Meeting Clients Halfway: A Tall Order

Joseph W. Bartlett

Please note: Appendices A, B, and C and be downloaded as a compressed file here:

Innovations Designed to Streamline, Facilitate, Enhance The Delivery of Legal Services, Empower Clients … and Reduce Expense.

A polemic featured on,[1] builds on a familiar theme – that lawyers are pricing themselves out of certain significant markets in this country, including particularly emerging growth finance, a/k/a venture capital.

The irony is that service businesses generally have made astonishing progress in enhancing efficiency and output while, coincidentally, reducing costs and prices. The question is whether the law business is keeping pace at a level which is consistent with the potential which modern technology and system design hold out.

I have to confess a bias. I have written on this subject, in a 1978 book entitled The Law Business to which the publisher added a tagline, A Tired Monopoly. I wrote this book while on a sabbatical, on the faculty at Stanford Law School, when I had a chance to sit and reflect on what I saw going on around me. My opinion has not changed in that regard. And the issue was reviewed in detail in 2000 by an English academic, Richard Suskind, in a profound monograph, Transforming The Law [2] … a book which I find enormously instructive and influential.

Before, however, I outline the ways in which I plan to deal with the issues, allow me to provide some background.

First, the law business has, in fact, gone well beyond the era of quill pens and powdered wigs. Thus, there are sophisticated management information systems which help law firms deliver their services efficiently and to a standard of quality of which the lawyers can be proud. To cite only some highlights, Lexis and Westlaw have collected, and indexed online, the entire census of statutes, regulations and reported cases; SEC filings are available on EDGAR, including thousands of contracts and forms filed as exhibits; trial dockets and opinions in a given case are searchable; and many treatises and trade periodicals are in digital format and readily accessible. Most firms can and do, in fact, eschew much in the way of the print libraries they used to maintain … as, indeed, do law schools and bar associations. Lawyers and clients stay constantly connected by Smart Phones and similar devices. Associates and partners in charge of researching an issue or preparing a brief rarely have to leave their desks; they can access electronic files as they enter the courtroom. And, all the younger lawyers are facile typists, meaning the one-to-one lawyer-to-secretary ratio is long gone.

In that regard, the law business is significantly ahead of perhaps the last car on the train of what Goldman Sachs has labeled “connectivity” … in the healthcare sector. As Goldman has pointed out “The average UPS driver has more technology at his/her disposal than a physician.”[3]

That said, my crusade has to do with my business, the delivery of legal services. It is my view that, although the issues are nowhere near as well publicized, we need an increase in legal “connectivity,” borrowing the Goldman Sachs phrase, because the law business, although not to the extent of the healthcare industry, is decades behind the times. I do not deny, of course, that, in many respects connectivity flourishes, as indicated above, in the law business. But, in certain critical areas, we are materially undershooting the possibilities, particularly when we interact with existing and potential clients. Thus, while there is ample information all over the web which lawyers could share with clients to get them up the learning curve, the point (as Ross Barrett, co-founder of VC Experts, has pointed out) there is a critical difference between “information” and “intelligence.” Thus, no one in their right mind ever escorted a client, however sophisticated, to a law library and advised: “Spend some time in the stacks. It will do you a lot of good.” Similarly, Westlaw, Lexis, Practising Law Institute lectures and webinars, while highly useful to lawyers, are of little value to a client … except as intermediated by counsel. Moreover, as John Hempill points out, connectivity needs to run in both directions. Lawyers need to be educated as well … not only on current legal developments but also on their clients’ particular situations. In short, the clients need and deserve, at a minimum, a reciprocal GPS system rather than a bound volume which contains raw maps of every country on the planet … in other words “intelligence” rather than “information.”

To be sure, clients get guided tours, in person … as, indeed, they always have. They call at their counsel’s office, sit down and enter into a two way dialogue which initiates and informs the process: the lawyer learns the client’s objectives and special needs and the client gets an introductory course on the legal principles and rules likely to be encountered. Often, when a thorny issue is put on the table, the lawyer admits that the questions are complex, and she will have to go into the books before responding … which she later does.

