Corporate Counsel

James Brink Pittsburgh Attorney

What is a general counsel and does my company need one?  The answer depends on how your company uses legal services.

Most small to medium size companies cannot justify having a full time general counsel on its management team.  The intermittent need for legal services just cannot justify the expense.   Instead, outside counsel is consulted only when a traditional legal need arises.

I have found over the years that in many instances management assumes the role as legal counsel unintentionally, and innocently, because they don’t think that a lawyer needs to be consulted on every issue.

For example, the office manager of a physicians practice group may not believe a lease for diagnostic equipment needs to be reviewed by an attorney.  As a matter of fact, the equipment sales representative may have even told the office manager that the lease is “standard boilerplate legalese” that everyone signs.  Unknown to the office manager who signs a multi-year lease over lunch with the zealous sales representative is the fact that the lease contains warranty waivers, onerous indemnification provisions, and price escalation clauses among other things.

My corporate general counsel experience will be an important asset to your company’s management team.  I make it a point to learn and understand the actual business of each of my corporate clients so that I can act as a sounding board for business decisions as well as offering legal advice.  Outside counsel generally are reluctant to act as confidants to corporate managers.  Instead, outside counsel for many law firms tend to remain steadfastly grounded in their role as an attorney only and opt to recite general legal principles without working to apply such principles to your specific needs.

This is what makes my approach to a corporate practice different from the others.

I will come to your place of business to work with your management team to find solutions to your legal challenges and not merely send a legal memorandum.  I will get to know your key managers so they are comfortable calling me without having to worry about ending up with a large bill for legal fees.

What I can do for your company as your general counsel

I have the experience to advise you on most legal challenges your small to medium size business may face.  I have provided a brief outline below of common legal issues that I routinely handle as general counsel on behalf of corporate clients.

 

Review of Agreements

The days of sealing a deal with a handshake are long gone.  Now, every agreement is in writing and, unfortunately, the written agreements will contain terms and conditions that are extraneous to the agreement.

Categories of agreements I review the most include commercial real estate leases, general purchase agreements, fixture and machinery leases, office equipment leases, bulk material purchase agreements, transportation agreements, utility agreements, partnership and limited liability agreements, oil and gas leases, pipelines and road rights of way, and independent contractor agreements.

It is not my intention to list every onerous provision found in today’s printed form contracts.  Nevertheless, there are some recurring terms that merit mentioning:

  • Evergreen Extension Clauses: These clauses are cleverly disguised to extend an agreement for a stated period of time unless certain notice requirements are fulfilled in advance of the expiration date.  I have seen some notice requirements of intention to terminate one year in advance of the termination date set forth in the agreement.  If the notice requirement is not satisfied, the agreement will renew.  Also, in most cases, price escalation clauses are built into the agreement for contract extensions, meaning that your company will be locked into an extension it may not want and paying higher prices it may not want to pay.  This is a lose-lose proposition.
  • Indemnification Shifting Clauses: An indemnification shift does just what it says:  It shifts liability from one party to the other.  These clauses must be carefully reviewed.  Otherwise, your company may be agreeing to indemnify the other party for liabilities that it should generally accept.  For example, I was recently involved in a case where one of my client’s employees was killed and another permanently maimed caused by a malfunctioning machine.  Since these men were employees, the client was immune from paying any damages other than workers’ compensation claims.

The families of the workers sued the manufacturer of the machine and any other company having anything to do with the machine, including the company that provided the commodities used in operating the machine.

Unknown to us, a former purchasing department employee signed an agreement in 2009 in which the company agreed to indemnify the commodity provider for any and all claims made against it for whatever reason.  The commodity provider settled with the families of the workers, then demanded that my client indemnify it for the amounts it paid in settlement.  The indemnity demand was several million dollars.

The point is that a careful legal review would most likely have prevented this liability shifting.

  • Limitation of Liability: Providers of goods and services have finally realized that the purchasers of their goods and services don’t like accepting liability of the providers.  Instead of including indemnification shifting clauses, a limitation of liability clause will be used.  This clause does just what its name implies:  The liability of the provider will be capped at an arbitrary amount.  Generally, this amount will be tied to the value of the contract.  For example, if the value of the goods or services consumed under a particular agreement is $1,000.00, then the provider’s liability will be capped at $1,000.00 no matter if the product or service is the sole cause of a fire that completely destroyed the purchaser’s plant.  Sure, there will be insurance, but it will be your company’s insurance.
  • Choice of Law and Forum: If your company is located in Pennsylvania, why would you agree to apply the laws of New York to the interpretation and enforcement of your agreement?  Why would you also agree to resort to the court system of New York to resolve any legal disputes arising from the agreement?  Neither of these options is acceptable, and yet the chances are that your company has already agreed to similar language in what you may have regarded as routine agreements you have already signed.
  • Alternative Dispute Resolution (ADR): An ADR clause is not an inherently bad provision assuming that you realize that you are giving up your day in court as a means to resolving a dispute.  I only raise this topic because in many cases, for whatever reason, a party may wish to preserve its option to seek judicial redress as its source of remedy.  By agreeing to ADR, this option is waived and the parties will proceed most likely to binding arbitration.

Drafting of Agreements

As your general counsel, I will draft agreements specific to your company and to the needs of your company rather than to rely on preprinted forms that can be obtained online.

Several examples of client-specific agreements that I routinely draft include employment agreements, covenants not to compete, non-disclosure agreements, land purchase and sale agreements, termination of employment releases, and asset disposition agreements.

 

Prior Review of Employment Decisions and Other Employment Related Issues

Oftentimes corporate clients ask me why a lawyer needs to offer legal advice when considering decisions affecting the termination or demotion of employees.  While it is true that Pennsylvania is an employment at will state where an employee can be terminated for any reason or no reason, there are nevertheless other factors that must be considered when making decisions affecting the employment status of employees.

The exception to the general employment at will rule is that a negative employment action cannot be made on a basis that could be regarded as discriminatory under state and federal law.  This means that negative employment decisions based on an employee’s race, gender, age, religion, national origin, disability and, in some instances, sexual orientation will be regarded as unlawful.

My practice is to review the entire employment history of the subject employee and speak with the decision makers involved in each instance prior to making a risk assessment based on the legitimate business reasons presented supporting the negative employment action.

I cannot guarantee that a terminated employee will not sue upon being discharged, but I can guarantee that a well reasoned and factual justification supporting the negative employment action will aid immensely in ultimately prevailing before a state fair employment practices agency or the U.S. Equal Employment Opportunity Commission.

During my tenures as in-house corporate counsel, the Human Resources Department was one of my client groups.  I have assisted Human Resources professionals in drafting employee handbooks, policies and procedures, and job descriptions.  I have also handled audits conducted by the U.S. Department of Labor Wage and Hour Division and the Office of Contract Compliance Programs.

For my unionized corporate clients, I have assisted in the negotiation and interpretation of collective bargaining agreements, handled grievance proceedings and resolved unfair labor practice charges filed with the National Labor Relations Board.

 

Litigation and Litigation Management

I had my first jury trial as a third year law student in 1982 with a classmate under a mentorship program that was in effect at that time.  We won.

Since then I have been handled dozens of state and federal jury trials either as first chair primary counsel or as a second chair assistant.  My substantial litigation experience enables me to represent your company in just about any case in which your company may become involved.

While I am suited to personally handle almost every kind of litigation that your company may have, I recognize that I am a small firm, so I usually don’t accept large, complex cases alone.  My method of handling these cases is to associate with another attorney, or attorneys, to form a legal team to manage the case.  I did this kind of work using dozens of attorneys and law firms throughout North America previously as corporate in-house counsel with much success.

