”
http://www.ipwatchdog.com/2016/10/22/inventors-dilemma-drafting-patent-application-lack-funds/

* Hey Startups, We Beg You to Stop Using These Words (2016-10-21)

  1. Bandwidth
  2. Best-in-Breed
  3. Disrupt
  4. Dry Powder
  5. Growth Hacking
  6. Innovative
  7. Lean Startup
  8. NDA
  9. Ninjas/Gurus
  10. Platform
  11. Random Capitalization/Portmanteaus
  12. Revolutionary
  13. Scaling
  14. Solution
  15. Thought Leader/Influencer
  16. Uber of/Airbnb of
  17. World-Class

http://bostinno.streetwise.co/2016/10/21/cliche-stereotypical-words-phrases-startups-need-to-stop-using/

* For Geeks Everywhere – Law Tech ‘Disrupters’ Gather At Landmark London Event (2016-10-18)
“A new co-working space for legal tech innovators was launched today at the Legal Geek conference in London’s Shoreditch.”
http://www.lawgazette.co.uk/practice/for-geeks-everywhere-law-tech-disrupters-gather-at-landmark-london-event/5058385.fullarticle

* An All-Too-Accurate Parody Of What Using A Chip Credit Card Is Like (2015-10-14)
The checkout line has certainly been disrupted by those annoying chip-enabled credit card machines.
http://digg.com/video/chip-credit-card-parody

* A Decade Ago, Google Bought YouTube – And It Was the Best Tech Deal Ever (2016-10-10)
I’m uncertain why people think this was a good deal. 10 years later and YouTube is still not profitable. In fact, can you name 10 Internet companies that have been purchased and made better?
https://theringer.com/google-youtube-acquisition-10-years-tech-deals-69fdbe1c8a06

* 60 Seconds Of Literally Every Commercial Ever (2016-09-29)
http://digg.com/video/the-kloons-commercial-ad-parody

* How The Father Of The World Wide Web Plans To Reclaim It From Facebook And Google (2016-08-10)
“Now a handful of companies own vast swaths of web activity – Facebook for social networking, Google for searching, eBay for auctions – and quite literally own the data their users have provided and generated. This gives these companies unprecedented power over us, and gives them such a competitive advantage that it’s pretty silly to think you’re going to start up a business that’s going to beat them at their own game.”
http://www.digitaltrends.com/web/ways-to-decentralize-the-web/

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* What Every Lawyer Needs to Know about Business Development

2016-09-06-kelli_pictureI fondly remember the only marketing lesson I took with me from law school.

Graduate law school. Get a job at a law firm. Answer the phone when it rings. Meet with the client. Do the work.

All right, no one said those exact words but no one really said anything about how you get clients. After vague conversations with faculty, practicing attorneys I met, and my fellow law students it was definitely implied that clients just showed up at your office wanting to hire you.

Why else wouldn’t my law school teach such an important part of practicing law if getting clients wasn’t that easy?

I was none the wiser until I started my own firm more than 10 years after I graduated law school. Up until then, I worked as in-house intellectual property counsel. I always had a client and a paycheck.

What a harsh dose of reality. Being a good lawyer wasn’t enough to get my phone to ring. In 2009, I began the slow slog of networking events, speaking gigs, volunteering to coach entrepreneurs, blogging, and any other marketing activities I could think of.

It sucked. I struggled to find paying clients. I was desperate to figure out what I was doing wrong. I started to study marketing, sales, entrepreneurship, and how businesses work. I slowly began to understand why lawyers struggled with business development.

Simply put: Lawyers were never taught it, so you don’t understand it. Because you don’t know what else to do, you do what every other lawyer does. You get frustrated when your efforts don’t produce results. Frustration turns to dislike and ultimately you just avoid it as much as possible, hoping your phone rings.

Unfortunately, you need to be good at business development if you are to be a successful lawyer. So here’s a crash course in Business Development for Lawyers.

What is Business Development?

Business Development isn’t marketing. It’s sales.

If you are struggling to bring in clients, it’s most likely because you are only marketing your legal services. You aren’t selling them.

There are 5 elements to every business in the world.

  1. Value Creation: Creating a valuable product or service that people want to buy.
  2. Marketing: The efforts you make so your ideal clients/customers know you exist.
  3. Sales: The efforts you make turning those prospects into clients/customers.
  4. Value Delivery: Delivering your product or service.
  5. Finance: Selling your product or service at a price that makes you a profit.

Notice that Marketing and Sales have to different goals.

