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		<title>Specialist Resources &#8211; The Core of an Efficient Legal Production, Part 2 of our 7-Part Series on Operational Strategy in Legal Organizations</title>
		<link>http://legalprocesssolutions.com/2012/04/05/specialist-resources-the-core-of-an-efficient-legal-production-part-2-of-our-7-part-series-on-operational-strategy-in-legal-organizations/</link>
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		<pubDate>Fri, 06 Apr 2012 06:05:46 +0000</pubDate>
		<dc:creator>contracttailor</dc:creator>
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		<description><![CDATA[Legal organizations can significantly increase their production efficiency by re-organizing their workflow and take advantage of resource specialization.  Achieving this goal successfully requires lawyers to challenge their existing paradigms about how lawyers perform legal work, how lawyers create value, and what leadership means in the profession. In this post, we will first examine how one can re-organize a traditional legal process to achieve greater efficiency.  Then, we will explore some consequences for law firm operational strategy.  In our next post, we will examine how this kind of operational strategic thinking challenges some deeply held cultural <a class="entry-excerpt-link" href="http://legalprocesssolutions.com/2012/04/05/specialist-resources-the-core-of-an-efficient-legal-production-part-2-of-our-7-part-series-on-operational-strategy-in-legal-organizations/">More&#8230;</a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=253&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>Legal organizations can significantly increase their production efficiency by re-organizing their workflow and take advantage of resource specialization.  Achieving this goal successfully requires lawyers to challenge their existing paradigms about how lawyers perform legal work, how lawyers create value, and what leadership means in the profession.</p>
<p>In this post, we will first examine how one can re-organize a traditional legal process to achieve greater efficiency.  Then, we will explore some consequences for law firm operational strategy.  In our next post, we will examine how this kind of operational strategic thinking challenges some deeply held cultural norms in the legal profession.</p>
<h2>Minimizing Movement</h2>
<p>As part of our series on the Toyota Production System and how its concepts apply to legal organizations, we are reviewing how the minimizing of the &#8220;7 wastes&#8221; form a core part of how the Toyota Production Systems is applied within organizations.  In doing so, we adapt those concepts to the law firm context.  In our previous post, we examined how minimizing wait times can dramatically increase the profitability of a wills and estates offering for the Main Street or High Street solicitor and attorney.</p>
<p>In this article, we will use an example from the litigation context to demonstrate how lawyers can &#8220;minimize movement&#8221; to create efficiency.</p>
<p>Consider the following diagram:</p>
<div>
<dl>
<dt><a href="http://contracttailor.files.wordpress.com/2012/03/litigation_process_flow_re-engineering1.jpg"><img title="Litigation_Process_Flow_Re-Engineering" src="http://contracttailor.files.wordpress.com/2012/03/litigation_process_flow_re-engineering1.jpg?w=1024&#038;h=641" alt="" width="1024" height="641" /></a></dt>
<dd>Re-Organizing Litigation Process for Efficiency</dd>
</dl>
</div>
<p>In this diagram, the first five rows illustrate some fairly typical steps in many litigation matters.  In example 1, we start with a litigation team engaged in an investigation step, then creating originating documents (these might be civil complaints, statements of claims, petitions, applications, or whatever the proper term may be).  There is a common process of document discovery, written discovery, oral discovery, all leading to some resolution step.</p>
<p>Example 2 shows a similar step, but with the steps spaced apart differently and in a slightly different order.</p>
<p>Examples 3-5 each show litigation processes having different start times, different orders, and different steps.</p>
<p>Typically, each matter (unique represented by a row) is staffed by a unique litigation team, headed by a senior lawyer.  Each team will proceed with each step sequentially through the process.  As such, each team leader, perhaps all lawyers, within a team perceives only the deadlines and resources required to conduct a litigation file that they manage.  If a team happens to manage several litigation matters, that team will perceive a very challenging calendar of managing the execution of different tasks at different times.</p>
<p>To most operational researches, this kind of operation is ripe for inefficiency.  The team faces uneven work loads and inconsistent activity types.  At any one time, a litigation team handling multiple matters in the traditional way must often juggle several different kinds of activities, each requiring different skill sets, competencies, tools, and capital equipment to create value for the client &#8211; often simultaneously.  Resources are not levelled.</p>
<p>Consider the alternative.</p>
<p>The bottom part of the diagram illustrates what can happen if we can group similar activities together and have them performed by dedicated resources.   For example, we can assign the task of investigating all claims to an investigation resources (this may be a single person or a team).  We create the &#8220;originating document&#8221; team, the document discovery team, and so on.</p>
<p>By the diagram, we trace when different tasks are scheduled to execute from the individual projects and map them against the availability of the newly created specialized resource.</p>
<p>By grouping like activities together, we can see how each specialized resource can now execute a &#8220;flow&#8221;.  The investigation team has a flow of work, enabling the team to focus on individual matters in sequence.  This enables them to use the same skills, expertise, and tool to generate an investigation result.  They can spread out their work and balance the workload.</p>
<p>Similarly, different specialized resources can experience a &#8220;flow&#8221; by focusing on executing one unique task within the litigation process.  The document discovery team can focus on extracting facts from documents and creating useful fact chronologies and tables.  The oral discovery team can focus on preparing and executing thorough discoveries, and so on.  The specialization of skills and labour also facilitates the acquisition of tools such as document automation and document assembly tools or legal knowledge management platforms.</p>
<p>Organizing a workflow in this way enables the legal organization to standardize processes, standardize skills sets and processes, enabling them to monitor workloads, cycles times, and productivity.</p>
<p>In our next post, we will examine how law firms can use project managers to coordinate between the functions, ensure that the specialize functions work to achieve the common vision for the matter, and manage the knowledge generated at each phase of the matter and ensure that it is properly and thoroughly shared with previous and subsequent phases of the litigation.  We will also examine some strategic opportunities that this work re-engineering creates, such as the ability to outsource or re-staff entire functions in non-traditional ways to lower operating costs.  In our final post, we will examine how this approach challenges existing legal cultural norms.</p>
<p>Let us know what you think about this process.  We&#8217;ll be sure to incorporate the discussion in our next two posts.</p>
