A client recently asked how employees should be dealt with where a business is temporarily closed to carry out a refurbishment. Closing a business for refurbishment can be a difficult decision. Whilst you will need to fund the cost of the refurbishment works, those costs will not pay for themselves, especially if you are forced to close for any period. You may also still need to pay your employees – regardless of whether they are actually able to perform any work.
So how do you ensure that your business remains as cost-effective as possible during the refurbishment? We think it is all in the preparation and consultation, although you may still need to make some difficult decisions.
Your starting point should always be to review your staff team and their contracts to work out your possible cost exposure and what rights you have.
There is no obligation to provide work to or pay genuine ‘zero hours’ or ‘bank’ staff. That will then leave your bona fide employees. Check their contracts (and they should all have one – it’s the law!) for their contractual weekly hours and pay, as that will allow you to calculate the maximum possible cost of closing for the full refurbishment period.
The contracts will also set out your rights in respect of work location, holidays, ‘short-time working’ and ‘lay-off’. Do you have the right to ask employees to work at a different location or to tell them when to take holidays? Can you send them home or reduce their hours of work? Make a note of the rights you have in respect of each employee.
In addition to the contracts, there are other questions to consider: Can any work be safely performed from the workplace during the refurbishment, is it practicable for employees to safely work from home, has anybody already booked or asked to take holidays or unpaid leave during the planned closure period, can work be increased before and after the closure period to off-set the lack of work during the closure itself, do any employees have less than two years’ service? The answers to these questions could guide your eventual decisions.
It will then be time to speak to your employees. Tell them about the closure and your need to keep costs to a minimum and ask for their suggestions. Your employees are likely to be happier if they feel that you are taking their views into account and it will hopefully foster better relations. Find out who is prepared to take unpaid leave and who will work from home. Find out who is prepared to take paid holidays or increase their work before and after the closure period – these will both involve cost but it may be cheaper in the long run.
Remember to clearly record any requests and agreements in writing.
The difficult decisions
Once you have narrowed things down, you will need to decide how to deal with those employees who have not already volunteered to help in some way.
The path of least resistance (and risk) will be to pay everybody their usual pay for the duration of the closure period. You may wish to consider making some form of bonus payment to those who have already somehow volunteered to help. If you can’t afford to do that, then you will need to rely on your contractual and other legal rights:
Under the Working Time Regulations you have the right to tell an employee when to take their holidays, provided that you comply with certain conditions. The employee’s contract must also not give rise to any conflicts with those rights.
You might have the right to require your employees to work from another location. That right must still be exercised reasonably and the distance/time involved cannot be too great.
You might have the right to require your employees to work from their own home, subject to the provision of all necessary equipment and health and safety compliance.
You might have the right to impose ‘short-time working’ or ‘lay-off’ whether with or without pay. Remember: even if the contract says that you have no obligation to pay your employees, they may have a statutory right to guarantee payments. They could also then have the right to request a statutory redundancy payment under a highly complicated legal procedure!
Although ultimately less savory, you might chose to dismiss those employees who have less than two years’ service – perhaps promising them a return to work after the refurbishment.
Clearly, a lot will depend on your plans, your employees and, ultimately, your rights as an employer. However, remember that, without the clear right to do so, you should avoid withholding pay if you want to avoid costly tribunal claims such as claims for unlawful deduction from wages or even for constructive dismissal.
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DEALING WITH CLIENTS
you have been in practice for any length of time, sooner or later you’re going to get stuck with a difficult client, or at least a difficult client conversation. Uncomfortable client conversations can arise for multiple reasons. Sometimes those reasons have more to do with the client than with the lawyer, but every attorney-client relationship contains two players, so you need to be aware of the ways in which you might be contributing to the problem and the ways you can contribute to a solution.
Take on the right clients
The best way to deal with truly difficult clients is by not taking them on in the first place. That requires that you be able to identify potentially bad clients early – preferably before a retainer is signed so that you can avoid them entirely. Make a list of bad client warning signs to help you identify potentially difficult clients.
Pre-screen and pre-qualify clients by:
Asking the right questions
Educating clients about the legal process in general and your services in particular
Evaluating whether your firm is the right fit for the potential client.
To effectively attract and retain good clients, you must communicate the value of the services you offer. Know what is important your potential clients and be able to differentiate yourself and your service from the others in your practice area – not just when you’re trying to attract new clients, but throughout the engagement.
Relate your services to the benefits to the client. Everything you do should be based upon the clients’ perspective – what’s in it for the client? How does each of the activities you undertake advance the client’s goals or contribute to their desired outcome?
Manage clients’ expectations
It is crucial that you discover, and help shape, the client’s expectations at the outset of the engagement, and that you continue to manage them throughout the engagement. If the client’s perception of ‘service’ is something more or different than what you provide, the client will always be dissatisfied, regardless of how good your work is. It’s your job to manage expectations in each of these areas.