The goal of Marketing is attracting the attention of people who are interested in buying what you are selling. We call these people prospects. Marketing builds demand for your services.

The goal of Sales is quite different. Sales is the process by which you turn prospects into customers.

Marketing alone can’t do sales’ job.

If you’ve gone to the same networking event for the last year, passed out your business card to every person you’ve met, and have never received one referral or gotten one client, there’s one of 2 reasons.

  1. Your ideal clients or referral sources don’t attend that networking event, so you’re marketing to the wrong people; or
  2. Your ideal clients and referral sources do attend that networking event, and you haven’t sold them anything yet. You just keep marketing to them.

Marketing alone doesn’t get you clients. Unfortunately, lawyers don’t like sales.

Why do lawyers avoid sales? Sales is scary. Sales involves active engagement. It also comes with the chance for rejection. Sales requires that you have a conversation. It requires you to ask something of someone that benefits you.

There’s also this mistaken idea that you are selling yourself. That makes people uncomfortable. It’s not true. It just seems to be true because so much of legal marketing focuses on the attorneys themselves.

By comparison, marketing is easy. It’s passive. Place an ad in the local paper. Show up at the event. Hand out a business card or brochure. You avoid direct rejection, but you also struggle to get the clients you need.

If you want to build a successful law practice, you need to sell your services.

If you are still having a problem with sales, think about sales this way:

Sales is the means by which people who have a problem get their solution.

If you are selling your legal services properly, you aren’t selling you; you are selling your solution to your prospects’ legal problems. If they choose another solution, it’s not about you. It’s about their needs, and the solution they believe best meets their needs. Your solution doesn’t work for them. It’s not about you.

Offer your solution to your prospects’ legal problems. Offer it with joy and happiness. You have the chance to help someone. You can make someone’s life so much better with your solution. Don’t hide it behind bland, boring marketing. Sell it. Make the world a better place.

You can do it!

 

* What’s The Goal Of The ‘Year Of Disruption’ Project?

I was on the phone recently with one disruptor, talking about the project and the contributions I thought she could make.

Then she asked me, “What is the goal of the ‘Year of Disruption’ project?”

That’s a very good question. And this is a paraphrased version of my answer. I don’t necessarily have a specific goal for the ‘Year of Disruption’ project. I have a good idea about once per decade, and I’m pretty sure that this is one. I want to create a platform for sharing cool ideas and see where it goes.

In 1992, when I wrote my first book about how (and why) lawyers should use the Internet, I did it because it was cool. I did not have a goal. I just wanted to write a cool book and see what happened next. Turns out I wrote 7 editions of that book over 4 years and got to participate in the Internet 1.0 fun for 6+ years. Those experiences (plus one good exit) let me start my law firm, which was another one of my good ideas.

Looking further back, I did not attend MIT and major in electrical engineering to become an electrical engineer. I attended MIT because I thought it would be cool.

Similarly, I signed up for AFROTC to pay for college, and then I decided to try to become an Air Force pilot. Not because I wanted to be a pilot, but because I thought it would be cool. (Footnote: All of my pilot training classmates had wanted to be pilots all of their lives. When I didn’t make it through pilot training, I just moved on to the next thing. Query as to what happened to those who put all of their eggs in the “I’m going to be a pilot” basket.)

A recent article in one of my favorite blogs confirms that I am not alone in my thinking.

Jason Kottke writes about Jason Fried (founder of 37signals, which became Basecamp), who writes about not having goals (http://kottke.org/16/07/ive-never-had-a-goal):

I can’t remember having a goal. An actual goal.

There are things I’ve wanted to do, but if I didn’t do them I’d be fine with that too. There are targets that would have been nice to hit, but if I didn’t hit them I wouldn’t look back and say I missed them.

I don’t aim for things that way.

I do things, I try things, I build things, I want to make progress, I want to make things better for me, my company, my family, my neighborhood, etc. But I’ve never set a goal. It’s just not how I approach things.

A goal is something that goes away when you hit it. Once you’ve reached it, it’s gone. You could always set another one, but I just don’t function in steps like that.

So I can relate to that. It’s not that I’m NOT goal-oriented, just that goals themselves are not what drives me.

The first 15 years of running my law firm were really cool. I want the next 15 years to be even more cool. And I’m pretty sure that disruption will be part of the future, as it has been part of the past. I’m also fairly certain that I don’t have all of the answers, nor do I necessarily even know all of the questions! But knowing what you don’t know is a good thing, I’m pretty sure.

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