<br />Filed under: <a href='http://legalprocesssolutions.com/category/public-sector/government/'>Government</a>, <a href='http://legalprocesssolutions.com/category/public-sector/industry-regulators/'>Industry Regulators</a>, <a href='http://legalprocesssolutions.com/category/public-sector/professional-regulators/'>Professional Regulators</a>, <a href='http://legalprocesssolutions.com/category/public-sector/'>Public Sector</a>  <img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=253&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></content:encoded>
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		<title>Double Your Law Firm&#8217;s Revenue Potential With 1 Step &#8211; Part 1 of our 7-Part Series on Operational Strategy for Law Firms</title>
		<link>http://legalprocesssolutions.com/2012/03/25/double-your-law-firms-revenue-potential-with-1-step-part-1-of-our-7-part-series-on-operational-strategy-for-law-firms/</link>
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		<pubDate>Mon, 26 Mar 2012 06:04:25 +0000</pubDate>
		<dc:creator>contracttailor</dc:creator>
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		<description><![CDATA[Last week, we introduced everyone to the Toyota Production System, its place in operational research and strategy, and how law firms could adopt the Toyota Production System in their operations.  Today, we start our more detailed examination by taking one of the concepts, minimizing wait times, and apply it to law firm operations.  This is a simple step that any lawyer can apply to their practice.  The concept is scalable to the practice group and firm level.  I intend to show how it can double realized annual revenue and triple profit margins. By eliminating wait <a class="entry-excerpt-link" href="http://legalprocesssolutions.com/2012/03/25/double-your-law-firms-revenue-potential-with-1-step-part-1-of-our-7-part-series-on-operational-strategy-for-law-firms/">More&#8230;</a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=251&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>Last week, we introduced everyone to the Toyota Production System, its place in operational research and strategy, and how law firms could adopt the Toyota Production System in their operations.  Today, we start our more detailed examination by taking one of the concepts, minimizing wait times, and apply it to law firm operations.  This is a simple step that any lawyer can apply to their practice.  The concept is scalable to the practice group and firm level.  I intend to show how it can double realized annual revenue and triple profit margins.</p>
<p>By eliminating wait times, lawyers can very quickly increase productivity, shorten collection cycles, and increase client &#8211; and lawyer &#8211; satisfaction.</p>
<h2>Short Refresher on the 7-Wastes</h2>
<p>Let&#8217;s summarize the concepts so far.  As we mentioned in our first post on this subject: <a href="http://blog.contracttailor.com/2012/01/24/operations-strategy-open/">Operations Strategy and the Law Firm &#8211; Opening our 7-Part Series</a>, one aspect of the Toyota Production System is the elimination of the &#8220;7 wastes&#8221;.</p>
<p>There are many aspects to the Toyota Production System.  We will only scratch the surface.  A common starting point, though, are what is often called “the seven wastes”:</p>
<ol>
<li>Waste of overproduction</li>
<li>Waste of time on hand (waiting)</li>
<li>Waste of transportation</li>
<li>Waste of processing itself</li>
<li>Waste of stock at hand</li>
<li>Waste of movement</li>
<li>Waste of making defective products</li>
</ol>
<p>A significant goal in the Toyota system is to minimize each of these wastes.  One should not produce more than what is demanded (hence the famed “<a title="Just in time (business)" href="http://en.wikipedia.org/wiki/Just_in_time_%28business%29" rel="wikipedia">just-in-time</a>” delivery system).  Waiting means idling resources &#8211; a waste of resources.  Unnecessary transportation and movement uses up valuable resources and cost.  Inefficient processing is more costly than necessary.  Re-work is costly both in time, money, and potentially customer goodwill.  Each of these “wastes” affect each other.  Minimizing one often reduces others.  To minimize one will often require reducing others.</p>
<p>As I indicated earlier, each of these seven wastes has a law firm equivalent.  We’ll be exploring each in detail, how they relate to the law firm, strategies and tactics that lawyers can use to reduce each of the wastes, and the benefit to the bottom line.  They are:</p>
<ol>
<li>Waste of overlawyering</li>
<li>Waste of delay</li>
<li>Waste of unnecessary delivery</li>
<li>Waste of inefficient processing</li>
<li>Waste of time and knowledge inventory</li>
<li>Waste of silo work</li>
<li>Waste of error and re-work</li>
</ol>
<h2>Minimizing Wait Times</h2>
<p>What is wait time?  Wait time is any length of time, whether it is five minutes or one year between steps in a process.  It is a time when no resource (in a law firm&#8217;s case, no person) is engaged in any activity adding value to the final result.  Here&#8217;s a concrete example.  A lawyer sends the first draft of a completed will to a client, waiting for the client to provide further comments.  The client takes seven days to get back to the lawyer.  After seven days, the lawyer receives the client&#8217;s comments, enabling them to revise the draft and return it to the client.  In this example, the wait time is seven days.</p>
<p>It&#8217;s incredibly important to distinguish &#8220;wait time&#8221; from &#8220;work&#8221;.  In the recent example, the client may have spent an hour reading the will, making comments, writing down questions, speaking with their spouse, and assembling a reply to the lawyer.  However, this was one hour in a seven day period in which no other value added work could take place to complete the will.  I remember when I was engaged in active litigation practice.  I may have only taken three hours prepare  client for an oral discovery (or deposition if you are American); but, we might have waited one month from the time that we scheduled the discovery/deposition to the time when it actually took place.  Unless I made use of that time to engage in other <a title="Value added" href="http://en.wikipedia.org/wiki/Value_added" rel="wikipedia">value-adding</a> activities, that whole period was a wait time.</p>
<p>Wait times matter because they represent a delay from the time that the an activity should take place to the time that the person engaged in the activity realizes value from it.  Taking the will example again, a week that a lawyer cannot finish a will is an extra week that a lawyer has to wait for payment on that job.</p>
<h3>An Example from Will Preparation &#8211; The Traditional Process</h3>
<p>Here&#8217;s how reducing wait times boosts a law firm&#8217;s profitability.  Consider the following diagram:</p>
<div>
<dl>
<dt><a href="http://contracttailor.files.wordpress.com/2012/02/willsworkflowdiagram1.png"><img title="WillsWorkflowDiagram1" src="http://contracttailor.files.wordpress.com/2012/02/willsworkflowdiagram1.png?w=1024&#038;h=539" alt="The Original Will Workflow Diagram" width="1024" height="539" /></a></dt>
<dd>Will Workflow With Traditional Wait Time</dd>
</dl>
</div>
<p>In this diagram, it has taken 10 days to draft a will, not even including the time it takes to schedule an appointment.  It&#8217;s not uncommon to receive a telephone call and then to schedule that first client intake meeting a week later.  The diagram illustrates what happens when we take a sequential approach to will preparation.  A lot of time is taken preparing a draft, giving it to the client, awaiting instructions, preparing a further draft, getting further instructions, and so on.  The result is a will that takes 10 days to prepare, even if it only engaged a few hours of professional time.</p>
<h3>A New Process</h3>
<p>Here is a new <a title="Workflow" href="http://en.wikipedia.org/wiki/Workflow" rel="wikipedia">workflow</a>:</p>
<div>
<dl>
