Ed. note: This is the latest post by Above the Law’s guest conversationalist, Zach Abramowitz, of blogcasting platform ReplyAll. You can see some of his other conversations and musings here.
I never wanted to be a corporate lawyer. After three mind-numbing years of law school, I barely wanted to be a lawyer, but at least being a litigator seemed mildly bearable. So when I got the call two weeks before starting that I was getting placed in the firm’s M&A department, I didn’t know the first thing about due diligence. I had done zero corporate work during my summer internship, and I didn’t have any idea what corporate lawyers did on a daily basis. Smash cut to me sitting in a dimly lit office in December aimlessly plugging provisions into a chart while being mentally and verbally abused by the midlevel associate above me in the deal. I had absolutely no idea what I was doing or why any of this was important. Throughout my two years as an associate, I tried convincing myself that diligence was interesting — it was a way to learn about a company from the inside out.
The real truth is that I couldn’t figure out why they didn’t give this work to a paralegal or, better yet, a robot. Both could have done my job better and cheaper. Well, wouldn’t you know it, savvy former Weil Gotshal associate Noah Waisberg has built DiligenceEngine, a piece of software that will find key provisions in documents for you, put them into charts, and save your clients time and money on due diligence. And if I know Biglaw partners, they LOVE to save their clients money and shave hours off the bill.
This week, I’ll speak with Noah about why diligence sucks, why human lawyers suck at it, and how he left law to make your life as a reviewing attorney easier and a little less miserable…
American companies often come to us with a “great business idea” that turns out to be prohibited for foreign companies in China. When we give them the bad news, their first response is usually: “But that makes no sense.” Some then suggest that all we need to do is meet with the “right people” in the Chinese government to explain how their business will create jobs and boost China’s economy. We tell them that will never work.
China has deliberately limited foreign involvement in certain industries (e.g., publishing and the Internet) to be able to control those industries. The Chinese government is more concerned with social harmony and the contentment of its citizens than with economic numbers, and you should always factor this into your China business decisions. China’s slowing economy only heightens the government’s focus on contentment.
If you are doing business in China, or even just considering it, you should be mindful of the following…
Since the launch of alt.legal, Ed and I have received a lot of very interesting emails and feedback. It is apparent that many of you read ATL literally allday love working in Biglaw, but most many have considered taking a walk onto the alternative side (sounds far more erotic than it is).
What we hope to prove to you through this ongoing column is that legal entrepreneurship is exciting, prestigious, lucrative, and, most importantly — to the many resilient lawyers out there who have remained idealistic in the face of back-to-back all-nighters — your best chance to change the legal system for the better. Moreover, despite what you think, innovation in the law is NOT just in e-discovery. Turns out, there are problems worth solving associated with almost every practice, and with each, there are entrepreneurs and innovators ready to change the game. (My co-author, Ed Sohn, is planning to write more on this underground world next time.)
Today, we profile one such entrepreneur, Adam Nguyen, who saw inefficiencies in the always-exciting process of contract review for due diligence (hey litigators, it turns out M&A lawyers have to do document review too), and leveraged $150,000 worth of Harvard Law-branded problem solving to create an innovative technology solution called eBrevia.
Rule number one for succeeding at doing business in China is to have a good partner. The odds of having problems with a Chinese company are much lower when you deal with a “legitimate” Chinese company. That means rule number two is making sure that you are dealing with a legitimate Chinese company.
But how do you do that? How do you distinguish between a Chinese company that is legitimate and one that is not?
The following are the basics for making that determination…
The first thing you should do is conduct a Chinese-language internet search of your potential Chinese counterparty. This sort of search is not likely going to be enough to make you feel good about going forward with a $10 million deal, but it frequently can give you enough negative information on your potential Chinese counterparty to convince you not to do any deal at all.
Next, do your due diligence the old fashioned way. Ask your potential Chinese counterparty to provide you with its government registration documents and, if relevant to your deal, its accounting and tax records as well….
A lawyer who lacks self-confidence feels compelled to run down every issue, make every argument, and depose every witness. After all, if you choose to make an educated guess about the importance of a tangential issue, or whether to omit a plausible (but likely losing) argument from a brief, or whether to incur the cost of deposing a just-barely-relevant witness, all may be lost. You might lose the case, and the recriminations would never stop. Better to leave no stone unturned than to leave yourself at risk of being second-guessed.
That’s one reason to hire lawyers with a little self-confidence. They’re willing to take intelligent risks where it makes sense to do so.
Which brings us to the topic of today’s post: Compliance due diligence.
If your company’s considering an acquisition, you can simply outsource the entire compliance due diligence process. Hire Big Firm, ask it to handle due diligence, and wait for the results. No muss, no fuss.
Jiminy jillickers! ATL editors are going all over the place over the next month or so. Or at least all over the Eastern Seaboard. If we aren’t heading to your neck of the woods on these trips, never fear, we may hit you up on the next time around. We’ve already hit up Houston, Chicago, Seattle, San Francisco, and Los Angeles in the past year.
Kinney Recruiting’sEvan Jowers is currently in Hong Kong for client meetings and still has a few slots available through October 22. Evan will also be in Hong Kong November 14 to December 15. Further, Robert Kinney has been in Frankfurt and Munich this week and is available for meetings with our Germany based readers.
One of our key law firm clients has referred us to one of their important clients in the US, Europe and China – a leading global technology supplier for the auto industry – in order to handle their search for a new Asia General Counsel and Asia Chief Compliance Officer.
Kinney is exclusively handling this in-house search.
This position will have a lot of responsibility and include supervision of eight attorneys underneath them in the Asia in-house team. The new hire will report directly to the global general counsel and global chief compliance officer, who is based in the US. The new hire’s ability to make judgement calls is going to be as important as their technical skill set background.
The position is based in Shanghai and will deal with the company’s operations all over Asia and also in India, including frequent acquisitions in the region.
It is expected that the new hire will come from a top US firm’s Shanghai, Beijing or Hong Kong offices, currently in a top flight corporate practice at the senior associate, counsel or partner level. Of course, the candidate can be currently in a relevant in-house role.
The JOBS Act created new tools for companies to publicly advertise securities deals online. As a result, thousands of new deals have hit the market and hundreds of millions in capital has been raised, spurring a wealth of new business development opportunities for attorneys.
Fund deals, startup capital raises, PIPE deals and loan syndicates are just a handful of the transactions benefiting from the JOBS Act. InvestorID FirmTM is a platform designed to help attorneys equip their clients with the workflow, marketing and compliance tools to publicly solicit a securities offering online. By providing clients with the tools to painlessly navigate the regulatory landscape of general solicitation, InvestorID FirmTM helps attorneys add value above just legal services.
The Jumpstart Our Business Startups Act (JOBS Act) went into effect in 2013 and permits Regulation D offerings of securities to be advertised publicly. This means that funds and companies can now use social media, emails and web sites to market transactions to new “accredited” investors.
However, with these new powers come new pain points. InvestorID FirmTM provides a secure, fully hosted, cloud-based platform with a breadth of tools for your clients, including: