Interview on the legal perspective of business issues.

This article is an interview I conducted with Jeffrey Paulsen, Principal of

Paulsen Law Firm PLLC, Bloomfield Hills, Michigan. It is presented as a series of articles to be presented in this forum.

We touched on just a few different issues and perhaps in the future Jeff will agree to visit again. Here is another part of the discussion:

Gerry: the impact of the economic downturn is well known and employment in both countries has been dramatically affected. Major industries have been forced to retrench in order to survive and in some cases without government handouts would close. Do you see similar impact on professional practices? How has the economy impacted the legal profession?

Jeff: Gerry, thank you for this question.  Without a doubt, the latest economic downturn has had an enormous short term economic and likely long term structural impact on the legal profession.  Many law firms are based upon an out-dated business model that consists of high overhead costs, high hourly billing rates, minimum billable hour requirements, and incentives and a culture based upon revenue generation as opposed to client-centric services.  Because of the high cost overhead structure of offices, high paid associates and staff, sports and country club perks, when the economy and tight credit conditions prohibited many companies from growth oriented activities and into a survival mode, the business generation and revenue stream of many law firms were severely impacted.  In order to save the law firms, lawyers and staff were laid off in record numbers.  Today, there are many unemployed or underemployed lawyers and unfortunately many of these lawyers never considered being an entrepreneur and were never given training on how to be an entrepreneur.  Just like the large automotive companies, the large law firms consisted of highly educated and well qualified individuals that no longer had the entrepreneurial spirit that built both industries.  Personally, I believe the legal industry has changed forever.  Coupling business leaders concerns for cost control, with an understanding that there are well qualified and very experienced lawyers that can provide the same services as their traditional business model law firms, but at a fraction of the cost because of lower overhead structures; the lack of minimum billable hour requirements and the real willingness to look for Win-Win creative compensation relationships with clients; and a belief that a lawyer can put the interests of their clients first and still make a nice living; leads me to the conclusion that the old out-dated traditional legal business model is on its way out.  While there will continue to be a need for the large behemoth law firms with multiple offices (i.e. very high cost overhead structures) for certain legal matters, the bulk of the legal needs and legal opportunities will exist for lawyers that believe that it is time for the legal industry to get aligned with business reality.

Thanks, Jeff for your participation. I’m sure the readers will enjoy your insights and I look forward to a future visit with you.  Gerry, my pleasure and it is great to have reconnected with you after all these years.  While my insights are personal, I have had the opportunity to think about and be involved in the legal industry for over 25 years as an in house corporate lawyer, a large law firm partner, and now a small law firm entrepreneur.  It is an exciting time for businesses in both Canada and the U.S., and for the legal industry.  I believe the best opportunities are yet to come.

Interview on the legal perspective of business issues.

This article is an interview I conducted with Jeffrey Paulsen, Principal of

Paulsen Law Firm PLLC, Bloomfield Hills, Michigan. It is presented as a series of articles to be presented in this forum.

We touched on just a few different issues and perhaps in the future Jeff will agree to visit again. Here is another part of the discussion:

Gerry: I often see business leaders shun taking advice from lawyers even when the advice is clearly in their best interest. How do you approach overcoming an issue like this? It must be difficult to be viewed as the “sales prevention” department within your own company or by the client.

Jeff: Yes, you have identified a problem that many lawyers face.  Just like the human resources function, the legal function is seen as a “cost center” that does not generate revenue (although I will argue that often the future revenue generated or expenses avoided are because of good lawyering) and therefore the lawyers are not held in as high regard as those business line leaders responsible for P&L statements.  My own view is that a great business leader understands that success comes from a well balanced team of professionals who are given the opportunities to do what they do best; whether it is accounting, finance, marketing, sales and yes, legal.  My approach has been to demonstrate that I am a business executive with a law degree and although my first responsibilities are to handle the legal functions for a company, my advice and counsel may be considered as a member of the senior management business team as important for the overall business strategy and business plan.  If I am permitted to express my views, from both a legal and business perspective, in conjunction with other senior team members, then I will have given the business leaders with the advice that they can use to make the ultimate decision that is in the best overall interests of the company.

Interview on the legal perspective of business issues.