<dt><a href="http://contracttailor.files.wordpress.com/2012/02/willsworkflowdiagram2.png"><img title="WillsWorkflowDiagram2" src="http://contracttailor.files.wordpress.com/2012/02/willsworkflowdiagram2.png?w=490&#038;h=305" alt="New Will Preparation Workflow" width="490" height="305" /></a></dt>
<dd>A will preparation workflow without wait times</dd>
</dl>
</div>
<p>In this case, we have used the time between client&#8217;s first contact with the firm and the first intake visit.  During this time, we have sent a detailed questionnaire that enables the lawyers to learn as much as possible about the client to enable the lawyer to select the appropriate precedent.  We propose that the lawyer sends the precedent to the customer along with an instructional guide explaining different parts of the precedent and various drafting options.  Then, the lawyer and the client sit together in &#8220;sprint&#8221; &#8211; a term borrowed from software engineering.  During this face-to-face meeting, the client and lawyer work collaboratively to draft the will in real-time.  The client provides further instruction to the lawyer.  The lawyer poses relevant questions and obtains contemporaneous feedback and then incorporates that feedback into the draft.  The client can provide drafting guidance and ideas as the lawyer drafts.  At the end of the sprint, if the template was properly selected and the sprint elicited thorough responses, it is highly likely that the session will produce a final will, or something very close to final.  If the will is complete, the client can approve the will and immediately execute it.  The lawyer can immediately register or perfect the will.  Then, on the same day, the lawyer can collect his or her fee.</p>
<h2>Benefits of Reducing Wait Times</h2>
<p>Here are some benefits of reducing the cycle time to create a will in our example.  Let&#8217;s try to standardize the example a bit by assuming that one week passes from the time that a client calls a lawyer to the time that a will is registered.  So, a will prepared with a traditional workflow takes 17 days to prepare.  A will prepared using the new workflow takes 8 days to prepare.</p>
<p>First, we have just doubled the throughput capacity of the firm to produce a simple will.  All else being held equal, a firm can now produce twice the number of wills in a given time period.  Again, let&#8217;s put some numbers to this.  Again, to simplify the example, we will assume that a lawyer can only work on one will at a time.  In a year with 365 days, a lawyer can produce 21.5 wills using the old workflow.  If a lawyer charges $300 per will, the lawyer generates $6,450 in revenue from this particular offering.  Under the new workflow, a lawyer can produce 45.6 wills, or generate or $13,680 in revenue.  We have almost doubled revenue potential &#8211; just by reducing cycle times.</p>
<p>Second, the lawyer will experience a higher productivity and lower their risk profile.  How often have we as lawyers needed to pick up a file, re-read it, and re-learn the material when a lot of time has passed between file activity?  The re-learning of a file materially increases the risk of error, wasted effort, and cost.  By compressing all of the work required to complete a task into a short amount of time, we minimize redundant work and reduce our risk of error.</p>
<p>Third, clients will be far more satisfied with the work product.  They will get their will done in 8 days, not 17 days.  They will collaborate with their lawyers, not work in isolation from the lawyer.  They will experience a face-to-face, personalized interaction &#8211; and be far more willing to pay for that experience than the anonymous, mechanical process of working with an online, canned will service.</p>
<p>Finally, by shortening the production cycle, the lawyer is shortening the payment and cash cycle.  The sooner a lawyer can complete the task, the sooner the lawyer can bill for that activity, and collect cash for that delivery.  By shortening the cash cycle, you minimize receivables and increase cash in hand, reduce credit risk, and increase working capital.</p>
<h2>Conclusion and Some Further Thoughts</h2>
<p>To illustrate the model, we made a couple of simplifying assumptions.  The most important of which, and which forms the the basis of many of the objections that I encounter when presenting the illustration, is that the lawyer is working sequentially &#8211; that is, we assumed in this model that a lawyer can only one work on one will at a time.  This is often not the case.  Quite frequently, a lawyer is working on multiple matters at a time.  In an ideal world, the lawyer is maximizing the use of his or her productive capacity &#8211; in this case the time available to work on matters.  In this example, a lawyer could have a sufficient volume of work such that he or she is closing a will each day, even if each will is taking 17 days to close.</p>
<p>It&#8217;s the rare individual practice that can truly boast that they are able to close a file every single day.  More often, there are clusters of closing in a single day or we spread those closings over a time period.  Second, the example still illustrates the main point.  Reducing cycle times improves turnover, which improves revenue potential.  Simply by reorganizing a work process, we can produce the same quality and value per unit, but do it more efficiently.  We were able to increase the firm&#8217;s revenue potential by focusing on the production of the product and not on trying to grow the number of units taken in &#8211; a more common paradigm to law firm strategy.  However, all else being held equal, reducing cycle times is a more profitable means of improving revenue potential.  Increasing intake volume (i.e. getting more clients through the door) requires promotion and advertising spending, more time spent on business development, and involves a higher degree of risk as much of that expense is a sunk cost.  However, reducing cycle times costs nothing.  If anything, it has the potential of even reducing the resources required to produce the same unit of production.</p>
<p>Most importantly, when we combine the goals of reducing wait times and therefore shortening cycle times with other techniques that we will explore in further articles, we can generate powerful operating leverage and increase a firm&#8217;s profitability significantly.</p>
<h6>Looking for a tool that can help you draft complex documents quickly in collaboration with clients? Visit <a href="http://www.contracttailor.com/tour">www.contracttailor.com/tour.</a></h6>
<p>Related articles</p>
<ul>
<li><a href="http://blog.contracttailor.com/2012/01/24/operations-strategy-open/">Operations Strategy and the Law Firm &#8211; Opening our 7-Part Series</a> (contracttailor.com)</li>
<li><a href="http://blog.contracttailor.com/2012/01/28/legal-knowledge-management-a-key-discussion-in-2012/">Legal Knowledge Management &#8211; A Key Discussion in 2012</a> (contracttailor.com)</li>
</ul>
<br />Filed under: <a href='http://legalprocesssolutions.com/category/public-sector/government/'>Government</a>, <a href='http://legalprocesssolutions.com/category/public-sector/industry-regulators/'>Industry Regulators</a>, <a href='http://legalprocesssolutions.com/category/public-sector/professional-regulators/'>Professional Regulators</a>, <a href='http://legalprocesssolutions.com/category/public-sector/'>Public Sector</a>  <img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=251&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></content:encoded>
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		<title>Copyright right assignments may not apply to future creations</title>
		<link>http://legalprocesssolutions.com/2012/03/21/material-development-in-copyright-case/</link>
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		<pubDate>Wed, 21 Mar 2012 16:32:38 +0000</pubDate>
		<dc:creator>contracttailor</dc:creator>
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		<category><![CDATA[Intellectual Property]]></category>