Know your boundaries and set limits
Often confrontations arise when the unexpected occurs. You can reduce many common difficult client situations by being prepared and setting boundaries at the outset of the engagement. Clients who can’t abide by your processes or boundaries will often self-identify themselves, offering you the opportunity to explore the situation before a confrontation occurs or the chance to decline the representation. There’s no reason to tolerate an abusive client!
Provide excellent service
Keep the client updated about what’s happening with the case. Don’t make clients ask you for a status; be proactive and provide regular updates, even when nothing is happening.
If you need to make a staffing change on the file, give the client a heads-up; don’t wait until the client receives a bill with a new attorney’s name on it or receives a phone call from a new attorney in your office they don’t know. Always present your best work; even if it’s just a draft, it should be free of spelling and grammatical errors, typos and other problems. Always accompany copies of documents or decisions in the client’s matter with a plain language explanation of what the document is and how it affects the client’s case.
Recognize that the client may not always agree with the course of action you think is best. Explain how the different options might advance the client’s stated goals and give your insight about consequences and potential pitfalls, but remember that ultimately, it’s the client’s job to choose the course of action. Document these conversations or follow up in writing.
Under-promise and over-deliver, keeping the four areas of client expectation listed above in mind.
Often, client problems or complaints arise out of disputes about or confusion over fees. Don’t nickel and dime your clients by charging them for items that really constitute part of your overhead and should already be factored in to your fees. Make sure your fees are fair and reasonable. If there is a change in your budget, big expenditures that need to be made, or if unexpected costs arise, advise the client as soon as you become aware of the change; don’t wait until the funds have already been expended or simply add it to your bill without discussing it with the client first.
Obtain client feedback
A client that doesn’t complain isn’t necessarily a happy client. And even happy clients may have additional needs that you could address. Obtain feedback throughout the engagement and upon its conclusion and act on that feedback when you receive it.
Handling Difficult Client Conversations
Even if you have done all of the above, you may still won’t be able to avoid difficult conversations entirely. Even generally good or cooperative clients can become difficult at times, especially when you have to tell them something they don’t want to hear, or when they have a complaint.
Sometimes conflict arises because clients don’t feel understood. Even business clients have an emotional investment in their legal matter, and many legal matters have high stakes, affecting clients’ finances, livelihoods, businesses, or their very lives. If you can guide the conversation in a way that makes clients feel understood, the conversation will run much more smoothly.
When you find yourself in a situation that requires a difficult conversation with clients, keep these tips in mind:
Mirror the client’s concerns. Let the client tell you what the issue is, and then reflect it back to the client. This way, the client knows they’re being heard, and you ensure that you understand their issue.
Focus on the client. The key to resolution is concentrating on the client’s feelings and the client’s desired outcome, rather than focusing on yourself, the work you have already done, or additional work that may be required. For example, if a client asks for something in a rush, respond by first acknowledging the client’s sense of urgency and how it affects their goals – not by telling them how much work you have to do or why what they’re asking is impossible.
Lay the groundwork for bad news – and go slowly. Resist the urge to just ‘get it over with’ by blurting out the bad news all at once. When you know the client isn’t going to be happy about what you have to tell them, start out by acknowledging the client’s desired outcome or goals, introduce what you are going to discuss, or explain that there are a number of different strategies that can be employed to move forward with their matter. Be sure to give the client reasons for those options and for what occurred. After you’ve delivered the bad news, let the client know that you empathize with their position.
Acknowledge the client’s feelings. Acknowledging a client’s feelings by saying something like, “I can tell that you’re upset about this” will begin to defuse the situation. Don’t let yourself get emotional or allow the client to push your buttons and don’t argue with clients about their feelings, whether you believe they are justified or not; you won’t change their mind and you are likely to make the situation worse.
Let clients know that they’re not alone. If this particular problem is a common one, or many clients seem to be frustrated by the same thing (for example the Court’s delay in making a decision, or opposing counsel’s refusal to provide documents), let the client know that not only are their feelings valid, but that they have been expressed by others in the past. If you are similarly frustrated, let the client know; it can be a way of getting you and your client back on the same side.
Work toward a resolution based on where you are now. Once the client is calmer and you’ve acknowledged them, you can begin to gather information that can help you to reach a solution to the underlying problem. Offer the client options for resolution, even if you can’t meet their specific demand.
Focus on the positive. Instead of saying no or telling a client what you can’t do and why, tell them what you can do. Explain the options in terms of the client’s goals (i.e. because I know that you don’t want to drag this litigation out…” or “Since you want to keep costs down…”
Don’t retreat or get defensive – it only escalates the confrontation.
Get help. While these suggestions may seem simple, they’re not always easy to implement. Working with a coach or getting some client service training can help you develop the skills necessary to handle difficult client situations.
