What makes a good franchise lawyer?
01 November 2007
The title of this introduction to this year's listing of the best franchise lawyers in the world may be a bit jarring to the ears. In most cases, and for most purposes, those attributes which make for a good lawyer, and especially a good commercial lawyer, will also dictate what makes a good franchise lawyer.
But the very notion of franchise law as a specialty is so new and so undeveloped in some parts of the world that one can argue that there are some quite different considerations to take in mind than in a traditional commercial undertaking. Different people will have different ideas as to the ingredients. Here is my effort at describing characteristics to look for when seeking the right lawyer to handle your franchise transaction or dispute, especially in a jurisdiction other than your own.WHAT DO OTHER PEOPLE SAY ABOUT THE LAWYER?
This is a field of law where there are few recognised credentials (in almost no place in the world is it a recognised specialty, there are still relatively few courses in franchise law given in major universities, there is no equivalent of a College of Trial Lawyers). Thus, one has little alternative but to turn to the views of others.
It must be acknowledged at the outset that this is a flawed process. There is, after all, a certain element of being "well known for being well known". But a sufficient number of well-planned inquiries should produce a reliable selection, or at least narrow a selection to a small number.
Some of those inquiries can be placed to other practising lawyers (assuming the person being called is, for whatever reason, not himself or herself a candidate). Notwithstanding the irreducible amount of competitiveness, the number of lawyers practising in this field is sufficiently small that one can get a trustworthy answer in most cases.
The best source, however, remains other franchisors, especially in-house counsel of those companies. That group of people is a highly prized component of surveys such as those reflected in this book. And because this book is the only professional survey in the field of franchising, what you will read in the pages which follow constitutes a useful shortcut to what you would be likely to find based on numerous calls and emails.
WHO WILL BE DOING YOUR WORK?
In an earlier and simpler time, this question would not even arise; you would be gathering a list of names of individuals. If you turn to a lawyer with whom you have dealt on franchise matters, but who has no experience in the jurisdiction in question, you are likely to receive the name of a lawyer in the jurisdiction in question. If you have confidence in the lawyer whom you called, you will need to satisfy yourself (not an easy task) that you can rely upon the same quality of service being provided by a person whose name you have just heard.
But if your call is to a multi-jurisdictional law firm, you will be confronted with a different issue: can you be sure that the quality of performance which you have come to expect of the lawyer whom you are calling will be maintained by his partner in a jurisdiction where he has an office, but with which you have not previously dealt? I cannot speak for all firms, but in our firm, we have made our position clear to all of our clients. We are engaged in a determined effort to assure that the quality of the franchise law advice in each of our 64 offices around the world is equal to that which our clients have come to expect of us. Gratifyingly, in most places in the world we are now comfortable in making that representation. Unless and until that is the case, we will not abandon the relationships with franchise lawyers which have been developed and cultivated over the years, and in whom we can place our and our clients' trust.
Every law firm you call, whether an international firm such as ours or a sole practitioner in your home jurisdiction, will tell you that a project also calling for involvement by counsel in a distant country will be handled ‘seamlessly'. Do not hesitate to press for an explanation of how that will be achieved.
WHAT IS THE LAWYER'S ACTUAL
EXPERIENCE?
Do not be reluctant to ask, and to ask for specifics. Glossy brochures replete with adjectives and adverbs are no substitute for a list of clients and projects. Both bar association rules in certain jurisdictions and a sense of restraint may well dictate that those will not be listed in materials which are distributed or posted on websites. But if the lawyer or firm cannot provide actual examples of directly relevant experience, you probably need to reassess your selection.
IN WHAT SORT OF LAW SHOULD THE LAWYER HAVE EXPERTISE?
That may seem an odd question. But the fact is, in most places in the world, there is no recognised body of franchise law. It is - as, indeed, it remains in the US - a microcosm of commercial law, contract law, corporate law, intellectual property, competition law and in some instances aspects of tax law or other disciplines.
Indeed, the volume of franchise transactions in most parts of the world is not sufficiently large to support a law practice in and of itself. Thus, the ‘best franchise lawyer' in many jurisdictions may well be a first-class commercial lawyer who has had experience in several franchise transactions, but who does not limit his practice to that field.
Expect your lawyer to have a mastery of whatever statutory and case law precedent exists in the field. But expect more of him or her. The truly accomplished franchise lawyer is one who has learned to take the basic principles of each of those disciplines and filter them through the unique prism of franchising.
HOW IMPORTANT IS KNOWLEDGE OF FRANCHISE LAW IN YOUR SELECTION OF COUNSEL?
That is a given: without it, the lawyer should not even be considered. But that is not enough. Because franchising is so inextricably interwoven with economic and social factors and trends, the lawyer who is unable to apply his legal knowledge to those larger themes will not be of much use to you.
Indeed, the truly valuable franchise lawyer is realistic about what he can achieve for you. (‘Realistic' is not the same as ‘modest'. Asking your lawyer to be modest as well is probably asking for too much.) The thoughtful franchise lawyer knows that it is the business desires which must drive the transaction, and only in rare cases the legal considerations. If the legal tail begins to wag the business dog, beware.