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		<description><![CDATA[Businesses commonly require their employees and independent contractors to sign agreements assigning ownership of all work product and related intellectual property rights to the business; but, such assignments may not work for future-created works (works created after the agreement is signed), and that copyright in a work can only be assigned by an agreement that is signed after the work is created. Businesses should consider implementing practices to address this issue and ensure that they acquire appropriate rights in their workers&#8217; work product. Century 21 Canada Ltd. Partnership v. Rogers Communications Inc. involved a dispute <a class="entry-excerpt-link" href="http://legalprocesssolutions.com/2012/03/21/material-development-in-copyright-case/">More&#8230;</a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=196&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<div class="wp-caption alignright" style="width: 310px"><a href="http://en.wikipedia.org/wiki/File:Rogers_logo.svg" target="_blank"><img class="zemanta-img-inserted zemanta-img-configured" title="Rogers Yahoo! Hi-Speed Internet logo" src="http://upload.wikimedia.org/wikipedia/en/thumb/0/09/Rogers_logo.svg/300px-Rogers_logo.svg.png" alt="Rogers Yahoo! Hi-Speed Internet logo" width="300" height="99" /></a><p class="wp-caption-text">Image via Wikipedia</p></div>
<p>Businesses commonly require their employees and <a class="zem_slink" title="Independent contractor" href="http://en.wikipedia.org/wiki/Independent_contractor" rel="wikipedia" target="_blank">independent contractors</a> to sign agreements assigning ownership of all <a class="zem_slink" title="Work product" href="http://en.wikipedia.org/wiki/Work_product" rel="wikipedia" target="_blank">work product</a> and related <a class="zem_slink" title="Intellectual property" href="http://en.wikipedia.org/wiki/Intellectual_property" rel="wikipedia" target="_blank">intellectual property rights</a> to the business; but, such assignments may not work for future-created works (works created after the agreement is signed), and that copyright in a work can only be assigned by an agreement that is signed after the work is created. Businesses should consider implementing practices to address this issue and ensure that they acquire appropriate rights in their workers&#8217; work product.</p>
<p>Century 21 Canada Ltd. Partnership v. Rogers Communications Inc. involved a dispute over the unauthorized copying of property descriptions and photos from Century 21&#8242;s website for use on a real estate listings website operated by Rogers&#8217; subsidiary Zoocasa. Century 21 sued Rogers based on license and assignment agreements signed by the co-plaintiffs before the property descriptions and photos were created. The Court decided that  Century 21 could not win because the license and assignment agreements did not give Century 21 ownership of copyright in the property descriptions and photos or an exclusive license to use them. The Court followed a 1924 decision that an agreement cannot effectively assign legal ownership of copyright in a nonexistent (future-created) work. Instead, a purported assignment of copyright in a future-created work gives the assignee only an equitable interest in the copyright when the work is created and a right to require the copyright owner to execute a proper assignment of copyright after the work is created, which might be difficult to do in many circumstances.</p>
<p>This is a big deal.  The decision that the common law does not recognize as valid an assignment of property that does not exist when the assignment is signed – could apply to all kinds of intellectual property rights and thereby limit the effectiveness of work product ownership agreements signed when a worker is first engaged. While employees&#8217; work, under the <a class="zem_slink" title="Copyright Act of Canada" href="http://en.wikipedia.org/wiki/Copyright_Act_of_Canada" rel="wikipedia" target="_blank">Canadian Copyright Act</a> are deemed to belong to the employer, there are no similar statutes to create that situation for other kinds of intellectual property, such as patentable inventions created by employees or for any intellectual property rights (including copyright) created by independent contractors.</p>
<p>To address these risks, businesses should ensure that when employees or independent contractors are first engaged, they are required to sign an agreement that includes appropriate assignments and exclusive licenses of work product and related intellectual property rights and that obligates the worker to execute further agreements to confirm the business&#8217; ownership of future-created work product and related rights. For workers who are already engaged, businesses should consider requiring them to sign a supplemental agreement (supported by valid consideration) to address these issues. In addition, businesses should consider implementing a practice of requiring that each worker sign a confirmatory work product ownership agreement on a routine basis (for example, when annual bonuses are distributed) and upon termination or disengagement (including as part of a severance agreement).</p>
<br />Filed under: <a href='http://legalprocesssolutions.com/category/business/entrepreneurial-ventures/'>Entrepreneurial Ventures</a>, <a href='http://legalprocesssolutions.com/category/business/private-growth-companies/'>Private Growth Companies</a>, <a href='http://legalprocesssolutions.com/category/business/small-cap-public-companies/'>Small Cap Public Companies</a>, <a href='http://legalprocesssolutions.com/category/uncategorized/'>Uncategorized</a> Tagged: <a href='http://legalprocesssolutions.com/tag/dispute-resolution/'>Dispute Resolution</a>, <a href='http://legalprocesssolutions.com/tag/employment/'>Employment</a>, <a href='http://legalprocesssolutions.com/tag/franchising/'>Franchising</a>, <a href='http://legalprocesssolutions.com/tag/intellectual-property/'>Intellectual Property</a> <img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=196&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></content:encoded>
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		<title>Limited Partnerships, Flexible &#8211; But Needs Transparency</title>
		<link>http://legalprocesssolutions.com/2012/03/19/limited-partnerships-flexible-but-needs-transparency/</link>
		<comments>http://legalprocesssolutions.com/2012/03/19/limited-partnerships-flexible-but-needs-transparency/#comments</comments>
		<pubDate>Mon, 19 Mar 2012 16:00:40 +0000</pubDate>
		<dc:creator>contracttailor</dc:creator>
				<category><![CDATA[Entrepreneurial Ventures]]></category>
		<category><![CDATA[Private Growth Companies]]></category>
		<category><![CDATA[Securities Market Participants]]></category>
		<category><![CDATA[Corporate Finance]]></category>
		<category><![CDATA[Corporate Governance]]></category>
		<category><![CDATA[General partnership]]></category>
		<category><![CDATA[Joint Ventures and Cooperation]]></category>
		<category><![CDATA[Limited partnership]]></category>

		<guid isPermaLink="false">http://legalprocesssolutionsdotcom.wordpress.com/?p=188</guid>