As the manager of your company’s litigation, I will act as coordinator with all outside counsel and manage their tasks and costs.  I will be your company’s sole source of information about all of your active cases.  More important, I will review all invoices rendered by outside counsel and will not hesitate to question inflated bills for routine services.

Many companies without a full time risk manager may not realize when there is a large deductible associated with a general liability insurance policy, the insurance company will hire a third party adjusting (TPA) company to manage the litigation on your behalf.  Unfortunately, the TPA’s primary task is to settle the case within your deductible so that its real client, the insurance carrier, does not have to pay anything.

This practice is not in any way beneficial for your company.  Since your deductible is not its money, the TPA has no motivation to vigorously pursue any defense to the claim you may wish to raise.  The TPA will retain and pay its preferred lawyer, with your money, with instructions to dispose of the suit within the deductible, which is also your money.  The TPA cares less about setting precedents or maintaining your company’s refusal to succumb  to assaults on its integrity.

Why would any company allow a stranger to spend its money without any oversight?  The answer is no company should.  I have managed dozens of similar situations in which I managed the TPA and its chosen attorney so that the company’s money was not squandered.  Although a majority of the cases I managed were resolved within the retainer, I can attest that the cost savings even in settlement were significantly lower than if the TPA was not managed.

As a matter of fact, when I was in-house counsel for a large chemical manufacturing and distribution company, the company risk manager and I were called to a meeting on Wall Street by a large insurance carrier to question us how we saved so much money managing the company’s deductible.  The answer was quite simple:  Attorneys should manage attorneys.  Otherwise, fees will be overstated and inflated since outside counsel “know what’s best” for the client and the client will not usually question a legal invoice.

I was involved in a situation recently where the in-house attorney for a workers’ compensation insurance carrier somehow assumed the defense of the client on matters outside the scope of the workers’ compensation insurance coverage.  This in-house attorney became friendly with the plaintiff’s counsel to the extent that he was producing my client’s employees at depositions without any preparation whatsoever.  More onerous was the fact that the in-house attorney gathered internal documents from the client and gave them to plaintiff’s counsel.    Surprisingly, this in-house attorney even went so far as to arrange for a plant tour for plaintiff’s counsel!

Unfortunately, the managers of the company with whom the in-house attorney was dealing thought they had an obligation to follow the directions from the in-house attorney.  When I was finally brought in, I was aghast at the level of incompetence of the in-house attorney and the possible liability to which he subjected the company due to the overreaching of his authority.

My management style is to use a fair but firm approach to managing outside counsel to keep legal costs in check.  This approach works so well that many of the attorneys I managed became good friends.

 

Managing and Coordinating Outside Counsel on Large Non-Litigation Projects

Years ago as in-house counsel we had reason to suspect that a rogue employee was sending disparaging emails to the chairman of the company.  Emails were much more difficult to trace then due to the limitations of the technology at that time.  My solution was to retain an outside forensic computer analytical group to travel to the location from which we believed the emails were emanating and when the employees left for the day, we copied hard drives from certain computers.

I managed this investigation for the primary reason that the work being conducted by the outside analysts would most likely be protected by the attorney/client privilege since I engaged the analysts and they were working for me as the attorney for the company.

I also conducted the numerous interviews that were inevitably tied to the information we gleaned from the computers.  Since the location was not in Pennsylvania, I retained and managed local counsel where the facility was located to further ensure that the results of our investigation would be protected.

This is just one example where using an attorney to conduct investigations could be vital to your company.  There is no human resource manager/employee privilege, meaning that a human resource manager could be deposed concerning the investigation and the manner in which the investigation was conducted.

If you suspect employee theft, abuse of trade secrets, a hostile or sexually abusive workplace, suspicion of union organizational activities if you are a non-union company, then you should consider retaining me to conduct and manage the investigation rather than to delegate the responsibility to a non-lawyer with no ability to protect the integrity of the investigation and maintain confidentiality through the attorney/client privilege.