HOW MUCH OF WHAT THE LAWYER CAN TELL YOU WILL BE ABOUT TODAY? AND HOW MUCH ABOUT TOMORROW?
Again, this may seem to be an odd question. You are not, after all, seeking a soothsayer.
But the law of franchising is so relatively unformed, and so much a product of other forces, that in most countries of the world it will be essential to have a lawyer who understands that, and who is able to place your proposed transaction in the larger context of the direction in which that country's economy and society are likely to be headed.
That is not a quality you would expect of your lawyer in, for example, the United States. Indeed, you might well be suspicious of a lawyer who is inclined to lecture you on subjects which you can read about in the Wall Street Journal as well as he can. In many foreign jurisdictions, however, it is precisely that quality which may make the difference between an acceptable and a truly superior franchise lawyer.
DOES THE LAWYER UNDERSTAND FRANCHISE RELATIONSHIPS?
Most lawyers don't, as most people who have not been engaged in franchising don't. It has, or may have, elements of other commercial relationships: buyer-seller, licensor-licensee, landlord-tenant, lender-borrower, and a whole range of others. If your lawyer is wholly absorbed in a subsection of a subparagraph of an agreement, and appears to have lost sight of the relationship itself, it's time for a heart-to-heart talk.
DOES YOUR LAWYER HAVE A
CONFLICT?
Again, what might seem to be an odd question. In the US, if the answer were ‘yes', the matter would end there, except in those circumstances where waivers can be appropriately sought and readily given. The approach to ‘conflicts' in many other parts of the world is substantially more relaxed. You are perfectly entitled to pursue this issue.
WHAT IF THERE IS NO LEGAL
‘CONFLICT', BUT YOUR LAWYER REPRESENTS ONE OR MORE OF YOUR COMPETITORS?
You will need to weigh whatever discomfort you feel on that score against the benefits you may obtain from the lawyer's previous exposure to issues arising in your industry. In most cases, you may well conclude that those benefits outweigh any discomfiture, especially if the lawyer's other characteristics are substantially more appealing than those of the other alternatives (which may well be the case in a smaller jurisdiction). But you may need to pursue the issue further. If you are a franchisor and you are contemplating a transaction with a large and substantial company in a target jurisdiction, even if the putative counsel does not now represent that entity, it may have hopes of doing so in the future. You may well be able to ensure that the lawyer will not be able to represent that entity in matters involving your company or this transaction, but what about on other matters? Again, this is a legitimate consideration to discuss.
WHERE DOES FRANCHISING FIT INTO THE RANGE OF SERVICES OFFERED BY THE LAW FIRM? WHY IS THIS IMPORTANT TO YOU?
As I have indicated, in most countries of the world there are very few lawyers who have a practice built entirely upon franchising. For that reason, a franchise transaction may not be appealing to a lawyer who does not see the prospect of building upon it.
But those lawyers with vision, who are sensitive to the direction in which cross-
border commerce is moving, are aware both that franchising is growing rapidly as a method of distribution and that the company which is today a client for franchise law purposes is likely to become a client for a wide range of other services the firm may offer. A lawyer who does not perceive those realities may well be lacking in the business acumen you would like to have on your side.
HOW ARE YOU GOING TO BE CHARGED?
If this transaction is unusual, or if the size of the jurisdiction is such that even the most experienced franchise lawyer has been exposed to a relatively small number of such arrangements, it may be difficult to obtain an estimate. You can and should obtain hourly rates, but the number of hours to complete the project will be harder to come by.
But you are entitled to ask for a range, and to ask for periodic reports of the amount of time which has been consumed, and certainly for an early warning if it appears that the project will exceed the estimate. If you are working with a multi-jurisdictional firm, or a firm which has had extensive experience in franchise transactions in that and other countries with similar conditions, you should be able to reduce your cost by having as much of the work as possible done by that firm, with a relatively small portion of the work entailed in the project being done at the local level (whether by an independent ‘correspondent' or by the local office of a multi-jurisdictional firm).
Be wary of flat figures. They are seductively appealing, especially for purposes of a budget. But few lawyers are able to predict these matters in advance with sufficient certitude as to make that a sensible way of operation. A lawyer who is anxious to obtain a new piece of work in this field, and who provides a set figure which is grossly inadequate, may well be tempted to give short shrift to the work.
LUCK
What does luck have to do with it? Very few lawyers, especially outside the United States, set out to be franchise lawyers. In most cases they stumbled into an opportunity, whether through a relationship with an individual in the firm which does the franchisor's domestic franchise work, a meeting at a conference, or through one of any number of other serendipitous circumstances.
Do not assume that one who has arrived at franchising by that route is as a consequence unqualified. The real test may not be how he got there, but what he did with the opportunity once he seized it.
***
The international franchisor has three questions to ask: What country? Who will be my partner? Who will represent my interests in the transaction? The book you are holding in your hands will not help you with the first two. But, properly used, it can be an invaluable resource in selecting your counsel.