		<description><![CDATA[Many capital pools, including private equity funds, hedge funds, venture capital funds, and others, structure themselves as  limited partnerships.  They are generally governed by a limited partnership agreement (an &#8220;LPA&#8220;).  Often, and especially in private equity funds and venture capital funds,  &#8221;side letters&#8221; between individual limited partners and the general partner modify the standard relationship between the limited partners and general partner.  Side letters can range in scope from administrative matters to providing substantive rights to limited partners.  Obvious questions include: what can parties include in a side letter what what ought to be included <a class="entry-excerpt-link" href="http://legalprocesssolutions.com/2012/03/19/limited-partnerships-flexible-but-needs-transparency/">More&#8230;</a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=188&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>Many capital pools, including <a class="zem_slink" title="Private equity fund" href="http://en.wikipedia.org/wiki/Private_equity_fund" rel="wikipedia" target="_blank">private equity funds</a>, <a class="zem_slink" title="Hedge fund" href="http://en.wikipedia.org/wiki/Hedge_fund" rel="wikipedia" target="_blank">hedge funds</a>, <a class="zem_slink" title="Venture capital" href="http://en.wikipedia.org/wiki/Venture_capital" rel="wikipedia" target="_blank">venture capital funds</a>, and others, structure themselves as  <a class="zem_slink" title="Limited partnership" href="http://en.wikipedia.org/wiki/Limited_partnership" rel="wikipedia" target="_blank">limited partnerships</a>.  They are generally governed by a limited partnership agreement (an &#8220;<strong>LPA</strong>&#8220;).  Often, and especially in private equity funds and venture capital funds,  &#8221;side letters&#8221; between individual limited partners and the <a class="zem_slink" title="General partnership" href="http://en.wikipedia.org/wiki/General_partnership" rel="wikipedia" target="_blank">general partner</a> modify the standard relationship between the limited partners and general partner.  Side letters can range in scope from administrative matters to providing substantive rights to limited partners.  Obvious questions include: what can parties include in a <a class="zem_slink" title="Side letter (collective bargaining)" href="http://en.wikipedia.org/wiki/Side_letter_%28collective_bargaining%29" rel="wikipedia" target="_blank">side letter</a> what what ought to be included in the LPA?</p>
<p>There are three basic categories of issues: (i) how the LPA treats the issuance of side letters, (ii) what provisions are appropriate to include in a side letter regardless of the <a class="zem_slink" title="Contractual term" href="http://en.wikipedia.org/wiki/Contractual_term" rel="wikipedia" target="_blank">express terms</a> of the LPA, and (iii) disclosure of the side letter to limited partners.</p>
<h3>Treatment of Side Letters under the LPA</h3>
<p>In general, LPAs may (i) be silent on the ability of the general partner to issue side letters, (ii)  contain blanket provision that permits side letters to be issued, or (iii) contain an express provision that permits side letters to be issued but also governs certain aspects of side letters, including, among other things, the extent to which a side letter may be inconsistent with the terms of the LPA and whether other limited partners are entitled to the benefits of any particular side letter that may be issued from time to time.</p>
<h3>Appropriate Provisions to Include in Side Letters</h3>
<p>At the time of writing this post, the regime is quite flexible.  But, one should still be cautious as it isn&#8217;t &#8220;anything goes&#8221;.</p>
<p>A general partner in Canada generally owes fiduciary duties to limited partners. Such duty would typically include an obligation for fair dealing with limited partners. To the extent that there is a side letter in favour of one or more limited partners, one could argue that the general partner discriminates amongst limited partners.  It is suggested that appropriate disclosure, and preferably specifically addressing side letters in an LPA, would significantly reduce any risks of any allegations by limited partners against the general partner that it breached its <a class="zem_slink" title="Fiduciary" href="http://en.wikipedia.org/wiki/Fiduciary" rel="wikipedia" target="_blank">fiduciary duty</a> in connection with the issuance of any side letter, subject to the following with respect to inconsistency between side letters and the terms of the LPA.</p>
<p>The relationship between the general partner and limited partners is generally governed by the LPA, which is a multilateral agreement between all partners. To the extent there is a bilateral agreement between the general partner and one or more particular limited partners which is inconsistent with the terms of the LPA, there is a question as to how any level of inconsistency would be interpreted by a Canadian court.  Not surprisingly, it is likely that any decision would be highly fact specific. However, it is suggested that there are levels of inconsistency which are more likely to be tolerable than others.</p>
<p>At one end of the spectrum, side letter requirements which do not affect other limited partners (other than in an immaterial manner), such as extra reporting requirements, are not likely to raise judicial concerns regardless of whether the LPA expressly addresses inconsistency between an LPA and side letters.  At the other end of the spectrum, side letter provisions which clearly and materially affect other limited partners should be carefully considered, even if the LPA provides express permission for inconsistency between the LPA and side letters. For example, an LPA  for an infrastructure fund may state that it is intended to invest broadly in North American infrastructure across various sectors. If the general partner of such infrastructure fund proceeded to issue a side letter requiring that the fund only invest in one narrow infrastructure sector in one country, such side letter would significantly alter the overall nature and character of the fund. In such circumstances, one could envision a Canadian court viewing such a provision differently than a provision that simply provides for extra reporting requirements. Numerous other types of terms lie in between the two ends of the spectrum, and it is suggested that each term proposed for inclusion in a side letter be considered in light of this spectrum.</p>
<p>Further considerations also arise in connection with how side letters are disclosed to limited partners, if at all (especially where side letter provisions may affect other limited partners) as well as broader considerations on the types of disclosure that may be made to limited partners, as further discussed in part below. General partners also need to weigh the effect of subsequent side letters on existing limited partners, especially if a subsequent side letter materially alters the nature of the fund, and therefore materially alters the basis on which the previous limited partners invested in the fund.  Such an analysis may take into account, among other things, the passage of time as between the  investment by the previous limited partners and those who are obtaining the benefit of such a side letter.</p>
<h3>Disclosure</h3>
<p>LPAs that permit side letters may regulate the &#8220;how and when&#8221; side letters are to be disclosed to other limited partners.  One may consider disclosing matters in side letters that may materially affect other limited partners:</p>
<ul>
<li>enhanced control rights</li>
<li>preferential liquidity/redemption rights;</li>
<li>the availability of preferential fees; and,</li>
<li>terms that materially alter the investment program disclosed in the fund&#8217;s offering documents.</li>
</ul>
<h3>Conclusion</h3>
<p>As in much of commercial and securities law, much of this comes down to a general partner treating all limited partners fairly.  Capital pools formed as limited partnerships should be transparent and have clear governance structures.  Discriminatory and preferential treatment should be agreed to be everyone and such treatment should be fully disclosed.</p>
