Contracts, In-House Counsel

House Rules: Fieldwork

David Mowry discusses taming the three-headed dragon of supply-side legal work...

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It is no secret that I work for a supply side corporation. While my position largely requires legal advice and support to the “field,” I am thankfully separated from sales by ethics and obligations to the company. I know from email correspondence that many of you also support sales in your companies. I have received several questions related to dealing with the conflict between assisting clients in meeting their, and the corporation’s, quarterly and annual revenue targets, and Legal’s ultimate obligation to the company.

In baser terms, the dichotomy may be viewed as attempting to rein in Mario Williams after a B-12 shot late in the fourth quarter….

Supply-side legal work can be like a three-headed dragon. One head is the corporation, which is your client. Another head is the sales force, which has its own agenda that may or may not align with the ethical and compliance strictures placed on the corporation. The third head is comprised of Accounting and other departments, which may be more conservative in both approvals and exceptions than you might be as legal counsel.

The conflict at play here is that all three heads must work as one to obtain the revenue targets set forth at the beginning of each fiscal year. And the heads don’t always get along.

I recently reviewed a master agreement for a large organization which has placed its contract out to bid through an RFP process. The organization has been a customer for many years. Obviously many economic and business changes have occurred in the interim, and the contract has clauses that are quite favorable to the customer. The field would obviously like to keep the customer happy and requested a rubber stamp approval of a renewal of the existing contract.

This would put our company in the best light for the RFP, as we would maintain the status quo, and there would be no need for a re-negotiation of terms and conditions. However, my duty is to the corporation, and in my position I am aware of many policy, procedural, and business changes that have occurred in the years since the original agreement was executed.

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So, I found myself in the position to either accede to the field’s request to push through a simple renewal, or to take the time to fine tooth the agreement to bring it standard with today’s language requirements. Being ever mindful of the third dragon-head (Accounting), I chose the latter. The reasons for this are:

1) Obtaining Accounting’s imprimatur on the language now, at the RFP stage, will save many a headache in the negotiation stage;

2) Not having to backtrack from the RFP submission language can help maintain credibility and any leverage during the negotiation; and

3) The corporation is entitled to update language as times change. This is evidenced by the customer’s own paper, which has some drastic language proposals. Redlining these issues now gives a heads-up to both sides where the real deal-breakers lie and can help both sides prepare for an efficient and productive meeting.

It is important to have a dialogue with the field about your choices and recommendations. If they understand why a choice was made, they can begin to build a level of trust in your work. By standing firmly in your position of protector of the realm, so to speak, your boss(es) begin to see the integrity and credibility you bring to your position. And by forging relationships with Accounting, more difficult processes down the road may possibly become easier to work through.

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I cannot state that the process outlined above is easy to navigate, or to choose. In reality, it can be quite difficult. Late in a quarter when the pressure is on, the stock price is partially incumbent on revenue targets, and everyone seems to be in a tizzy to get deals closed, it can be an easy choice to take the path of least resistance. But as an old Indian saying goes, walking the muddy road makes you stronger.

After two federal clerkships and several years as a litigator in law firms, David Mowry is happily ensconced as an in-house lawyer at a major technology company. He specializes in commercial leasing transactions, only sometimes misses litigation, and never regrets leaving firm life. You can reach him by email at dmowry00@gmail.com.

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