September 18, 2000

   Lawyer Specializes in Helping Displaced Executives
Underserved Market is Ripe For Small Firms

By Michael Bowden

Believe it or not, powerful corporate executives can have lots of trouble finding a lawyer.  When it comes to employment suits, high-level managers are neither fish nor fowl, according to R. Craig Scott, an attorney who once represented employers and now focuses virtually all of his energies on ensuring executives are treated fairly by those companies. His new niche – which he calls "executive law" – was born when he realized their interests are generally too management-oriented to be properly addressed by attorneys who represent employees, but not sufficiently company-oriented to be of interest to management lawyers.  When Scott first represented a few of these displaced moguls back in the mid-90s, he realized he was onto something big. Referrals began pouring in as the word spread that an "executive lawyer" was finally available to help white-collar casualties of corporate upheavals. With the advent of fast-moving dot.com companies and overnight millionaire CEOs, his workload grew even more.  In June, Scott formed the Executive Law Group (http://www.execlaw.com), a national referral network of mostly small-firm lawyers who use Scott's training and principles to help their clients.  Scott recently spoke with Lawyers Weekly USA about how solo and small-firm lawyers can succeed in the field.  Q. Where did the concept of 'executive law' come from?  Old-school management lawyers like me were always trained to say, "There are employers and there are employees, and you don't cross the line." But in today's world, we've had to overcome that stereotype. Now there are three types of entities in the workplace – employers, employees, and executives – and they're each different. And we really saw a need to help the executives.  Q. What does 'executive law' entail?  We handle employment suits filed by executives who have been fired or forced out of a company and help them negotiate severance packages when it comes time to leave voluntarily. But in addition to this, we help executives prevent awkward separations by negotiating detailed employment contracts when they first accept a position.  Q. Is it still a wide-open field?  It is, for several reasons.  First, there is an intense present demand for executives – the chief operating types. For example, my market research suggests that the demand for CEOs and COOs alone rose 71 percent from the first quarter of 1999 to the first quarter of 2000. The unmatched demand is just incredible. So many dot.coms, in particular, are pulling from the established businesses, and people are chasing themselves from one job to another.  Second, according to The Wall Street Journal, the number of executives who now have employment contracts is going up. It used to be, five or six years ago, that perhaps only 10-15 percent of executives had employment contracts. But the numbers are much higher now, and rising. And the reason is, people are seeing a need for the protection of an employment contract, and within it, provision for their exit.  That's something we really emphasize with the executives we represent: As you go into a job, figure out how you're going to exit. And put that into the employment contract. That need has really risen. So a number of these factors are leading people to say, "Yeah, there is an unserved market out there."  Q. How did you get into this field?  It just started with one or two clients. You see, there just weren't a lot of lawyers with an employer-management background who were willing to take on executive clients. So as the word got out that I was willing to do it, referral after referral came in, and that's really what built the business.  Q. Has your clientele changed with the influx of dot.com executives?  Yes. They're a particularly demanding group at times, but also very satisfying to work with. In general, their timeframes are shorter. They tend to communicate mostly by e-mail, also by fax. They want a much quicker turnaround. I mean, they're working 24 hours a day, and, of course, they assume that I am, too!  So I'll have experiences where I'm in trial in a matter, and I'll get an e-mail at eight in the morning. By ten there's another e-mail saying, "Craig, where are you?" By noon, it's "What happened to my lawyer? Have you retired?" There's just this demand for immediate service.  Q. What have you done to satisfy them?  One of the things we've done is to establish this position with Clarence. (Clarence Carter is the Executive Law Group's Vice President for Marketing & Business Development).  Now, when people e-mail us, not only do I get a copy, but Clarence gets a copy too. And he can be there to hold hands, and to assure them that I will finish the trial at noon, and be back to them by 1:30. So we are continually communicating with our clients – and not only during normal business hours. It's not unusual for me to call clients at their homes at seven, eight, nine o'clock on a weekday evening, and to have stacked appointments in the evening.  Q. Have all of the recent shake-ups in the dot.com sector sent a lot of business your way?  