Mark Suster is at it again. In a good way overall, but, as usual, the good lawyers (and other professionals) have to defend themselves.
Mark’s latest re lawyers is that lawyers won’t do an all-hands meeting to be efficient and get the deal done.
I believe this to be false. I have often strongly urged (BEGGED) multiple times for all hands meetings and not been able to get them when acting as counsel for a client. In each case we were forced to “negotiate by drafting” and sending docs back and forth by email. And, in each case, the deal fees and the frustration on both sides went up and up. When the strongly and frequently urged all-hands meeting was severely delayed or never happened, I believe it was the PRINCIPALS, and not the lawyers, who were resisting the meeting, foolishly thinking it was a time-suck for them and a way lawyers try to get more fees or a free trip to their beautiful city! Sometimes cynicism bites you in the ass.
If you have trouble getting parties to agree to an all-hands drafting session, either (a) you have bad lawyers who are not putting client interests first, OR (b) you are misjudging the source of the problem. I suggest that 90% of the time it is the latter, and that 10% of the time you need more attentive lawyers.
In short, I agree 100% with the all-hands negotiating session approach (kudos to Mark for pointing this out), but the only issue I have seen from the lawyer side of this equation is a busy schedule.
So, if you have lawyers who have schedules and styles (or attitudes) that make it tough to get an all-hands meeting, FIRE THEM, and hire lawyers who care about results – your results. They do exist. You may even wish to engage a lawyer who is also an investor and entrepreneur?
Mark Suster’s post: Don’t Cede Control: Why You Need to Cut out Middle Men in Negotiations
So you got your big term sheet signed and you’re now in the drafting. You thought it was going to be as easy as just having term sheet transferred to a longer form document. But as it goes to the legal docs naturally 20 issues arise the require negotiations. You want the deal to close in 4 weeks. But every freakin’ week there are delays in getting the lawyers to “turn around” the documents.
Their lawyers blame yours. Your lawyers blame theirs. This seems to happen on every deal I ever work on.
Here’s the reality. Sometimes the problem is that one of the sets of lawyers has too many deals on the table and just doesn’t process your documents quickly enough. Trust me, that happens. Other times it’s a matter of the other lawyers waiting for feedback from their client who hasn’t had time to process the issues. So much freakin’ time gets lost in the back-and-forth.
And then there’s the madness. Lawyers insist on arguing with each other like sports. They have their “lawyer points” that they really care about and believe you should be passionate about as well. It’s their job. I call it “arguing over semi colons and periods (full stops to you Brits).”
Do you want to get the deal done faster? There’s one way – even though everybody is going to try and resist. Get everybody in the same room for a multi-hour “drafting session.” By everybody I mean your lawyers, theirs and the VCs or whoever the client is (maybe a company acquiring you). That’s the only way to work through all of the issues in a timely manner.
Why do they not want to commit to being together? I’m guessing it’s less efficient for them. They have to suck up all those hours for just one client and in a large block. If they do it asynchronously they can deal with it when they have time to get around to it – often late in the evening. If for some reason your deal fall through – remember that “Time is the Enemy of All Deals” – it’s not the end of the world to them. It might be to you. Your incentives for speed aren’t aligned.
In the same room, when “lawyerly” issues crop up you and the counter-party can take commercial judgments on where you want to compromise. In the same room, clients can’t “hide behind their lawyers” by saying “it wasn’t me asking for that.” You problem solve. Everybody is in the room to hear the issues.
Shit gets done.
Don’t let lawyers toss the ball back-and-forth. Cut out the middle man. Negotiate directly with your VC or acquirer with lawyers present in the room.