Winston WONG (6 February 2025): The role of a lawyer varies from jurisdiction and industry, and who is utilizing the lawyer. In jurisdictions where client-lawyer relationship may be defined by contingency fee contracts, or a fixed/cap fee structure, it is foreseeable that a law firm takes on a proactive role. On a separate note, in Korea, it is not uncommon for the judge to communicate directly with the litigant rather than with the lawyer with the lawyer literally and figuratively standing behind the litigant. Indeed, even individual persons or organizations utilize their lawyers differently, eg. a startup as compared to a mature multinational entity. Whereas an sales account manager views his in-house lawyer as an unnecessary annoyance who stands between him and his bonus, the shareholder of that same multinational views the same in-house counsel in the same transaction as a gatekeeper, ensuring that contracts are correctly worded in favor of the multinational. The in-house counsel of a multinational utilizes an external legal counsel as an insurance against a tough decision, or a punching bag where an unpopular decision needs to be made by the legal department. A Founder of a startup, on the other hand, would use lawyers to ensure that Founder shares are securely protected against incoming investors, and the startup itself would presumably have no use for lawyers until it finds enough funding to hire a professional CEO/COO, whereupon such CEO/COO would utilize its legal counsel as a multinational company would.
In this article we delve into how the client-lawyer association as well as the impact of lawyers on the path taken by a client resulting from the interaction.
The first meeting, and after
Let us proceed chronologically. After onboarding your client and complying with conflict check and AML procedures, you have your kickoff meeting with your client. Now take a step back and make a list of what you intend to do. Did your list include any of the following? Or should some of these items more correctly appear after the initial meeting?
- Request product brochure
- Purchase company ACRA Bizfile profile from Company Registry
- Study shareholder structure, request for constitution, study preference shareholder rights
- Review standard pre-emption rights in constitution, double check if there are drag-tag rights, double check liquidation preference rights
- Search document templates for pro-Founder shareholders agreement
- Arrange meeting next week to discuss and finalize docs with Founder
- …
Were you able to determine what your role as a commercial counsel will be for this specific engagement, or for that matter, this specific client? Who is your client? Was it the multinational company, or the instructing in-house counsel? What are the interests of the instructing in-house counsel that conflict with the multinational company? If your client is the multinational company, to what extent do you take your role as its counsel seriously enough to ignore the express instructions of the in-house counsel?
Pre and post completion
Next, we examine a couple questions from the perspective of the lawyer, in the specific context of a subscription of shares coupled with a shareholders agreement between a client-Founder. After you conclude your transaction with your client-Founder, ask yourself the following questions:
- What is the immediate outcome you had directly contributed to by negotiating the sale of shares agreement?
- Did the executed agreement affect the manner the company operates in the year following the acquisition?
- What played out in the mind of a shareholder in considering drag-along right available to his co-shareholders when negotiating with a potential VC-buyer considering purchasing the company? Did the drag-along right affect the possible exit price?
- Did your client receive the purchase consideration payment sooner than if the client did not engage you?
- How did your client-investor benefit from the advice given by you?
Will it make a difference to the way you conducted the transaction if you played out the questions in future tense above during the transaction, rather than considering them retrospectively after completion? Did considering the above change your role as legal counsel vis-à-vis the client?
The role of Artificial Intelligence
I end this discussion with the following question(s) for you: How does the advent of AI affect any of the above considerations?
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