Is Your eCommerce Business Ready For In-House Counsel?
Eric:
Hello and welcome to May It Please The Internet, Revision Legal’s podcast where we talk about all kinds of eCommerce and business and legal related items. I’m Eric Misterovich. I’m joined today by Chris Carol. Chris, how are you?
Chris:
Good. Thanks Eric. How are you doing?
Eric:
Good thanks. Chris is an associate attorney here with Revision Legal. You joined what about a year and a half ago now?
Chris:
Yep. That’s about right.
Eric:
Yeah I remember it was a very busy time. We were in trials in Maryland and you kind of stepped in and really helped steady the ship while John and I were tied up in court. Chris, why don’t you give a little background about yourself to our listeners?
Chris:
Yeah, sure thing. So, like Eric said I joined Revision Legal about a year and a half ago. Before that I spent the majority of my career as corporate legal counsel for a variety of different entrepreneurs mainly up here in Northern Michigan. I got my first in-house gig around I think 2011 and sort of just did that until I joined up with Revision where I’m still kind of doing the same thing just more on an outside general counsel basis. Although I also do a lot of the M&A transaction work on top of it. But it’s just like anything else I guess, in how these things kind of go. I wasn’t really planning on being specialist in corporate law but I got an opportunity to work with kind of an up and coming marketing company here in Traverse City. They’d grown to a point where contracts were just a mess for them so they brought me in. And then I’ve just been doing this pretty much ever since.
Eric:
Yeah, that’s the way it goes a lot of times where you kind of drawn to the industry for some reason, glutton for punishment or something but then you bounce around until you find something that you want to stick with. That was certainly my experience. I previously was representing municipalities and doing a lot of work involving county drain commissioners. Wasn’t the most exciting, and I really love doing the stuff that we get to do now.
Chris:
Yeah, for sure.
Eric:
So, because you’re joining us today, I thought it would be a good idea for us to talk about e-commerce and in-house councils and the kind of title we were working with today is your e-commerce business ready for an in-house council? And it’s a question that probably some people would immediately think, no, I would never even want an attorney on payroll. Others would think, well, I don’t know maybe that’s something I should think about. And others would say, I already have one. And I understand the cost benefit analysis that comes with that. But the goal today is to kind of talk about an attorney’s role within a business, how they can help the types of advice they can provide that is more than kind of, oh shit call legal. And to just explore how this works, when attorneys are more involved on the business side of things. So, I guess the first thing Chris, if you had to explain what is an in-house council, what do they do? How would you explain it?
Chris:
Good question. It’s hard to explain even to other attorneys. I remember attending local bar association meetings and telling them I was a corporate council and half of the room didn’t understand what that meant. So, I mean, you’re largely the legal representative for company. It’s a bit of a quasi attorney, client meets employee role if you’re hired in as a full-time general counsel. So, your employee to the business, but at the same time there’s still attorney client privilege. You get a much more intimate look at the business as a whole. You spend a lot more time with the quote unquote C-suite or the business owners themselves. And what ends up happening is you’re not the guy that’s looking to sue somebody every second of the time that you’re in the business, but you’re also responsible for making sure that the company stays out of hot water. They look to you to issue spots, any kind of potential legal problems or issues along the way.
They’re often looking to you if you’re first starting out and it’s a business that hasn’t had in-house council before to build and refine whatever legal processes that company needs, whether that’s a contract document, review process, or certain human resources issues. So, it’s a mixed bag of stuff. And you really do become versed in a lot of different areas. You generally become so bogged down with some of the more bigger picture issues that you find yourself needing to make good connections and find specialists that can help you and certain issues arise. And essentially just sort of be there for these business owners when problems come up, whether those problems are mainly legal or oftentimes this quasi business, potentially problematic legal side where you sort act more as a general objective voice in the room than giving them legal advice.
Eric:
Yeah that makes sense. I’ve never technically served as an in-house council where I’ve been on the payroll as an employee of a business. But as well kind of explain later, there’s a lot of ways to think about in-house council and I’ve certainly acted in that kind of capacity, even though I was always in private practice. But usually comes down to things like there’s these internal corporate kind of matters, maybe there’s day to day contracting issues that come up. A lot of times like regulatory issues I can see being part of an in-house council role.
Chris:
Yeah.
Eric:
And then like you said, there becomes more specialized issues where you as in-house council, you’re not doing the work but you’re effectively managing outside council, right?