Yes, an example of that just happened today. Perhaps three months ago, I worked with a fellow who was becoming the president of a dot.com company. We worked through his employment agreement and everything seemed great. But he just e-mailed me today and said, "Things are falling apart here, and I need to put together a plan for my imminent exit."  The dot.com executives, particularly, are moving into companies quickly, they're moving out of companies quickly. In fact, some of these people I'm seeing repeatedly within a one-year period.  Q. It must be a relief when you get clients who are traditional, buttoned-down executives.  Well, with more old-school executives, it's a question of "Craig, when can you get it done?" They understand reasonable deadlines. Part of it, I think, is just a question of business maturity. A lot of those in the New Economy companies are moving very quickly. They don't have a lot of experience in terms of business and they have a lot shorter fuses.  Q. What's a typical job you handle when an executive is leaving a company?  Typically, we receive a document – when someone is separating, it's a separation agreement. And what we're about, in the first instance, is reviewing that document and saying, "Does this make sense for our executive? Is he or she getting a good deal on the way out?"  There's just a panoply of issues that arise – everything from how the bonus structure is set up in the new employment relationship, to how the payments are going to be structured on the way out. There are issues of money, liability; for example, we're concerned about mutual releases when someone leaves.  Q. What about the executive who's entering a new position?  Well, there are issues of the terms and conditions of employment, and again, the all-important, "How do you exit?"  We're writing lots of change-of-control provisions; we're spending time with the new entering executive on things like good-reason-to-resign provisions. That's an interesting one: A lot of times, agreements do not provide for resignation for good reason.  For example, say someone takes a job in a particular city, and they don't want to leave. So we write in a provision that says, if they're required to move more than 50 miles from the principal office location, then they have the right to resign, for good reason, with a severance package. Or perhaps, it's resignation for good reason if their job title changes – if there's a material change in the nature and substance of their duties.  Those are the kinds of things we'll spend time working on with the executive, to be sure that – to the degree we can – we've insulated them from all possible problems in the future.  Q. It sounds like you're really breaking new ground. These are areas that employment law really hasn't ventured into in the past.  It really is new ground, particularly for the employment lawyer. Corporate lawyers, in the past, have drafted the "standard employment agreement." But I believe that, as employment lawyers, we take a different view from the corporate lawyer. The executives we're working with are employees, and the lawyers in our contract network tend to be employment lawyers. We really do see different issues, different pitfalls, than our corporate brethren.  Q. So employment lawyers make the best executive lawyers?  We find that the employment lawyer who has management representation experience brings a lot to this table.  When we look for lawyers to come into our network, we look first of all for someone who has experience in the substantive areas – particularly, I'm looking for a management-side labor and employment law attorney with at least 10 years of experience.  They've been around the block; they've dealt with these kinds of people for years, and that's just critical. Because you must convince the executive – both by your presence and by your command of the issues – that you've been down this road before; that you've succeeded in taking others down that road; and that you will succeed in helping them down the road.  Q. What about personality type? What kind of person makes the best executive lawyer?  We want a person who's able to hold someone's hand. Sometimes I feel like we're doing more psychological work than legal work. Our clients need to tell their story, and we need to respond sympathetically and empathetically. We need to give them the security that we will help them through the process.  I can't think of a better way to describe it than just handholding – and that's what it takes. I've had executives who understand that the clock is ticking, we've talked through the legal issues – but they're just looking for reassurance that they're okay, and that they'll be okay in the future. They know that they're paying for the service of handholding, and they want it.  Some of them have never been through transition before, and they really need to know that you're with them, you're helping them, and you will see them through the process.  Now, not every lawyer can do that. As we build our network, one of the searching issues for us is, "Demonstrate! Talk to us! How can we become convinced that you're a handholding lawyer?"  Q. That's a little surprising. I would have thought that a lawyer who wants to represent executives would have to be as hard as nails.  Well, yeah, you have to be a little hard-boiled too; executive lawyers can't be pansies! But it's certainly possible to be very good at the handholding, and to be as tough as nails in the negotiation. We have to do that, on occasion, when we're dealing with the employers.  