Your Company ABC Just Bought Company XYZ, Could Adding XYZ’s Outside Counsel to Your Legal Team Spell Win-Win?
Imagine for a moment the following.
Lauren has been occupied with ACC’s aggressive growth campaign. SFTT is the fourth company in the last 18 months that ACC has acquired. She wonders whether ACC and its new subsidiary companies have sufficient compliance controls in place. Certain of the companies rely on telesales, email and text marketing, and use social media influencers to promote products on Facebook and other social media sites. Lauren has a solid in-house team, but none of the lawyers have advertising and marketing expertise, or experience dealing with federal and state agencies that regulate these practices. Lauren also wonders about the risks of private litigation, including class actions, involving texts and calls to mobile phones under the Telephone Consumer Protection Act. She recently read that Papa’s Coffee Company settled a purported class action for $ 5 million alleging the unlawful sending of coupons by text.
In light of these developments with ACC’s growth, Lauren thinks that perhaps it is time to expand the legal marketing expertise within her team. SFTT’s general counsel, Harry Dunn is leaving the company post-acquisition, but mentioned that Melissa Sharp is an incredible resource for SFTT and has done work for SFTT for over 20 years. He indicated that Melissa has extensive institutional knowledge and is a tremendous resource. Melissa recently sent Lauren a note asking for a meeting. Does it make sense to retain Melissa, essentially keeping on legacy counsel from SFTT and perhaps using her to advise ACC’s other companies?
The answer is YES!
While company counsel normally brings in its own “team” when there is an acquisition, completely giving up legacy outside counsel may result in the loss of substantial resources. I am pleased to say that I have several clients today because they acquired my client’s companies but retained me to continue advising the acquiring company (and other subsidiaries). By attempting to “clean house” with new counsel, you may actually be increasing costs as new counsel would have to come up to speed on the issues and the background, while legacy counsel likely knows it like the back of her hand. In addition, legacy counsel usually has relationships with operations personnel and may know key things like who are the best witnesses in your subsidiary company for, say a 30(b)(6) deposition (“use John, he’s great, and he describes our procedures with depth and clarity, plus he’s brilliant on a cross-examination”).
Another aspect where legacy counsel can be incredibly beneficial is in counsel’s relationships with regulators, legislators, and even opposing counsel your company may encounter. By way of example, I have a client I have represented for over 25 years. During this time, I have established relationships with key regulators, who know from our dealings that this client uses best practices in its compliance procedures. I have said several times, “we didn’t come up with this defense just because we got your letter, these are procedures the company has established over the course of many years and I have helped with their implementation.” Another client recognized that I had solid relationships with plaintiffs’ counsel in an industry ripe with litigation, and that I had a record of resolving matters quickly and efficiently. There was no need to recreate the wheel. Legacy counsel can bring her skills, knowledge of the law and the business, with minimal (if any) onboarding time.
In short, there are many reasons to retain legacy counsel, including institutional knowledge, established relationships, and, particularly in the midst of ongoing litigation or other matters, a continuum of services, expertise, and strategy. It makes sense, of course, to outline any new expectations, whether there are new billing procedures or other organizational mandates. Having been the legacy counsel several times, I can tell you that a longtime counsel will truly value your trust and seek to do the best job for you and your organization. Legacy breeds loyalty and is a win-win for the company, the in-house counsel, and the legacy counsel.