The problem, of course, is that the meter is on, prompting my question: What can be done to create an information sharing eco-system before the first meeting … both lawyer and client getting up the learning curve prior to the starting gun going off? Can I structure a system such that the client has a chance to enjoy an outcome similar to that to which an informed patient can look forward? Based on compelling evidence, informed patients have significantly better outcomes than the guys who wander in and say, “Whazamatter with me, Doc?” Moreover, if a client has been prepped in advance, the parties do not waste a ton of time discussing and answering questions which the informed client should and can already have under her belt.

O.K. What systems can be installed to advance the mutual education process efficiently? How do we save time (and money) by using IT, Wikipedia-type sources, Web 2.0 and common sense (plus a modicum of elbow grease) to help meet the growing impatience with deemed unnecessary legal expense … and without handing the client a scalpel and asking her to take out her own appendix. Allow me to make my didactic points by way of examples, which I am refining into a practice modality, governing the way I go about my business.

1. Model Forms. The good news is that the language in the documents typically deployed to memorialize the business deal in a given transaction are becoming, at least presumably, standardized, if only by osmosis on material selection. In my 1978 book, I wondered:

“Why law firms throughout the country could not draft standard language for use by all lawyers (not just lawyers within a given firm) in putting together, say 90 percent of the text.”[4]

That metric is changing. Model forms are available on line … from, for example, the National Venture Capital Association, the Angel Capital Association and from commercial vendors. Most large firms maintain internal libraries of model forms, in some cases lightly annotated; in fact even if a central library is not maintained, a lawyer in need can go onto the firm’s internal grid and ask for a model form, usually with positive results. Legal treatises, replete with exemplars of model forms, come accompanied by digitized versions online. And, I trust I will be pardoned if I refer repeatedly to the features offered by VC Experts; while justifiably proud of the content and data available to subscribers, I am using that resource as a generic example of the Wiki-type facilities, and there are many, available to enterprising lawyers and firms as they search for money and time saving methods to draft documents, analyze issues, research problems. And in fact, help train young associates. Thus, when a client calls for a given agreement, plus explanations of its constituent parts, a real time response is available from multiple platforms; the lawyer picks her favorite portable (i.e., digitized) library (which in my case is VC Experts) and clicks ‘send.’. Bingo, the first draft has arrived.[5]

1. “Top Ten” Cheat Sheets: The Guided Tour

That said, however, the job, done right, is not that simple. As Carl Kaplan points out, the clients (whom he, a noted punster, refers to as the “tutorialees”) need more than access to documents and annotations. In fact, as pointed out by Carl and a number of my colleagues who reviewed the first version of this paper, advanced client connectivity is most usefully advanced by a guided tour … the GPS system I referred to earlier. That is to say, as a client is approaching a particular transaction, the trick is for counsel to pull out a list of items in the term sheet, stock purchase agreement, agreement of plan and merger, et al, on which the client should focus. Simply forwarding a model form to the client, even a compact form, can be, depending on the experience of the client and the length of the working relationship, inadequate. Thus, in any deal there are a discrete number of items, for example, in the Series A convertible preferred stock purchase agreement and allied documents which are of lesser importance; registration rights, for example … rarely if ever exercised; so also drag along and tag along rights. This is not to say they are trivial and can be ignored; but it is, in my view, the job of the lawyer to focus the business people on the issues likely to be critical and identify the same, providing a brief explanation as to how to focus most profitably and effectively on the points likely to arise.

(a)   I call the guided tours “Top Ten Cheat Sheets.” The term “Top Ten” is borrowed, of course; it refers to the number of bullet points in a memo … a “cheat sheet” (concise set of notes used for quick reference) … which highlights, on the eve of a transaction, the points (which can be any number, of course, but 10 is as good as any for this purpose) in a document to which the client should pay special attention. By way of an example, I am attaching (Appendix A)[6] a typical edition. The whole idea is to start the question and answer session between lawyer and client from again, an elevated plain.

2.   Checklists. A related concept is the proffer of a checklist.[7] The checklist in Appendix B, which I routinely hand out as clients come over the transom, is not a list of items applicable to each situation. But, regardless of the maturity of a private issuer, odds are that at least a few of them are perchance, an “aha” epiphany. See also Appendix C, the Corporate Formation package.

3.   Eliminate the Biggest Waste of Time: Pompous Lawyers Sparring on “Market” Deal Terms. Assume a fund formation assignment. A lot of lawyer time is often spent arguing over the terms of the deal between the investors (the limited partners, or LPs) and the fund sponsor. To avoid this wasted effort, often involving a dialogue of the deaf at high decibel levels VC Experts is able to include in its Data Center, which graphically computes and ranks the “market” or “industry standard,” as the jargon goes, deal terms for both venture and buyout funds. You have no idea how much time is wasted in one of the negotiation sessions by the posturing of two hyper-aggressive lawyers in a pitched battle over deal terms. “We always get this deal term.” “We never give it.” This is a discussion of the ‘my dog is bigger than your dog’ variety. It can go on forever. The Deal Terms Survey in the package cited above can help finish that conversation before it starts. (Editor’s note: There are competing surveys available … law firms have choices in this regard; my objective is to stress the importance of the concept.)

4.   Same as No. 3, but on Pre-Money Valuation . VC Experts, in its Key Investment Trends portal, takes the deals reported in the PWC Money Tree Survey each quarter, segregates them by region and industry sector, and gives the client (at the click of a mouse) pre- and post-money valuations. In both venture and buyout investing, the final decision is often based on the ‘money see, monkey do” concept,[8] particularly in venture. Even the most experienced investors, after due diligence and all the other tests they run through to reach the goal line on valuation, inquire (as best they can) on what others in the venture business are paying pre-money for, g., San Diego bio tech companies in Phase 2. Without reliable data on comparables, the fund is relying on anecdotes; clients, both the buy and sell side, should, and can in my world, be able to access the comparables, averaged and presented in analytically friendly formats. (P.S. Another commercial: While there are competing surveys on valuation, the Key Investment Trends data on comparables is the most comprehensive, and is the only one based on official government filings.).

5.   Finding Money. There is a feeling in the law community that lawyers, particularly those at major national and international law firms, should be in a prime position to assist a client … typically but not exclusively an emerging growth company embarked on a trip, as I put it, “from the embryo to the IPO” … in its relentless, never-ending search for investment capital. When a client comes to see me and leads off with that thought, my initial remark in the past follows.

“If anybody in the law business ought to be able to assist you in finding money, I suspect it should be I, based on the number of years I have spent in this business. Frankly, I do not know how to find money for companies; if I did, maybe I would get out of this business and get into that one. Since I do not know how to do it, I suspect no lawyer does either, or at least nobody I know of. The takeaway from the prior statement is that those lawyers who pretend they will help you find money, in order to induce you to hire them, are often, to put it politely, fudging the truth.”

After that noble declaration, however, we then get down to business, which means that I am prepared, as are most of us, to perform a “traffic cop” service. That is to say, we try to help our clients, when they are looking for investors, by pointing in various directions and suggesting likely people to contact … both principals and agents. We do not charge for that service; if we did, we could be required to register as broker/dealers in securities, and I do not believe any major firms have so registered. Nonetheless, an unpaid traffic cop is a valuable ancillary service and, once in a while, it pays off.