Chris:
Right. So, the bigger company gets, the more success they have, the more a general council becomes exactly what you just described, where they just manage whatever outsource specialist the company needs. They interface directly with these attorneys. I mean so for instance, just how I came to work with Eric for the most part was, he was my outside council for intellectual property litigation. So, a lot of my day to day for the intellectual property issues that we were seeing for the business I was working for, it’d be Eric and I interfacing on what’s going on in these particular cases. I’ve got the particular legal background and can understand where Eric’s at, what the strategy is from an inside baseball perspective of the legal world.
But then it’d be my job then to hedge cost to some degree. You got to be mindful of the costs that are coming up when you’re inside council. But then more so than that, and more importantly would be taking what Eric is doing and translating it out of the legalese for the business people so they could understand where things were at in the case, why we were doing this, that or the other thing, without the business people having to read a legal brief or kind of understand the nuts and bolts of it.
Eric:
And that’s a big part of it to have people on board with outside counsel, understand what they’re doing, understand the importance. Being a check on spending, recognizing good work product when you see it. And generally keeping tabs on outside attorneys that cost a lot of money. There’s no question about it. And so that in-house council role really can help. Even if they are not the ones doing the work, they can help find trusted outside attorneys and also keep them in line a little bit and make sure that their bills are fair, that they’re doing the work and that things are progressing as planned.
Chris:
Yip.
Eric:
But the part of what you said was this business advisor role.
Chris:
Yeah.
Eric:
And I think it’s kind of funny because anytime I’m negotiating an APA or something, oftentimes things come up and I very quickly say, that’s a business issue. I’m out of here.
Chris:
Right.
Eric:
I don’t have anything to do with it. That is not legal, that’s business, you tell me.
Chris:
Yeah.
Eric:
And that’s an easy answer for me to provide when I don’t really know anything about what’s going on. I have no framer reference for, if this is a good business decision, I could have my own personal thoughts but I’m not involved in how everything got to where it is.
Chris:
Right.
Eric:
And I think what I’m hearing from you is if you’re in house, you’re just necessarily more involved in all of the business and you’re sitting in on those meetings and you’re bringing a different point of view.
Chris:
Yeah, that’s a hundred percent right. And I’m right there with you on those transactional deals. It’s kind of nice to sort be on that side of the table and to shuffle the business item off because they tended to be the [inaudible 00:09:18] sticking points when I was serving as general counsel for these entrepreneurs because I would be involved in that decision. And then the weight is kind of exactly like you said, I might have a personal preference or I might be leaning one way or the other. But the owner was looking to me to be that voice in the room and to nudge him this way or that way. And that’s, I think where the main difference is between corporate legal counsel and then just anybody else that just kind of maybe dabble in corporate law.
If you’re a true in-house counsel, a true general counsel or a true business minded attorney in general and you’re doing the kind of work that you and I do get to do for a variety of our clients, it becomes less of a, what’s the legal risk here? And more of, I literally just want your opinion on whether I should do a or B or if there’s some other middle ground that we could find that has nothing to do with liability or risk or anything like that. They just kind of look to you as just like you said, that trusted voice in the room, through our training and for better or for worse, we’re kind of geared towards taking an all angles objective approach to any kind of a problem, be it legal or personal or business or anything like that. And your role tends to mold more towards just helping them make a tough decision every now and again. Knowing that they’re ultimately, it’s their choice to make, but.
Eric:
And I think we are called on in our normal day to day jobs to give very frank advice. We can’t assume people know things. We have to be very direct. We have to lay out all the options. And usually that’s laying out the risks associated with picking between A, B and C. And let’s be honest, most of the time business people want us nowhere near these kinds of discussions.
Chris:
Right.
Eric:
And for many times probably good reasons. We will get to a little bit of what we think the benefits are of having us in the room a little bit more later. But the in-house role is a little bit dynamic. You have this, I’m going to actually do legal work. I’m going to then manage other people’s legal work that impacts the business. And I’m also going to essentially be an advisor to the business. And that may not even pertain to legal items. It’s an interesting role in my opinion, where you have a lot of different things to work on and a variety of issues that come across your desk and you’re expected to essentially be the expert on all of them.
So, I think it’s a really interesting position and can keep the day moving quickly. But let’s talk about, okay that’s what they are. That’s what in-house council is. Let’s talk about the kind of types of in-house councils because I think most of us would initially just think, okay you’re on the payroll and you are working at a rather large business if you’re going to have in-house council. And to me it’s not necessarily true. There’s certainly some businesses that are more apt to have a in-house council, if you’re involved in a highly regulated industry involved in the financial industry. Or you’re just very large business. Yes, right, those are typical to have an attorney in-house on the payroll.