This article is an interview I conducted with Jeffrey Paulsen, Principal of

Paulsen Law Firm PLLC, Bloomfield Hills, Michigan. It is presented as a series of articles to be presented in this forum.

We touched on just a few different issues and perhaps in the future Jeff will agree to visit again. Here is another part of the discussion:

Gerry: Another common problem I see is how companies deal with customer complaints. Consumers in both countries seem to be too litigious and think companies have such deep pockets they can sue over every product defect and get a large settlement. The old “I’ve got a bug in my soup” story. If the company settles all the time they are vulnerable to copycat suits. If they defend aggressively they get a PR black eye. How do you advise companies in these scenarios?

Jeff: My answer will not to be one answer that fits all.  Having served as a company General Counsel responsible for protecting the company from litigation and working to avoid litigation when possible, I can share a few of my suggestions.  My initial premise is that we business lawyers should be in the business of helping companies avoid litigation if at all possible.  Litigation is expensive, time consuming, gives up control of the resolution process, and takes the company’s focus off of its real business; making products, providing services and helping others achieve commercial success.  Although I am now an outside lawyer, I still think it is almost always in my clients best interests to attempt to resolve customer complaints and disputes through creative business solutions, or if needed, by monetary settlements. The counter to that suggestion is as you have noted that it may encourage copycat complaints and lawsuits. There are times when a company needs to defend its legal position aggressively.  Clearly if you have a dispute that can jeopardize the existence of your company, its business, a product line, or if the ability to construct a business resolution is not possible, then you must devote whatever resources are needed to ensure success in the litigation.  When it comes to copycat litigation, I suggest that a clear understanding of the risk be discussed and that a plan for resolution be implemented.  I attempted this at a former employer with retail establishments where we received over 2,000 customer complaints per year and typically had 40 to 50 cases in litigation at any one time.  Although the implementation of our plan was not exactly as I had envisioned, this type of decision-tree process can help when a company considers whether to defend each and every lawsuit, settle each and every lawsuit, or preferably implement a plan that includes both a litigation and settlement strategy.

Interview on the legal perspective of business issues.

This article is an interview I conducted with Jeffrey Paulsen, Principal of

Paulsen Law Firm PLLC, Bloomfield Hills, Michigan. It is presented as a series of articles to be presented in this forum.

We touched on just a few different issues and perhaps in the future Jeff will agree to visit again. Here is another part of the discussion:

Gerry: Another common problem I see is how companies deal with customer complaints. Consumers in both countries seem to be too litigious and think companies have such deep pockets they can sue over every product defect and get a large settlement. The old “I’ve got a bug in my soup” story. If the company settles all the time they are vulnerable to copycat suits. If they defend aggressively they get a PR black eye. How do you advise companies in these scenarios?

Jeff: My answer will not to be one answer that fits all.  Having served as a company General Counsel responsible for protecting the company from litigation and working to avoid litigation when possible, I can share a few of my suggestions.  My initial premise is that we business lawyers should be in the business of helping companies avoid litigation if at all possible.  Litigation is expensive, time consuming, gives up control of the resolution process, and takes the company’s focus off of its real business; making products, providing services and helping others achieve commercial success.  Although I am now an outside lawyer, I still think it is almost always in my clients best interests to attempt to resolve customer complaints and disputes through creative business solutions, or if needed, by monetary settlements. The counter to that suggestion is as you have noted that it may encourage copycat complaints and lawsuits. There are times when a company needs to defend its legal position aggressively.  Clearly if you have a dispute that can jeopardize the existence of your company, its business, a product line, or if the ability to construct a business resolution is not possible, then you must devote whatever resources are needed to ensure success in the litigation.  When it comes to copycat litigation, I suggest that a clear understanding of the risk be discussed and that a plan for resolution be implemented.  I attempted this at a former employer with retail establishments where we received over 2,000 customer complaints per year and typically had 40 to 50 cases in litigation at any one time.  Although the implementation of our plan was not exactly as I had envisioned, this type of decision-tree process can help when a company

Interview on the legal perspective of business issues.

This article is an interview I conducted with Jeffrey Paulsen, Principal of

Paulsen Law Firm PLLC, Bloomfield Hills, Michigan. It is presented as a series of articles to be presented in this forum.

