In Partnership with the Client
T. Hale Boggs
Manatt, Phelps & Phillips, LLP
Partner, Co-Chair Business
& Transactional Division

The Successful Corporate Lawyer
Being a successful corporate lawyer is more than being a capable legal technician or someone who documents a company is transactions. It is more than understanding a set of laws and regulations that govern a client is business. In my experience, being a successful corporate attorney must be far more collaborative than that.

Although my involvement with clients does not rise to the level of business partner, I am there to provide objective, independent advice, whether or not it will generate a profit. I attempt to give a more holistic analysis, rather than an impersonal examination, of how the law applies to the clients particular facts and business circumstances, and ultimately to assist the client in achieving its business objectives.

That might have a lot to do with the portion of our firms client base with which I work most closely. Although weв are a fairly large firm with major clients in a variety of industries, we also have a well-established middle-market practice. Many of the clients I work with either do not have in-house counsel or only have one or two staff lawyers. As a result, they often look to me and our firm to do more than answer a specific legal question or prepare transaction documents. We play a broader role, and I enjoy that.

A big part of being successful is having substantive and in-depth knowledge of the clients business. I do not hold myself out as a general corporate practitioner who can handle any corporate assignment that comes along. I think I am very good at working with clients in certain business segments. I know those segments well, and I have a sense of the market and how things are priced – the kinds of issues that are more business related. That is the added value a good business lawyer brings.

Contrast that, for instance, with litigation. You can be a very good litigator “a hired gun for any case that comes along“ because litigators learn about the facts and circumstances during the litigation. I do not think it works that way in business law. You really have to have more in-depth knowledge about the clients business “what it does, how the business model works, who the competition is, and so on “ to provide the best advice.

You cant be everything to everyone. I started my career working at a firm that focused specifically on the financial services industry “commercial banking and the savings and loan industry. I spent five years as a regulatory lawyer, learning a lot about the laws and regulations governing financial institutions and developing an expertise about the business that these regulations impacted. Now my focus is broader: My financial services background moved me into working for some institutions involved in the venture capital business. It is still finance related “ its venture finance versus commercial banking finance “ but with that specific industry area as the starting point.

There are likely several ways to develop a specialty. I suppose there are people who just decide, I am going to become an expert on the poultry industry, or whatever it might be. But it did not happen for me that way. For me it was more evolutionary.

There are a few golden rules for success in business law. Care deeply about your clients. Understand their businesses. Do your homework in negotiation, and do not always strive to win at any cost. Take a long-term view of a client relationship and realize there will be a few wrong turns and roadblocks along the way. Most importantly, try to work with people you genuinely like and who genuinely like you. If you are able to view your work as something positive and enjoyable “and as something that is of real value to your clients“ you will achieve success.

The Lawyer-Client Relationship
Dedication to clients is the key. You need to have the mindset that what you do is not just a 9-to-5 job: It is your career and it defines you professionally. It is relationships with clients “the way clients feel about you and how you feel about them“ that really matters. In my view, this is what differentiates great lawyers from good ones. There are many good lawyers who can do a competent job of putting together documents and providing legal advice. There are a lot fewer who are truly dedicated to a clients success and who measure their success as an attorney by how well the client does.

I want clients to feel they are getting excellent value for the cost of my services. Legal services today are incredibly expensive, especially at the larger firms. When a client makes a decision to involve me (or any lawyer) on a project, that client is making a major investment. My principal goal is to guarantee that when the dust settles and the project is done, the client is aware it has received excellent value for that investment, just like any business investment the client would make.

I want clients to understand I am more than just a lawyer to them. I want them to know they can come to me for counsel in all the meanings of that term, and that I have an appreciation and understanding of their business goals, not just their legal objectives. When clients spend $475 or $500 an hour for an attorneys time, they should receive advice thats meaningful to them, beyond just a standard answer to a narrow, specific question. It is extremely important that I be perceived by the client as adding value and am more than just a resource to answer a specific question.

It is also important for me to feel that I am making a long-term investment in the client. My practice is not a transaction-based practice: It’s a relationship-based practice. Most of my clients are long-term clients. Some corporate lawyers are hired for a particular deal. They do the deal, they finish the deal, and they move on to the next deal for another, completely different client. The majority of my practice is not like that. Most of my work involves businesses and clients that engage me to handle the bulk of their transactions over a long period of time.

When I have issues with clients about fees “it happens with all lawyer-client relationships “Ill proceed along these lines: If I have confidence that it is a long-term relationship and a good company worth the investment of my time, it does not really matter if I write off a bill or write down a bill. I know that one billing dispute is relatively insignificant during the course of a long-term relationship. If we can get past it, or whatever issue may arise on any given day, I will have won that clients loyalty. The longer-term benefit is a client who understands my objective is not to collect that months bill, but rather to be the clients lawyer through thick and thin.