But kind of what I touched on earlier and what you touched on in the beginning that we serve in this kind of in-house role for clients that we’re not on the payroll as an employee, but it’s almost like this fractional in-house council or outsourced in-house council where we’re doing a lot of the same things as an in-house council where someone would come to me and say, we’re facing this tax issue and here’s the situation can you help us? And the answer is no. I have no idea what’s going on with tax law. I don’t ever want to know what’s going on with tax law. But I can help find a trusted person. And I can communicate with that person to still it down, push them. And the things we’re looking for, kind of cut through the bullshit and help deliver the result that we need.
And I do that as a private attorney. And so obviously it depends on the client.
Chris:
Yip.
Eric:
But I think it’s important, especially for e-commerce businesses because legal is going to be low on the list, I think for most, until you hit a certain size.
Chris:
Yeah.
Eric:
But I think there’s real benefits in having us around a little bit more, I guess is how I would put it. And this can be done, for example I have a few clients where I have either weekly or biweekly or monthly meetings that are just on the calendar. They’re just standing meetings that helps us stay in touch, helps us kind of be very regular on communications of what’s coming up. Other companies we’re directly into their teams or Slack channels where we can be brought up to speed very quickly. We can watch things happen and just see how things are going.
We’ve been on company retreats where everyone gets together and get some FaceTime, not just with decision makers but with the whole team. And I’ve always thought this is a really nice way of becoming more integrated into a business and helping them in the way that we can. We’re not going to solve all of the problems or anything. But I think when we talk about helping them how we can, I think most people think we’re going to slow things down and we’re going to put up roadblocks, but can’t the opposite be true Chris? Don’t you think the other way could be a likely outcome?
Chris:
A hundred percent. And I think that should be any, whether it’s fractional general counsel or a hired in-house counsel, the goal should be not to be the roadblock. You may have to work at it in the beginning to get yourself out of that, depending on the mindset of the entrepreneur. I mean it’s true that seeing legal on their meeting agenda for the day is a major bummer for most people. I mean, it’s not a fun conversation generally speaking. But if you can build rapport, you can come with reasoned and practical advice, you can kind of meet them where they are in terms of how fast they want to move or what the ultimate risk might be, kind of that can help gauge your ultimate response. But it’s more of doing what you can early on in the relationship to make them feel comfortable.
And for them to trust you, that if they come to you as something, you’re not just going to be the rubber stamp that says no, which is I think what the perceived reputation for most attorneys generally is. I don’t want to go talk to Chris, because Chris is going to tell me I can’t do this. It should be, let’s go talk to Chris, let’s figure out what the pitfalls might be and then, they’ve got a pretty good idea of what direction they want to take but at least whatever direction they ultimately end up going with, we can be there to make it as informed and whatever decision it is, they’ll live with the consequences and we can at least do our best to mitigate it.
Eric:
To me it’s just like, listen if you’re doing big decisions and investing a lot of time and resources, money into something, it might not be a bad idea to have a legal mind in the room, just to listen. An example comes to mind of people that, this is something that comes up a lot where people are like, we’re doing a raffle, we’re doing a sweepstakes, we’re giving away prizes and it’s all done. Everything is done for this event that they are going to do, whether it’s online or not. And then they say, hey we just need you to write up a couple, just take a look at the rules and we’re like, whoa.
Chris:
Just draft the terms up.
Eric:
The online raffles and giveaways and contests and things are much more complicated than you think they would be. And that would be something that could be caught on the initial idea.
Chris:
Yes.
Eric:
Of by us right away. Or things when you run into, especially financial issues and SEC regulations about, you’re going to get money from who, and then you’re taking a cut of what?
Chris:
Right.
Eric:
There’s things where, to a business entrepreneur, they’re moving fast, they have a plan, they don’t want to be told no, they want to get this plan done. And it’s not that you can’t do the plan, but there might be complications that you didn’t know about. And now you have wasted all this time and money because you called us last. And that’s what I mean when I say having us in the room can be a benefit. Our job isn’t tell you no, our job is to tell you, if you do this, X could happen.
Chris:
Right.
Eric:
If you want to do it, go ahead. It’s not my decision. I just tell you what’s the likely outcome. Now on rare occasions there’s things where it’s like, if you do this I’m really not going to be able to work with you anymore. But that’s very rare.
Chris:
Yeah, it is.
