NO OUTSIDERS - The legal industry, which is still holding out to see whether this whole “world wide web” thing has real staying power, is not exactly known for embracing new ideas. So it likely won’t shock you to learn that, despite the potential benefits of accepting outside investment, many law partnerships are wary of giving up equity to nonlawyer investors. As Law.com’s Justin Henry reports, concerns over the impact that nonlawyer stakeholders could have on client services is enough for many firm leaders to wait for test results from recently created U.S. regulatory regimes before shaking up their own firm’s ownership model, according to consultants and former firm leaders interviewed for this report. “Lawyers are more risk-averse than your average person, and some of that is due to the nature of the business of law,” said Marcie Borgal Shunk, president and founder of consulting firm The Tilt Institute. “They are delivering services based on precedent, so as a lawyer you are typically looking at what came before. Then there’s the partnership model which is designed to create the most profit within a single year. That is not the mindset that drives innovation.”
CONTRACTING EXPANDING CONTRACTS - Contract management is a huge time-suck for many legal departments and it’s becoming a bigger and bigger problem as legal department workloads swell. But, as Law.com’s Trudy Knockless reports, it doesn’t have to be this way. Legal chiefs and legal ops experts say it’s crucial to set expectations for salespeople and ground rules for which contracts require legal review or approval and which do not. A key piece of that process is creating an authority matrix that identifies who must sign off on which terms. “The [first] trick for contract review [is] to have a good policy in place that sort of sets expectations for the salespeople and enables efficiency in terms of the way that contracts get reviewed,” said Craig Gatarz, chief legal officer of Veritone, an artificial intelligence technology and solutions provider. Oh, and also? Cut the crap. “Get rid of the redundancies,” said Stephen Kim, chief legal officer of Toronto-based Avicanna. “Chop the amount of paper. Reduce them to the number of redundant templates. And also reduce the number of touch points. Each second or minute aggregated over the thousands of contracts will add up at the end of the year.”
ON THE RADAR - Private equity firms Sequoia Capital, Thoma Bravo, and Paradigm Operations were hit with an investor class action Tuesday in California Northern District Court in connection with the collapse of the crypto trading platform FTX. The lawsuit claims that the investment firms irresponsibly bolstered FTX’s reputation in order to raise the company’s valuation and the worth of their investments. The suit, backed by brought by Robbins Geller Rudman & Dowd, alleges claims for negligent representation, intentional misrepresentation, fraudulent inducement, civil conspiracy and violations of state consumer protection laws. Counsel have not yet appeared for the defendants. The case is 3:23-cv-00655, Rabbitte v. Sequoia Capital Operations. Stay up on the latest deals and litigation with the new Law.com Radar.
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