We touched on just a few different issues and perhaps in the future Jeff will agree to visit again. Here is another part of the discussion:

Gerry: One of the most common areas that I see poorly handled is employee management. Management of poor performers is often highlighted with a termination and I have not seen any business that seems to handle a termination well. Do you agree? Why is it difficult?

Jeff: Many business leaders are educated and trained in their particular disciplines such as finance, accounting, marketing, sales, supply chain management and other typical disciplines of business leaders.  These individuals have been able to achieve success because of their knowledge, hard work and understanding of how to make a business successful using these disciplines.  Many business leaders are not trained, nor are they generally interested, in the “softer” functional areas such as human resources management. Often, business leaders are happy to have these concerns handled by the human resources staff; believing that the staff will implement the human resources policies directed from top management.  From my experience, I have seen minimal resources allocated to the non-revenue producing functions, such as human resources.  This often results in managers not understanding how to write a job description, conduct a performance review or handle employee discipline or terminations effectively.

Interview on the legal perspective of business issues.

This article is an interview I conducted with Jeffrey Paulsen, Principal of

Paulsen Law Firm PLLC, Bloomfield Hills, Michigan. It is presented as a series of articles to be presented in this forum.

We touched on just a few different issues and perhaps in the future Jeff will agree to visit again. Here are the first questions:

Gerry: Jeff, we both have conducted business in the U.S. and Canada. Do you see any fundamental differences in how entrepreneurs approach business in each country?

Jeff: Generally, I see very little differences in how entrepreneurs in Canada and the United States approach business.  Canada is the largest trading partner of the U.S., and even though we are distinct countries, our economic futures are closely tied to each others’ success.  As both countries are based upon English jurisprudence, our supporting legal systems, although different in some respects, share a common basis. Our free market economies and entrepreneurial spirit are closely aligned.

Gerry: Despite free trade agreements, it seems that barriers to cross border commerce still exist. Do you think the politics of trade will ever take a back seat to good market development?

Jeff: I am very hopeful that it will.  There is a certain tendency to go into a protectionist mode; particularly when economic times are rough.  Plus politicians are measured on how well they protect and represent their own specific constituents; thus often time leading to an I Win- You Lose mentality.  With increased business leadership and influence on politicians, I believe that the idea of the greater good of expanding the total economic pie will prevail and lead to Win-Win solutions to market expansion.

How to crystalize business growth options through Strategic Planning

What is it? Why do strategic planning? When is the right time for strategic planning?

Strategic Planning is a tool to formulate high level business strategy. It sets the table to allow preparation of detailed business plans.

Strategic planning is undertaken to define the precise mission of the organization, prioritize opportunities and help manage growth. It is also a very useful tool in satisfying succession planning needs.

Most strategic planning is undertaken to establish base guidelines for a business plan. It also provides the benefit of helping maximize resource utilization and prioritize growth options.

A strategic plan is a coordinated and systematic way to develop a course and direction for your company. Basically, if you don't have a strategic plan, it's akin to navigating unknown territory without a map. And without a map, you're lost in a highly competitive business environment that will inevitably throw these challenges your way: increasing globalization, unpredictable investment patterns, more demanding clients and the dizzying speed of technology. A rule of thumb is that if there's uncertainty on the horizon, which there always is today, the greater the need for strategic planning.
Since no two businesses are alike, the process you choose to do your strategic planning should fit the nature of your business. You can adapt it to suit your needs. For example, if you're a small firm, a brief strategic plan might be appropriate. If you're a bigger company, a more detailed plan on various aspects of your organization may be more effective.
Don't confuse a strategic plan with a business plan which is a much broader document and includes a strategic plan, a marketing plan, financial plan and operational plan.
Prepare and define the scope of your planning by reviewing your motivation, costs and means.
Review of your company's internal environment and look at external factors such as competition and demographics. Match your strengths and weaknesses in order to capitalize on opportunities.
What's important is that you have a document that outlines where your company is going, so that everybody in your business is working with the same information. Ultimately, strategic planning helps to gauge what an organization is, what it does exactly, and why it does it, with a focus of optimizing your future potential.