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Flashback to a typical Silicon Alley scene at the height of the New York gold rush: a hip downtown restaurant, tables filled with chattering black-clad people yapping into cell phones and jotting notes on their Palms. In the middle of it all, a general counsel from a hot dot-com chats with two editors, telling them about the company’s recent all-staff junket to Las Vegas, where he had to make sure none of his young charges got arrested. Michael Simon, that GC, boasted about Internet consultancy Razorfish Inc.’s global acquisitions, and the challenges of integrating such a big, diverse workforce. Simon, previously a record company in-house lawyer, had been with Razorfish almost from its heady start. Then Nasdaq tanked. And sagged and sank. Seemingly overnight, Jolt Cola-fueled all-nighters in front of a computer were replaced by sodden pink-slip parties. Razorfish has seen its share price sink from $52 to 50 cents as of press time. And Simon is starting to sound pretty old economy, talking about becoming more aggressive in collecting receivables. Corporate Counsel senior editor Anthony Paonita caught up with Simon recently to chat about what it’s like to be a dot-com GC in the spring of 2001. Paonita interviewed the Razorfish general counsel over the telephone, apologizing for being so chintzy. “That’s okay,” replied Simon, “I’m so busy that I wouldn’t have had time for lunch anyway.” Simon’s comments that afternoon, edited for style and content, follow. Anthony Paonita: It’s a different world from the last time we talked. What’s changed for you and your industry? Michael Simon: In solid economic times legal work is virtually unlimited. And the amount of work lawyers do is bound probably only by their imagination to think of it. In difficult economic times, the work is still boundless, but we are constrained by resources. The [legal] workload remains constant, and substantial. But I have to prioritize by subject matter, and [what's] most important to us, and make sure that it’s all getting done in order to keep our business moving forward. I’m focusing more of my energy on client-related work. To ensure client satisfaction. To turn deals around very quickly. To make sure that, if a client is prepared to hire us, we’re prepared to be hired within a day as opposed to after three weeks of negotiations. If there are bad debts that need to be collected, they escalate to my department more quickly — as opposed to going from business operations, to finance and accounting, and eventually to legal. I am aggressively going to collect our receivables. It’s also a time of opportunity. To the extent that there are opportunities to improve the cash position or economic environment of the company, that becomes a priority. So if my day says that I can send out five cease-and-desist letters to people infringing our trademark, or I could negotiate with a financial institution regarding a line of credit, the credit line comes first. Because if I don’t collect the money, the lights don’t come on. Q: Razorfish, like a lot of other companies, has had to lay off people. That can’t be very pleasant. How involved have you had to be? A: It’s hard when we have to let go people who have been with us for a very long time, and who have done everything in their power to do the best work that they can. I am responsible for overseeing the implementation of plans that are being created by our managers. That means I’ve had to become more familiar with the labor laws of Norway, Sweden, Finland, Germany, Italy, and the United Kingdom than I’d ever thought I would have to be. Generally, the lawyer’s role is to advise on the best way to lay people off, and to create the best departure package for the employees that’s possible, within the financial context. You also have to think what’s the best way to do it, both in terms of morale and company liability. Q: How is this rough time also a time of opportunity? A: I’m having to negotiate deals and structure transactions in a way that I haven’t had to in the last four years. We’ve had enormous leverage in the past. Never before the fourth quarter of 2000 had we been unprofitable. We’d always been on an upswing. Q: Are you finding that clients are a little less open-ended? That they want to see a site or a project completed faster? A: Client expectations have changed. But we were smelling this for some time. We didn’t predict a downturn in the economy, but we believed that clients were no longer going to say things like, “I have $5 million and I must have a Web site. I don’t know what that means. Here’s the money, just give me something.” What we did over the last four or five months — which makes us look like geniuses– is retool our service offering so that it was even more aggressively geared toward demonstrating a return on investment for our client. Meaning: You spend a hundred bucks with me, I will cut a thousand dollars out of your supply chain in costs. Whatever the metric is, we believed we would be more competitive. Client buy cycles have slowed down, while our in-house capabilities have increased. So the work that clients are buying is even more sophisticated. And they’re more demanding now. Q: How are you getting along with your outside law firms these days? We ran an article about how Sun Microsystems basically told Brobeck, Phleger & Harrison that it wasn’t going to pay for associate raises any more. Do associate salaries bother you at all? A: I have never not scrutinized our legal bills. I have never not faxed back a 50-page bill for $60,000 because they allocated two hours to me that should have been allocated to either another client or another matter. I haven’t increased my level of scrutiny. I’ve been all over my vendors for some time. I have negotiated discount rates with my primary provider, which it continues to this day to give. Q: Who is your primary provider? A: Morrison & Foerster. When we started out with them, we got a discount. And now when everybody is being cash-conscious, we still have a discount. And I still go over their bills. And I still ask them, “Why does it takes a paralegal 14 hours to assemble the documents necessary to create a bound volume?” They just put in the time, and send it to me. I don’t know if they’re hoping I’ll pay it, or not notice. But when I call them on it, they are very good at saying, “That does seem a little unreasonable, 14 hours for a bound volume. I’m going to knock that down.” Q: Sun’s stance seemed a bit ideological, too. A: We know what that’s about. I don’t want to insult my brethren. I’m sure that Sun has been responsible with their legal bills, and has been reviewing them and probably is fighting with its lawyers. This is just, I imagine, a public affirmation of their fiscal responsibility. Q: We talked a lot last year about what it was like to be, in effect, the dad to lots of rambunctious, smart, young people. Has that aspect of Razorfish changed? A: We still have a culture of respect for difference and a respect for voiced opinion, which means we still have a very diverse employee population who are vociferous in their opinions about everything. Q: Last year you took everyone out to Las Vegas during the holidays. Did you have anything like that this year? A: We had lots of events, but nothing like that. We had an employee training program called Catapult, where, on a quarterly basis, we went to the global organization of managers and leaders, and we asked them to identify or nominate a person for leadership training. And then every quarter we ended up with 30 people who we had identified as the future leaders of Razorfish, who could move, get catapulted up through the company. So we’ve worked to try to take what was the Las Vegas-type event — a bonding, feel-good, create-a-single-company-and-move-it-forward event — and made it something that not only achieves that result of feel good/bond/move forward, but is tied to a very concrete corporate goal. Q: You’ll forgive the expression, but it sounds like Razorfish itself is growing up. A: Well, we are more than 5 years old, and some of us have been here for more than four years. It happens to everybody.

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