<br />Filed under: <a href='http://legalprocesssolutions.com/category/business/entrepreneurial-ventures/'>Entrepreneurial Ventures</a>, <a href='http://legalprocesssolutions.com/category/business/private-growth-companies/'>Private Growth Companies</a>, <a href='http://legalprocesssolutions.com/category/securities-market-participants/'>Securities Market Participants</a> Tagged: <a href='http://legalprocesssolutions.com/tag/corporate-finance/'>Corporate Finance</a>, <a href='http://legalprocesssolutions.com/tag/corporate-governance/'>Corporate Governance</a>, <a href='http://legalprocesssolutions.com/tag/general-partnership/'>General partnership</a>, <a href='http://legalprocesssolutions.com/tag/joint-ventures-and-cooperation/'>Joint Ventures and Cooperation</a>, <a href='http://legalprocesssolutions.com/tag/limited-partnership/'>Limited partnership</a> <img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=188&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></content:encoded>
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		<title>Operations Strategy and the Law Firm &#8211; Opening our 7-Part Series</title>
		<link>http://legalprocesssolutions.com/2012/03/17/operations-strategy-and-the-law-firm-opening-our-7-part-series/</link>
		<comments>http://legalprocesssolutions.com/2012/03/17/operations-strategy-and-the-law-firm-opening-our-7-part-series/#comments</comments>
		<pubDate>Sun, 18 Mar 2012 06:02:21 +0000</pubDate>
		<dc:creator>contracttailor</dc:creator>
				<category><![CDATA[Government]]></category>
		<category><![CDATA[Industry Regulators]]></category>
		<category><![CDATA[Professional Regulators]]></category>
		<category><![CDATA[Public Sector]]></category>

		<guid isPermaLink="false">http://legalprocesssolutions.com/?p=249</guid>
		<description><![CDATA[As part of the New Year, we start a new discussion series on operations strategy and the law firm.  As we scan through online and offline articles that deal with business strategy and the law firm, three lenses dominate the discussion: marketing: market positioning, promotion, and alternative billing human resources and leadership: mentorship, practice group design, firm leadership; finance: billing and especially now, alternative practice structures, including public company ownership. Many business consultants will share with you that many of the major advancements in managerial research has been in the area of operations strategy: supply chain management, production <a class="entry-excerpt-link" href="http://legalprocesssolutions.com/2012/03/17/operations-strategy-and-the-law-firm-opening-our-7-part-series/">More&#8230;</a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=249&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>As part of the New Year, we start a new discussion series on operations strategy and the <a title="Law firm" href="http://en.wikipedia.org/wiki/Law_firm" rel="wikipedia">law firm</a>.  As we scan through online and offline articles that deal with <a title="Strategic management" href="http://en.wikipedia.org/wiki/Strategic_management" rel="wikipedia">business strategy</a> and the law firm, three lenses dominate the discussion:</p>
<ol>
<li>marketing: market positioning, promotion, and alternative billing</li>
<li>human resources and leadership: mentorship, practice group design, firm leadership;</li>
<li>finance: billing and especially now, alternative practice structures, including public company ownership.</li>
</ol>
<p>Many business consultants will share with you that many of the major advancements in managerial research has been in the area of operations strategy: supply chain management, production optimization, outbound logistics, and data management.  Yet, we perceive scant discussion of these topics in typical legal strategy publications.</p>
<p>That changes today.</p>
<p>Today, Precedent will start a 7-part series on operations strategy in the law firm.  Over the next three months, we’ll be addressing seven common issues in operations strategy and how they apply to the law firm.</p>
<p>So, by way of introduction, we will be organizing our presentation along a very common topical scheme in operations strategy: the <a title="Toyota Production System" href="http://en.wikipedia.org/wiki/Toyota_Production_System" rel="wikipedia">Toyota Production System</a>.  We’re using it because it’s scheme is simple, understandable, and has direct parallels in law firm operations.  As a brand name, it’s approach is well-documented, accepted, and recognizable by lawyers.  We thought it would make a great starting point.</p>
<p>There are many aspects to the Toyota Production System.  We will only scratch the surface.  A common starting point, though, are what is often called “the seven wastes”:</p>
<ol>
<li>Waste of overproduction</li>
<li>Waste of time on hand (waiting)</li>
<li>Waste of transportation</li>
<li>Waste of processing itself</li>
<li>Waste of stock at hand</li>
<li>Waste of movement</li>
<li>Waste of making defective products</li>
</ol>
<p>A significant goal in the Toyota system is to minimize each of these wastes.  One should not produce more than what is demanded (hence the famed “just-in-time” delivery system).  Waiting means idling resources &#8211; a waste of resources.  Unnecessary transportation and movement uses up valuable resources and cost.  Inefficient processing is more costly than necessary.  Re-work is costly both in time, money, and potentially customer goodwill.  Each of these “wastes” affect each other.  Minimizing one often reduces others.  To minimize one will often require reducing others.</p>
<p>As I indicated earlier, each of these seven wastes has a law firm equivalent.  Over the next few months, we’ll be exploring each in detail, how they relate to the law firm, strategies and tactics that lawyers can use to reduce each of the wastes, and the benefit to the bottom line.  They are:</p>
<ol>
<li>Waste of overlawyering</li>
<li>Waste of delay</li>
<li>Waste of unnecessary delivery</li>
<li>Waste of inefficient processing</li>
<li>Waste of time and knowledge inventory</li>
<li>Waste of silo work</li>
<li>Waste of error and re-work</li>
</ol>
<p>Let us know if you have any questions that you would like us to answer or address in future articles.  Meanwhile, here is a great wikipedia article on the TPS.  A great primer.  Think about how it might apply to law firms: <a href="http://en.wikipedia.org/wiki/Toyota_production_system.">http://en.wikipedia.org/wiki/Toyota_production_system.</a></p>
<h6>Related articles</h6>
<ul>
<li><a href="http://kowalskiandassociatesblog.com/2012/01/03/trending-for-law-firms-in-2012-what-to-expect-this-year/">Trending for Law Firms in 2012: What to Expect This Year</a> (kowalskiandassociatesblog.com)</li>
<li><a href="http://ldobuzz.com/2012/01/23/basic-economics-of-law-firms-a-perfect-storm/">Basic Economics of Law Firms &amp; a Perfect Storm.</a> (ldobuzz.com)</li>
<li><a href="http://ldobuzz.com/2012/01/12/outstanding-service-from-law-firms/">Outstanding Service from Law Firms?</a> (ldobuzz.com)</li>
</ul>
<br />Filed under: <a href='http://legalprocesssolutions.com/category/public-sector/government/'>Government</a>, <a href='http://legalprocesssolutions.com/category/public-sector/industry-regulators/'>Industry Regulators</a>, <a href='http://legalprocesssolutions.com/category/public-sector/professional-regulators/'>Professional Regulators</a>, <a href='http://legalprocesssolutions.com/category/public-sector/'>Public Sector</a>  <img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=249&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></content:encoded>
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		<title>Losing professional qualification or license may enable dismissal without cause</title>
		<link>http://legalprocesssolutions.com/2012/03/15/losing-professional-qualification-or-license-may-enable-dismissal-without-cause/</link>
		<comments>http://legalprocesssolutions.com/2012/03/15/losing-professional-qualification-or-license-may-enable-dismissal-without-cause/#comments</comments>
		<pubDate>Fri, 16 Mar 2012 06:17:47 +0000</pubDate>
		<dc:creator>contracttailor</dc:creator>
				<category><![CDATA[Business]]></category>
		<category><![CDATA[Employment]]></category>

		<guid isPermaLink="false">http://legalprocesssolutionsdotcom.wordpress.com/?p=198</guid>
		<description><![CDATA[What is an employer to do if drivers they have hired lose their license? What if the professionals they employ lose their accreditation? Must an employer provide notice or pay in lieu if that happens?  A recent court decision suggests &#8211; perhaps not. In Cowie v. Great Blue Heron Charity Casino, a security officer had been convicted of a criminal offence in 1983.  He was a security guard with a casino starting around 2000.  In 2007, Ontario changed the law requiring security guards to be licensed.  And, if you wanted a license, you had to <a class="entry-excerpt-link" href="http://legalprocesssolutions.com/2012/03/15/losing-professional-qualification-or-license-may-enable-dismissal-without-cause/">More&#8230;</a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=198&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<div class="wp-caption alignright" style="width: 310px"><a href="http://commons.wikipedia.org/wiki/File:Coco-park-security-guard.jpeg" target="_blank"><img class="zemanta-img-inserted zemanta-img-configured" title="Coco-park-security-guard" src="http://upload.wikimedia.org/wikipedia/commons/thumb/e/ef/Coco-park-security-guard.jpeg/300px-Coco-park-security-guard.jpeg" alt="Coco-park-security-guard" width="300" height="200" /></a><p class="wp-caption-text">Image via Wikipedia</p></div>
<p>What is an employer to do if drivers they have hired lose their license? What if the professionals they employ lose their accreditation? Must an employer provide notice or pay in lieu if that happens?  A recent court decision suggests &#8211; perhaps not.</p>
<p>In Cowie v. Great Blue Heron Charity Casino, a security officer had been convicted of a criminal offence in 1983.  He was a security guard with a casino starting around 2000.  In 2007, Ontario changed the law requiring security guards to be licensed.  And, if you wanted a license, you had to have a clean criminal record.  Of course, by the time the law was in effect, he did not have a clean record, lost his license, and then lost his job.  The casino terminated him without severance.</p>
<p>The Court of Appeal in Ontario ruled that the employer could terminate the employee without cause.  The employment contract, in legal terms, was frustrated.</p>
<p>There are many circumstances in which a loss of a required qualification may make it illegal for employees to continue to perform their duties. Drivers may lose their licenses. Professionals or tradespersons may lose their certifications. Or employees&#8217; immigration status may suddenly prohibit them from working.</p>
<p>When circumstances such as these arise, an employer of a non-union employee may well be justified in terminating the employee without notice, due to <a class="zem_slink" title="Frustration of purpose" href="http://en.wikipedia.org/wiki/Frustration_of_purpose" rel="wikipedia" target="_blank">frustration of contract</a>. Note, however, that this case did not involve a unionized situation. The result may or may not be the same there.</p>
<h6 class="zemanta-related-title" style="font-size:1em;">Related articles</h6>
<ul class="zemanta-article-ul">
<li class="zemanta-article-ul-li"><a href="http://business.financialpost.com/2012/03/07/good-hiring-prevents-bad-firing/" target="_blank">Good hiring prevents bad firing</a> (business.financialpost.com)</li>
<li class="zemanta-article-ul-li"><a href="http://career-advice.monster.co.uk/salary-benefits/employee-benefit-schemes/can-my-company-take-away-my-bonuses-or-benefits/article.aspx" target="_blank">Can my company take away my bonuses or benefits?</a> (career-advice.monster.co.uk)</li>
</ul>
<br />Filed under: <a href='http://legalprocesssolutions.com/category/business/'>Business</a> Tagged: <a href='http://legalprocesssolutions.com/tag/employment/'>Employment</a> <img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=198&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></content:encoded>
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		<title>Maximize business value with the right business structure</title>
		<link>http://legalprocesssolutions.com/2012/02/06/maximize-business-value-with-right-structure/</link>
		<comments>http://legalprocesssolutions.com/2012/02/06/maximize-business-value-with-right-structure/#comments</comments>
		<pubDate>Mon, 06 Feb 2012 18:00:14 +0000</pubDate>
		<dc:creator>contracttailor</dc:creator>
				<category><![CDATA[Business]]></category>

		<guid isPermaLink="false">http://legalprocesssolutionsdotcom.wordpress.com/?p=152</guid>
		<description><![CDATA[When it comes to setting up a business, entrepreneurs find themselves facing a sometimes bewildering choice of structures. This articles starts our five part series on how entrepreneurs can advance their strategic objectives by selecting the right business structure.  To do this, we present a simple framework that helps us define and evaluate different options, using two key variables: entrepreneurial commitment and entrepreneurial independence. The model illustrates which organizational structures maximize stability in different economic arrangements. There are many reasons entrepreneurs choose various structures, including unlimited or limited partnerships, joint ventures, and cost sharing arrangements. However, <a class="entry-excerpt-link" href="http://legalprocesssolutions.com/2012/02/06/maximize-business-value-with-right-structure/">More&#8230;</a><img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=152&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>When it comes to setting up a business, entrepreneurs find themselves facing a sometimes bewildering choice of structures. This articles starts our five part series on how entrepreneurs can advance their strategic objectives by selecting the right business structure.  To do this, we present a simple framework that helps us define and evaluate different options, using two key variables: entrepreneurial commitment and entrepreneurial independence. The model illustrates which organizational structures maximize stability in different economic arrangements.</p>
<p>There are many reasons entrepreneurs choose various structures, including unlimited or limited partnerships, joint ventures, and cost sharing arrangements. However, when choosing their structure, entrepreneurs often fail to consider important strategic factors. They tend to choose based on short-term tax and other tactical issues rather than longer-term strategic issues. Similarly, when lawyers advise entrepreneurs on whether they should incorporate or not, lawyers will typically provide traditional advice on technical issues such as tax considerations, the ability of corporations to limit liability, and the ease with which entrepreneurs can sell parts of their business to outsiders for <a class="zem_slink" title="Equity (finance)" href="http://en.wikipedia.org/wiki/Equity_%28finance%29" rel="wikipedia">equity financing</a>.</p>
<p>We approach the issue of structure from a different perspective. Based on our experience and our work with clients, we summarize the most important strategic considerations underlying the choice of <a class="zem_slink" title="Business" href="http://en.wikipedia.org/wiki/Business" rel="wikipedia">business structure</a> using two variables: (1) the entrepreneur’s ability to create value (without contributions from other people) in exchange for an ownership stake in the business (we call this “Entrepreneurial Independence”); and (2) the level of what we define as “committed resources” that the individual entrepreneur must invest in order to start the business (we call this “Entrepreneurial Commitment”).</p>
<p><em>Entrepreneurial Independence</em></p>