Eric:
It’s just this idea of, can we be helpful on business aspects? And I think people might underestimate that a little bit. We’re not going to be in every meeting. We’re not going to be in every call. We don’t want to be, you don’t want us there. It doesn’t make sense. But once a month, once a quarter, hey what are you guys doing? What’s going on? Is there anything new, big plan? Just running things by us, there can be real benefit in that if there are problems, you find them early and they’re going to cost less to solve and will get solved faster. And the whole plan will go off faster if you come to us first. And so that’s, I think an overlooked aspect of how attorneys can help. Is your business ready for an in-house council? Well, maybe not full time but maybe it’s ready to have one sit in on a few more meetings. Now I think that’s a fair thing for probably a lot of businesses out there.
Chris:
I agree completely. The way that I’ve always looked at it in the startup phase, I would say, get an attorney involved, a business minded attorney, get all of your ducks in a row from a business sense. But after I help you set this business up and I get some of the initial corporate governance documents done, don’t call me for five years. I don’t want to hear from you, just go do your thing. But as you grow, these things are just going to kind of come up both from a legal and from a regulatory compliance and any number of different things. You’ll get to a point where you do need to have those conversations. And then to your point, it’s more about retraining the business minded people not to hate or fear, speak into these attorneys because most of the time that they’ve had to do that, there’s been a big problem and they know there’s going to be expensive.
It’s something they don’t want to have to spend time thinking about. It’s never a really positive interaction in general for most people. But if you can switch the narrative and you kind of set it up perfectly for this, whereas the role of a general council, be it somebody that you hire or it’s a fractional outside engagement, is more for us to just communicate with you, know and understand a bit better than maybe an everyday worker needs to know and understand about what’s going on with the business. So that if there are things that are on the horizon, it’s our job to find those things and to point them out sooner than later so that’ll ultimately save time and money on their side.
Eric:
And cost is obviously an issue. It doesn’t make financial sense to have us involved in every meeting. My thought here is, when people get mad about attorney bills, nine times out of 10 it’s because the bill was unexpected. They thought it was going to cost two grand and they got a $10,000 bill. They thought it was going to cost 10,000 and they got a $50,000 bill.
Chris:
Right.
Eric:
That is usually when, and I hear this from just my friends and that are working or they’re in-house council. I just got a text last night I said, I just had a call with our outside council, they just told me we own $50,000 for this patent opinion that they wrote 10 months ago. And we never got a bill for it. How am I supposed to respond to that? And it’s like, classic failure by the attorneys there who don’t communicate about cost. They’re not upfront about it. And then they wait 10 months to send a bill. So, I guess the point is to cut to the chase, if some of what we’re saying is making sense, talk to your attorney about a budget. About a predictable plan, flat fees even.
Chris:
Yeah.
Eric:
Building out a package of you get X number of hours for X number of dollars. Consistency is great for us too. We like to have that and know that we’re going to have that work. We are going to have that income coming in. We’re going to know that there’s going to be some offshoots that come off of it. We can build our schedule around it. It’s good for everyone. So to me, if some of this sounds interesting, you have attorneys, you like that you work with, it’s worth a conversation to say, can we get a predictable plan in place to have you be a little bit more involved?
And I think if you can budget for it and plan for it, and it’s not these wild spikes, then things can work and you’re kind of off to the races. So, don’t be afraid of us. We can actually help. I think as long as you take some thought in how we can be more involved and win and come up with a workable budget, it’s not impossible. So, Chris, we usually end these podcasts with a little bit of a parting shot here. And, do you have something that you want to kind of leave everyone with?
Chris:
Yeah, I think we’ve kind of hit on it throughout this entire episode but what I love doing is just helping people solve business problems in general. And so I love it when clients can get us in the mix early, even if they don’t think there might be a need. I mean the last thing I want to hear is a situation where you learn secondhand that so and so didn’t come to you because they were scared that you were going to say no, there’s some perceived fear that you’re just going to gum up the works a little bit. If we can do our job and dissuade those kinds of fears and be that trusted voice in the room and help people grow and scale their businesses without taking them to the [inaudible 00:23:59] in terms of costs, that’s ultimately a win for me. And that’s what I like doing.
Eric:
Yep. I agree. It’s a common theme for this episode is that taking your vitamins is more beneficial than taking your pain pills.
Chris:
Right.
Eric:
So, early and often, talk to your attorneys. Have that line of communication, open it up and things will work. So, Chris I really appreciate you stepping in here for John today. Hope to have you back on soon. And thank you everyone for another episode of May It Please The Internet.