Typically, an executive comes to us. We'll counsel with him, go over his issues. And typically, I'll send the executive back to do the negotiation. I will arm him with the dialogue; I'll give him the negotiation points; and then send him back. Because if you insert the lawyers too early in the process, you tend to polarize the parties. So we have to be very good coaches.  But there are occasions where we have to be on the front line. When that is the correct strategy, then we have to be as tough as the situation requires.  Q. What about geography? Are there certain parts of the country – say urban concentrations – that could support an executive law niche, and others that can't?  The simple answer is no. I don't think the practice area is geographically limited because there are executives everywhere who need this kind of help. In fact, this is the kind of practice that lends itself well to the use of modern technologies, and not having to be restricted geographically.  It's important to note that we never meet 90 percent of our clients. We never shake hands with them. We deal with them by phone, by fax and by e-mail. That means we can deal with anyone anywhere that we have a license to practice law – so we have as many clients in Northern California as we do in our South California office location.  Q. Wait a minute, if you've got a predominantly electronic practice, where does the handholding come into play?  Broadly speaking, there are two different approaches to executive cases. If you look at our website, we have what might be called "The Package Deal."  Somebody comes to us and says, "You know what? I think this exit package is fine; I'm okay with the terms; I just want to make sure it's 'legal.'" Fine. So we'll do the review, talk to them on the phone about it and so forth. That's kind of the quick in and out. Those are very easy to do, relatively speaking.  The ones that require more help and handholding are the extremely complicated deals, where you're really helping somebody sort through how they're going to keep their future together, where their future is, how to get them to where they want to be. I'm talking about cases where you're getting into 5+ hours, maybe 10-20 hours of legal time. In those cases, there are usually more personal meetings, but a lot of the work will still be conducted over the telephone. And executive lawyers have to be able to exude that empathy and hold that hand over a telephone line.  Q. What about reaching outside California? How big is your network at this point?  We're already out and contacting lawyers and establishing our network, because this is such a fertile field. For example, we have begun going to certain areas of the country where there are high concentrations of new economy businesses that will result in a lot of executives moving in and out.  But we do not give out assignments from Executive Law Group until we have assessed where our potential lawyer-providers are in terms of experience. So first we go through that assessment process and then we do a formal training session with them, which we then supplement over time. So far, six lawyers have gone through the training, and there are a number of others we're in contact with to put together the network.  Q. Does a lawyer with 10 years of experience really need a training session?  In the training sessions we've had with experienced lawyers, it's interesting to see how they express wonder at the shift in perspective that executive law requires.  They say, "Wow, we've never seen it organized quite like this." I have very conscious approaches to how you evaluate the needs of the particular executive, and then how you go about meeting them. Over time, I've developed a process that isn't found elsewhere – and I think that's part of what we offer at Executive Law Group.  Q. Are you looking mainly at large- or small-firm lawyers?  We like the flexibility that's afforded when you've got a solo or small firm. They can take assignments from us and work with us. I suspect that some of your readers are people we'd like to have in our network.  We do not anticipate hooking up with lawyers in large firms. It just wouldn't work; their billing rates are probably too high to make that happen.  Q. How do you market your executive law services?  We've just launched Executive Law Group, so I haven't yet done a lot of speaking on "executive law" issues. But I do have a popular program that goes under the title, "Negotiating the Ins and Outs," which I use with groups of separated executives who are working through an outplacement process. These are people who are out looking for that new job, who are in transition. I'll take a group of 10-30 in a seminar situation, and they want to know "What do I look for going into the next job?" And of course, "The next time I'm exited, what should I be watching for?"  I certainly expect to be talking to more groups of executives in transition, and even those who are still in their present situation. People are transitioning so quickly today that if they don't need us now, they'll need us in the future.  R. Craig Scott can be reached at Executive Law Group, Newport Beach, Calif. Tel. (888) 920-EXEC, or through his website, http://www.execlaw.com.  © 2000 Lawyers Weekly Inc., All Rights Reserved.