<p>Entrepreneurial Independence is the entrepreneur’s ability to create value for which customers will pay – without the entrepreneur giving up ownership rights in the business.  By resources, we mean financial, human, intellectual, social, and all other resources necessary to start the business.  We model this variable on a spectrum between independent and inter-dependent.  For example, a dentist can assemble financing (usually a large bank loan to purchase equipment), lease an office, hire dental assistants, and perform work for which patients, or their insurers, will pay.  Similar dynamics exist in local owner-operated retail businesses.  In both examples, each entrepreneur can realistically engage in activities that enable him or her to create value for which customers will pay, without giving up his or her equity stake in the business.</p>
<p>Conversely, in an interdependent relationship, various actors must combine their resources to create value for which a customer will pay.  For example, in many manufacturing businesses, different entrepreneurs, each with different skill sets, must collaborate to create value for the customer. An engineer designs a new machine.  A marketing specialist identifies target customers who may purchase the machine.  An operations specialist designs the production line to manufacture or source the machine.  In this case, no one individual can independently create value for which end customers will pay.  The individuals must collaborate to achieve this; they are interdependent.</p>
<p><em>Entrepreneurial Commitment</em></p>
<p>The level of “committed resources” that the individual entrepreneur must invest to start the businessis our second variable and is also modeled on a spectrum between low commitment and high commitment.  Committed resources are those explicit or <a class="zem_slink" title="Implicit cost" href="http://en.wikipedia.org/wiki/Implicit_cost" rel="wikipedia">implicit costs</a> that the entrepreneur cannot recover except by successfully convincing customers to purchase the goods or services that the business produces.  Promotion costs are a good example.  The entrepreneur cannot easily recover these costs as there is no fixed asset to sell.  The entrepreneur can only recover the investment by successfully selling products or services.  Similarly, the large costs of major land, buildings or equipment, or intellectual property, are difficult to recover because such assets are often so specialized or so large that they cannot be sold easily.   Further, the more specialized the asset (particularly in the case of research and development), the more difficult it will be to recover the expense except by successfully selling the end products or services.</p>
<p>To illustrate the difference between businesses with low commitments and businesses with high commitments, we can compare <a class="zem_slink" title="Professional services" href="http://en.wikipedia.org/wiki/Professional_services" rel="wikipedia">professional services</a> firms with major manufacturing businesses.  Professional services firms are typically characterized by low commitments, since most of their costs are in the form of <a class="zem_slink" title="Variable cost" href="http://en.wikipedia.org/wiki/Variable_cost" rel="wikipedia">variable costs</a> such as labor, office expenses, and rent. Professionals within the business use their unique intellectual capital (personal knowledge, skills, etc.) to create value. And such capital moves exclusively with the professional, despite anyone’s efforts to make such implicit knowledge explicit through activities commonly termed “knowledge management”.  In contrast, manufacturing businesses typically operate with high commitment such as significant research and development, technology, or <a class="zem_slink" title="Machine" href="http://en.wikipedia.org/wiki/Machine" rel="wikipedia">capital equipment</a>, in the form of buildings, land, or large-scale machinery.</p>
<div></div>
<div>In future articles, we will analyze each category in detail and consider how each model is created in practice to advance these goals.</div>
<div></div>
<br />Filed under: <a href='http://legalprocesssolutions.com/category/business/'>Business</a>  <img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=152&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></content:encoded>
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		<title>Adam Maddox of Gastown Labs Recommends LPS</title>
		<link>http://legalprocesssolutions.com/2012/01/26/adam-maddox-of-gastown-labs-recommends-lps/</link>
		<comments>http://legalprocesssolutions.com/2012/01/26/adam-maddox-of-gastown-labs-recommends-lps/#comments</comments>
		<pubDate>Fri, 27 Jan 2012 05:59:54 +0000</pubDate>
		<dc:creator>contracttailor</dc:creator>
				<category><![CDATA[Uncategorized]]></category>

		<guid isPermaLink="false">http://legalprocesssolutionsdotcom.wordpress.com/?p=137</guid>
		<description><![CDATA[&#8220;Chilwin has proved to be the perfect fit for the work we do at Gastown Labs. He really understands startup culture, is responsive, collaborative and delivery focused. Chilwin has helped us structure the corporation and helped design the legal relationship with our clients through consulting agreements. We found Chilwin based on a recommendation so I&#8217;m happy to extend that courtesy to his future clients.&#8221; Adam Maddox, Founder and Owner, Gastown Labs Inc., Vancouver, BC, gastownlabs.com Filed under: Uncategorized<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=137&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>&#8220;Chilwin has proved to be the perfect fit for the work we do at Gastown Labs. He really understands startup culture, is responsive, collaborative and delivery focused. Chilwin has helped us structure the corporation and helped design the legal relationship with our clients through consulting agreements. We found Chilwin based on a recommendation so I&#8217;m happy to extend that courtesy to his future clients.&#8221;</p>
<p>Adam Maddox, Founder and Owner, Gastown Labs Inc., Vancouver, BC, gastownlabs.com</p>
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		<title>Andrea Shillington, Founder, BrandsforthePeople.com recommends LPS</title>
		<link>http://legalprocesssolutions.com/2012/01/26/andrea-shillington-founder-brandsforthepeople-com-recommends-lps/</link>
		<comments>http://legalprocesssolutions.com/2012/01/26/andrea-shillington-founder-brandsforthepeople-com-recommends-lps/#comments</comments>
		<pubDate>Fri, 27 Jan 2012 05:57:15 +0000</pubDate>
		<dc:creator>contracttailor</dc:creator>
				<category><![CDATA[Uncategorized]]></category>

		<guid isPermaLink="false">http://legalprocesssolutionsdotcom.wordpress.com/?p=135</guid>
		<description><![CDATA[&#8220;Chilwin was an instant fit as our lawyer for Brands for the people. As a Founder of an exciting tech-startup business, I was amazed to find a lawyer who truly understood my needs as a lean startup. I was even more surprised when Chilwin showed his tech savvy know-how and was in-tune with my values to design relationships that are fair for all. Chilwin is more than just my lawyer, he&#8217;s part of the team.&#8221; Andrea Shillington, Founder, Brands for the People: http://www.brandsforthepeople.com Filed under: Uncategorized<img alt="" border="0" src="http://stats.wordpress.com/b.gif?host=legalprocesssolutions.com&#038;blog=31874124&#038;post=135&#038;subd=legalprocesssolutionsdotcom&#038;ref=&#038;feed=1" width="1" height="1" />]]></description>
				<content:encoded><![CDATA[<p>&#8220;Chilwin was an instant fit as our lawyer for Brands for the people. As a Founder of an exciting tech-startup business, I was amazed to find a lawyer who truly understood my needs as a lean startup. I was even more surprised when Chilwin showed his tech savvy know-how and was in-tune with my values to design relationships that are fair for all. Chilwin is more than just my lawyer, he&#8217;s part of the team.&#8221;</p>
<p>Andrea Shillington, Founder, Brands for the People: <a href="http://www.brandsforthepeople.com" rel="nofollow">http://www.brandsforthepeople.com</a></p>
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