A mentor told me very early in my career: Hale, you have to care about your clients, and you have to make them your friends. That was excellent advice. Now, many years later, I care deeply about my clients, mainly because they are my friends. As a result, I do not feel imposed upon if I get a phone call at ten o clock on a Saturday night. I know the person calling would only do so if it were really important.

I also interact socially with my clients. In many ways, there is not a big distinction between my professional life and my personal life. This may sound unusual, but they are fun people. Maybe I am just lucky because of the clients I work with, but I would choose to be with these people even if they were not my clients. Maybe that is the best way to think about it. The fact that they happen to be clients, and I can work with them and for them and get paid to do it just makes it better.

Making Connections
Another aspect of being a good business lawyer is knowing when and how to match two clients, or one client with a third-party, in a way that results in something good for them, even if there is nothing foreseeable in it for me. That happens all the time. I have a company that is looking for money, and I have an investor who is looking for a particular type of investment. I introduce them, they make an investment, and everybody is happy. Sometimes Ill get to work on that deal and sometimes I wont. But you can be sure that theyll both remember, and at some point “whether it is a day, a week, a month, or five years later “ they will come back to me. It always happens. That is very rewarding. But I think it is something you can only figure out over time. If you are looking at client development with a short-term view, you wont often get the return on investment you anticipate. But over time, it usually works out.

Efficiency
I think some firms have a lot of people around who really dont add value, who merely add hours to the time sheet. Clients are more savvy these days and more price-sensitive. They understand the importance of efficient staffing. I believe a leanly staffed matter, where each lawyer or legal assistant involved adds something specific and particular, is critical. That way, the lawyers, especially the more junior lawyers, feel valuable; they dont feel as if theyre just cogs in a big machine. The client also understands that youre doing them a good service “youre not replicating and generating more billable hours than necessary.

With this system, the associates and junior partners working with me have a lot of interaction with clients almost immediately. I like nothing better than when a client begins to feel comfortable calling a junior person directly. I think thats what its all about “ developing that level of confidence in junior people and having them invest in the client, understand the business, get to know the management or legal staff personally, and then begin to see them socially. That can only happen if they are involved in a particular matter or case thats substantive, thats meaningful, that allows them to be more than just a body on a big corporate team.

Preparing for Negotiations
In preparing for negotiations, before I make that conference call or participate in an all-hands meeting, I spend a lot of time learning about my clients objectives, if I dont fully understand them already from past projects. I also do my homework on the other parties. What are their backgrounds? What are the personalities of the other sides principals?

If I dont know the other lawyers, I try to find out about them. So I spend a lot of time. And I do it myself, by the way, rather than simply being briefed by an associate. I can have people help me by doing the research, but Id rather spend the time studying the material myself to be as prepared as possible. Every transaction is as much about who the other people are as what the deal is. The personalities and backgrounds are often indicative of how the negotiation will go, often more indicative than what the term sheet says.

For me, negotiations are all different. I dont approach the negotiation with the view that I want to win at any cost. Maybe my clients wont like to hear that, but that really isnt how I start. I start with the objective of achieving a result that works for everyone and that pleases everyone. Yes, you want to achieve a great result for your client, but if its at the expense of someone on the other side feeling completely discredited, or feeling that his or her objectives were not achieved, ill will surfaces. Life is short, and its a small world. My sense is that you leave those kinds of deals “ and I have been involved in several “ feeling uncomfortable. On the other hand, in a deal where your client has done pretty well and the other side has done pretty well “ you shake hands, close the deal and walk away. Everyone wins.

Risk
I am a firm believer in the old adage Nothing ventured, nothing gained. The most successful companies, and frankly the most successful people, are those willing to take risks. Its important to have a hedge, though. In other words, while its okay to be aggressive and enter into speculative transactions, its only okay if you also have other transactions or investments that are pretty safe, so you have other secure sources of revenue. I think about it in the same way I think about an investment fund. Youll have your risky investments that, if they pan out, could bring spectacular returns, but they very well could end up with a zero. And youre going to have your T-bill sort of investments, which will have a slow and steady rate of return, but will be consistent.

Companies, in strategizing about their business objectives, really ought to do the same thing. Take a flyer on the acquisition of that little startup company across the country, because if it works out it could have a huge return for you. But dont do 20 of those. Do one or two and continue to make your regular margins on your core lines of business. Its common sense. Too often, though, “ and its human nature to do so “ people see one thing as such a high return they put all their resources into it. Then that one thing changes, and in a relatively short period of time what had been an investment producing big returns is suddenly producing big losses. So you should hedge your bets when you can.

In terms of the risk involved taking on new clients, much of what I do involves companies and people referred to me by others I trust and respect. I think thats the best way to get new business: having a referral from a current client, which happens frequently, or from someone Ive known and worked with or been friends with for a long time.

