The Counseling Function
| Author | David A. Steiger |
| Pages | 43-59 |
Outside counsel often say that they are not involved in formulation of a
client’s internal strategy. Harvey Cohen, of Dinsmore & Shohl, says that
in his experience, many clients do not want to pay outside counsel to sit in
initial meetings. It is understandable for smaller businesses to do all they
can to reduce costs, particularly at the earliest stages of a project when
management buy-in may not yet be complete. In many instances, though,
this strategy may end up being “penny wise and pound foolish.”
What the client is often missing at initial in-house meetings is structure
and efciency, says Cohen. That said, outside counsel should keep in mind
that they might not get the opportunity to provide “a voice of reason” until
later in the process. Regardless of when they get involved, they should be
prepared to question the basis on which decisions were reached and ensure
that potential risks have been addressed.
Cohen gives the example of his dealings with a group of international
clients who, in Cohen’s opinion, had not done their homework. “People
tend not to think about governance or co-owning equity in a company,”
Cohen observed. He emphasizes how important it is to consider things
such as which party will have the right to call meetings and which specic
events trigger exit provisions. “Exit provisions should be cut and dried,
as this will cut off excessive legal fees later.” Cohen called to these clients’
attention factors that had not been included in their analysis: Which party
keeps technology licenses, trade names, and logos? Is a noncompete clause
necessary, and if there is none, how would it affect the process of buying
out partners? “The lawyer’s added value,” Cohen concludes, “is telling the
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Chapter 3
The Counseling Function
Steiger_TransBorders_20140625_09-05_FinalPass.indd 43 6/26/14 9:20 AM
client that ‘what you want to do doesn’t make sense.’” Of course, the law-
yer’s value is also in helping the client achieve well thought out strategic
goals in a way that does make sense.
Overview
Assumedly, there is at least one stakeholder, or a small group, at the client
company contemplating the feasibility of a cross-border transaction. When
working with a closely held company, outside counsel may immediately be
dealing with a key decision maker. At a larger, midsized public company,
the contact may be several steps away from “go-ahead” authority.
So, where to begin? A logical place to start is to consider the competi-
tive forces, mentioned in Chapter 1, that are driving your clients toward
international activity in the rst place. IBM Consulting refers to these as
“external forces” and “internal drivers.”1 What aspects of the global econ-
omy are affecting your client’s business today, and what global trends are
likely to impact them ve or ten years from now? What cost savings and
opportunities can be found by moving across borders?
To dene “external forces,” consider the example of a Tier II auto parts
supplier. This supplier is either already under pressure to expand to China
and perhaps other locations to which the original equipment manufactur-
ers such as Ford or Toyota and Tier I companies have already migrated, or
soon will be. Or consider a family printing business that recognizes how
low-cost, high-volume printers in various countries overseas are expanding
ever deeper into their local market. If they partner with such a rm, even
on only a few jobs, they may be able to go after an entirely new business
segment. By contrast, “internal drivers” might be represented by companies
that recognize the cost savings, ease of administration, and service upgrades
that can result from outsourcing their human resources (HR) functions.2
1. Eric Lesser & Joanne Stephane, Preparing for Human Resources Business Transforma-
tion Outsourcing, IBM B C S 2 (2005), http:// www -935 .ibm .com
/services /multimedia /ge510 -4015 -hr -bto .pdf.
2. Id. at 3.
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