(a)   As this piece concludes, a confession/concession is in order. The preceding narrative, arguably, fails to give adequate recognition to the episodic efforts of many lawyers and law firms to institute and implement what I am abbreviating as Client Connectivity, although not (as far as I am aware) ever using that label. Sarah Reed, the General Counsel at Charles River Ventures, has spent years persuading the venture capital community to cooperate on a suite of model forms which are currently maintained on the National Venture Capital Association’s site and are widely used. Go to and take a look; a lot of firms swear by these forms. Moreover, not infrequently individual lawyers, Ed Miller at Sullivan & Worcester, for example (and of course, yours truly) routinely suggest client-friendly concepts and structures which are designed to solve challenging problems in the industry. Moreover, client flash reports and newsletters are available online to all through g., Securities Mosaic, Insights, and on the web sites of the firms themselves; see, e.g., the Advisory series and the VC Experts Buzz of the Week.

(b)   In short, the landscape is by no means bereft of anecdotal evidence of Client Connectivity. The thrust of my polemic is, however, that those of us who love this profession need to stimulate ourselves and our colleagues to focus much more intensively on the myriad ways to improve Client Connectivity. We are not taking anywhere near full advantage of the opportunities offered by the revolution in communications technology experienced globally during the past several decades. In order to blunt the rising tide of criticism and turn the situation to our advantage as responsible professionals, we need an exponential increase in our efforts in this regard. VC Experts is, of course, not the only answer, nor should it be. However, it is an answer, a good faith attempt at an answer, I maintain. And I recommend the resource as one material step on the road to a significantly better relationships between the profession and the client community.

[1] Elinson, “VC Slams Attorneys on Salaries, Overlawyering,”, 6/4/2008.

[2] Suskind, Transforming The Law: Essays on Technology Justice and the Legal Marketplace (Oxford Press, 2000).

[3] Goldman Sachs Global Investment Research – June 4, 2004.

[4] For a proposal on standardizing statutory language, see Allen & Outa, Better Organization of Legal Knowledge, 1969 U.Tol.L.Rev. 491 (1969). For application of standardized language for legal drafting see Sprowl, Automating the Legal Reasoning Process: A computer That Uses Regulations and Statutes to Draft Legal Documents, 1979 AM.B. Found. Research]. 1 (1979).

[5] To illustrate: My client wants to organize a private equity fund … an expensive (legal fees on the low six figures) enterprise … with, in today’s universe, a significant chance of failure. The trick, in my case, is to furnish, at the outset of the relationship, a digital kit made up pre-selected VC Experts material for the client’s review, consisting of: annotated model forms, soup to nuts; the latest VC Experts survey of “industry standard” deal terms for the transactional documents between the GP and the LP; an article on how to save cash as the fund is being organized; a questionnaire which focuses the members of the GP on the issues (long neglected) they face in memorializing their internal relationships; an analysis of the impact of the so-called “hurdle” on the GP’s economics; and a free pass to rummage through Book 10 of The Encyclopedia of Private Equity and Venture Capital for easily searchable data and analysis which serve to answer, in advance, client FAQs. By giving clients a head start of this nature, the law firm should be able, given an inquisitive and experienced client, to reduce the invoices substantially; I’ll hazard a guess of, say, $20,000 to $30,000 on a typical mid-six figure bill. The client is not asked to take out her own appendix; but she can make the stay in the hospital shorter and the bill lower by preparing herself and her associates.

[6] I have a bunch of these in my files, to which I am adding routinely, and (why are you not surprised) the feature will be up shortly on VC Experts.

[7] The argument for checklists, draws again on the medical analogy. A crusader in the health care industry has made a compelling case that checklists in the operating room cut down errors and save lives. Experienced surgeons, like experienced lawyers, typically scoff at the idea of checking off routine procedures as the operation progresses. Their experience and skills are such that a checklist is, in their view, puerile; that said, the fact is that even with the most experienced practitioners to charge, checklists cut down errors, hence, the idea that, in the MAC/MAE area, a checklist is long overdue.

[8] On the question of how VCs typically arrive at valuations, the answer, as per data compiled by Vivian Fu and reproduced online in The Encyclopedia, 59% of the investors in early stage transactions use the comparable transaction method. In fact, Vivian’s material is highly useful for companies and funds stuck with IRC 409A and FAS 157 responsibilities … survey evidence on how VC valuations are arrived at. In unity there is strength.

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