Its unusual for me to get a client to whom Ive had no prior connection. It happens every once in a while, though, and in those situations Ill do a lot of homework. Ill have a Dun and Bradstreet report pulled on the company and its principals. Ill do a search to see whether the company or its principals have been involved in much litigation, which to me is a red flag; I try to stay away from that. Occasionally, Ill even work with an investigative firm if something about the client seems a little unusual. I am fortunate that Im able to work with people I want to work with. I dont feel compelled to take on a client I feel is questionable or think might create problems, simply because I might receive a fee. Its not worth it. Life is too short for that.

Trends in Corporate Law and Business
Trends in business are inevitable. As sure as the sun will rise tomorrow, businesses and industries will experience ups and downs. While it is impossible to predict these trends with certainty, being able to recognize where we are in a particular cycle is highly important.

A significant part of my practice in recent years has involved the venture capital business. Obviously, this industry has undergone a tremendous amount of change in the last ten years. To be a successful counselor to the venture capital industry, you need to recognize the cyclical nature of the business. Again, it comes down to taking a long-term view.

For instance, regarding fund raising for a venture firm and dealing with institutional investors “ large pension funds, universities, the big investors “ three years ago the good venture firms could effectively dictate terms, because investors were lining up to write checks. Now, you really need to think forward and realize thats not going to happen. You must be more creative. You must be willing to give regarding terms that benefit the investor versus the general partner, the venture capitalist. So I think you have to recognize where you are in a business cycle, or in an industry cycle, and not overreach.

Another trend, of course, involves corporate ethics. Given the huge accounting scandals during 2001-2002, I get many questions from senior corporate executives concerned about personal liability and how much effort and attention is required of them to verify financial data and other information. Theres a great deal of concern now among business executives, and therefore among business counsel, about the standard of care, the duty to stand behind financial data and reports, certification, etc.

This has created an atmosphere somewhat like the savings and loan scandals of the late 1980s, when the Savings and Loan Insurance Fund crashed. The current situation is bigger, broader and more encompassing, though, and touches all industries, not just a particular one. So in terms of big issues, theres clearly a focus on that particular one.

My guess is weвre going to see a backlash “in fact, its already happening. People who would make outstanding board members say, No, thanks. I dont want to have to deal with that. And while its nice to get director fees and it may be a prestigious thing, I dont want the liability. As a result, weвre going to lose a number of people who otherwise would be good contributors and good directors in big companies. And thats a big problem. Were going to end up with management teams that arent as strong as they could be, because some of the best and brightest people are going to decline to participate. That will diminish the overall quality of management, which on a macro basis will diminish the quality of the business product.

Because I work a lot with middle-market companies, one of the first questions I ask in response to concerns about accountability involves liability insurance and indemnification. Most companies have it, but not all do. Many directors are eligible for indemnification, as long as theyve acted in good faith in the capacity as director. A company can also provide directors contractual indemnification. If I am working with a director, I will certainly recommend asking for that as part of the package when theyre being considered for nomination to a board. Insurance obviously is a secondary way of protecting against those liabilities. But at the end of the day, I cant tell people there is no risk, because in this climate there is. Regulators are looking for scapegoats.

Industry Consolidation
For the future, I think we will continue to see corporate consolidation. As long as the antitrust rules remain as relaxed as they have been, were going to continue to see it “ not just here, but internationally, with increasing consolidation of large multinational companies. I have concerns about that on a number of levels. I worry about consolidation and roll-ups and the ability of middle market companies to sustain themselves in a market increasingly dominated by gigantic entities.

From a more general perspective, Im not sure its so great for our society. Consolidation reduces competition. It drives product and output to a lower common denominator. Quality and service suffer when the economy is dominated by giant players that can get away with products not quite as good as they might otherwise be with more competition. I wonder how that will play out long-term. I wonder if there will be a backlash, the same as with corporate ethics, where somebody just says, Enough, and we go the other direction and some of these big deals are blocked.

Id like to feel that we could have a thriving business community populated with a combination of large, multinational, corporate players but including many locally and regionally important players. Public and private companies should be able to thrive in their particular market niche, whether its because of a particular expertise or product quality, and not feel compelled to have to sell to achieve some return to a shareholder.

As a lawyer, Id like to feel I can continue to be counsel to that important tier of regional and local companies able to thrive within their markets. Thats how I built my career. I hope those companies survive so that five, ten or twenty years from now were not all customers of one or two banks, one or two car companies, and one or two giant retailers.

T. Hale Boggs, a partner in Manatt, Phelps & Phillips, LLP, focuses his practice on corporate and securities matters, including mergers and acquisitions, public and private securities offerings, venture capital representation and general corporate matters. His clients include public and private companies, venture capital firms and numerous financial institutions and financial services companies. Boggs splits his time between Manatts headquarters office in Los Angeles and the firms Silicon Valley office, which he established for the firm in 1998. He is co-chair of the firms Business and Transactions Division and serves on the firms Executive, Compensation and Management Committees.