CALIFORNIA LAWYER
August, 2000

   R. Craig Scott, employers' lawyer
to executives' lawyer

CULTIVATING A NICHE

Sometimes opportunities just walk through the front door. For R. Craig Scott, a Newport Beach labor and employment lawyer at the five-person firm of Scott & Whitehead, that opportunity was in the form of a client, the president of a publicly held company, who was being "exited."  Although high-level managers are among the nation's most significant consumers of legal services when acting on behalf of their corporate employers, they usually have no place to turn when they need help about their own employment situations. In this case, all Scott did was give his client brief legal advice about his exit agreement. Soon, representing senior managers became a small niche in Scott's practice -about 5percent.  Then in 1998 it began to snowball. Not only did satisfied clients refer others but lawyer who represented corporations suddenly had someone to whom they could refer their management contracts. Now this niche accounts for 35 percent of his firm's revenue and takes 80 percent of Scott's time. In June 2000 Scott launched a new project called the Executive Law Group to provide Web-based legal services for senior executives.  "In the traditional mode of employment law practice," Scott says, "there are two kinds of entities in the workplace; employers and employees. Those who provide legal services to management never represent employees." The trouble is, high-level executives are too management-oriented to fit in well with workers' lawyers, so they occupy the netherworld in between, unsuitable clients for attorneys on either side. "They're extremely vulnerable when they're exiting one job and entering new opportunities," says Scott. In 1978 Scott joined the Los Angeles office of Sheppard, Mullin, Richter & Hampton, representing only employers. By 1986 he had made partner and was given the task of building the firm's labor and employment practice in Orange County. By 1990, however, Scott wanted a more entrepreneurial opportunity, so he joined a group of lawyers that had left Gibson, Dunn & Crutcher for Pettis, Tester, Kruse & Krinsky. Despite his improved situation, Scott wasn't able to run things as he wanted, so in 1993 he struck out on his own. Today Scott & Whitehead continues its representation of employers. The transformation from representing employers to high-level executives led to the creation of what Scott calls a "double-breasted operation," with Scott & Whitehead serving employers and the Executive Law Group serving the executives. Eventually the Executive Law Group became a separate undertaking. "From my own experience in working with this universe of individuals," says Scott, "executives are coming back for representation about every 18 months to two years." One client "recycled" five times, with Scott providing the representation during negotiations over severance packages on the way out, and for contracts full of perks going in. "According to my market research," Scott says, "the demand for CEOs and COOs alone rose 71 percent from the first quarter of 1999 to the first quarter of 2000. And the people who serve this area-recruiters and the like-comprise a $10 billion business annually." The Executive Law Group expands Scott's services statewide. He uses a network of 15 corporate or employment law attorneys throughout the state to provide exiting and entering senior executives whatever services they require. The executives don't need to come into the office. In fact, his lawyers don't meet 90 percent of their clients. Using an interactive Web site, (www.execlaw.com), management-level executives can scan through the menu of services and apply online to become a client. Reversing the norm in order to accommodate law business in cyberspace, executives submit retention agreements to the Web site, making a request to the Executive Law Group for representation. Usually the engagements involve a three-pronged approach: counseling and developing options based on an executive's contracts and legal obligations, negotiating a severance package, and implementing a new contract. If there's litigation, the Executive Law Group will handle that, too. "Typically, these senior executives are sophisticated and interesting. They appreciate good counsel, and the engagements tend to be fast moving," says Scott. Because the executives are already technosavvy, the vast majority of problems are handled by e-mail and fax, and all the fees are charged to a credit card. Nevertheless, sometimes an executive can end up in a snarled, convoluted situation requiring a more personal approach. For example, in one case, Scott says, an American executive took a CEO job in Japan, only to have it fall apart in a short time. "He comes to me with all these legal issues involving two domestic and one foreign jurisdiction, with 60 pages of documents that I need to go through," says Scott. "We had to come up with options: How do we play this out? How do we get him a separation package while working through a minefield of legal and personality issues? How do we get him back to the United States and on to another job?" Resolving these kinds of issues has renewed Scott's practice. "There's a great deal of satisfaction that I find from helping people through very challenging times," he says. "They're either exiting a bad situation or going into a new situation. It's very fulfilling." --Michael Jonathan Grinfeld ©2000 CALIFORNIA LAWYER