DEALING WITH THE BOARD OF DIRECTORS
I want to continue my effort to post a few articles about basic corporate law issues. The members of the Board of Directors are elected by the shareholders of a corporation. Their job is to manage and supervise the company’s officers and management and to look out for the interests of the shareholders. Directors owe the shareholders/company a “duty of care” and a “duty of loyalty” while serving on the Board.
The Legal Department interacts with the Board in several ways. Typically, the Corporate Secretary (the person who manages the operational aspects of the Board along with other duties related to maintaining the corporation) sits in Legal. Often the General Counsel is also the Corporate Secretary. The Corporate Secretary works closely with the Chairman of the Board and the Governance & Nominating Committee. The Chief Compliance Officer may also sit in Legal and works closely with the Audit Committee. Similarly, any significant litigation, contract, acquisition, or other material legal event will come to the attention of the Board and may require its input or approval in some instances. The Board will take up these legal matters at regularly scheduled Board or committee meetings, or at a special meeting if the circumstances warrant. When these ad hoc legal events come to the attention of the Board, various members of the Legal Department may be invited to the meeting in order to present the issue to the Board or be a subject matter expert for any questions the members may have. Any in-house lawyer can be intimidated the first time they meet the company’s Board of Directors or prepare materials for them (even if it’s just responding to an email). This edition of “Ten Things” will give you some pointers on how to deal with the Board:
Do your homework. If you are meeting members of the Board for the first time (or even the second), be sure to take some time to learn more about them. The easiest way to do this is to ask people who deal frequently with your Board (i.e., others in Legal, Finance, Corporate Secretary function, etc.). Some Boards operate very formally, everyone in suits and ties, and stick to a strict agenda/schedule and very specific protocols. Other Boards are informal, dress casually, and work through an agenda but varying from it often to discuss other things. Know which type of Board you will be dealing with. If there is any question, always bet on “formal” because it’s hard to go wrong if you pick that path. Take your queues from other company employees in the meeting with you. Don’t be a jokester – that rarely is appropriate and can be the kiss of death in the wrong circumstances. Do some background research on the Directors. The websites of most companies, especially publicly traded companies, will contain Director bios, and so will the annual report (Form 10K) and the proxy. If you are invited to a Board dinner or lunch, knowing a bit about each Director’s background (e.g., their college or where they work and live) can be a real asset and conversation saver. Learn their names and their roles on the Board, i.e., committees, lead director, activist director representative, etc. Finally, try to get a sense of their personalities. Again, this is one where you’ll need to ask people who meet with the Directors frequently. Most Directors that I have met are great. They are warm and friendly, super smart, and very dedicated to the company. Every once in a while you meet one who is not. Going in to the meeting knowing where the traps are personality-wise is priceless.
Understand where your duty lies. As an in-house lawyer you need to understand who your client is at all times. Under the ethical ruleshere in the USA, an in-house lawyer’s client is the corporation. It is not the CEO or the CFO, it is not any one Director. It is the company as a whole, i.e., the shareholders’ interests as represented by the Board of Directors. Your job is to be sure your advice and your actions match up with this obligation to your client. Watch out for any one Director attempting to influence what you do or how you think based on their self-interest. While rare, it is something to be on guard for. If you think you have an issue with any particular Director go talk to the General Counsel or Corporate Secretary (or someone in senior management if necessary).
Transparency. I remember a valuable piece of advice a Board member once gave me. They said “Do not hide things from the Board. Be transparent and even-handed in your advice to us.” What he was telling me was don’t try to “game” the Board or play it cute with your advice and counsel. Give the Board all the facts. Discuss the pros and cons of any situation in even-handed manner and do not try to shade things so you can get a certain result from the Board. And never try to hide things from the Board. Your integrity and reputation are two of the most important things you bring to the table. If the Board feels you lack integrity you will tarnish yourself beyond repair in their eyes. Get all of the potential outcomes on the table. Do not let the Board get surprised by something they did not know was a possibility. For example, if the other side in litigation has asked for an injunction that would shut down part of your business. Be sure that is noted to the Board when discussing or writing to them about the litigation, even if you think there is virtually no chance the court will grant it. If you’re wrong and there is an injunction (which you failed to mention was one of the claims), you will have a lot of explaining to do.
Keep it simple. As you present to or discuss issues with the Board, don’t overwhelm them with text and legal-speak. One of the most valuable skills an in-house lawyer can have is the ability to make complex topics simple and straight forward. You need to learn how to do this to be successful. This goes for any presentation materials you prepare for the Board, emails discussing legal issues, or other types of memoranda and correspondence. Writing and presenting as an in-house lawyeris different from being with an outside law firm. Do not pack your PowerPoint or memo with paragraphs of text or spend time on case citations and detailed footnotes, or use Latin phrases or other legal buzz words or acronyms. If you have visuals, keep them simple and uncluttered as well. Whenever you have the opportunity to get information to the Board, think long and hard up front about:
What is it that I want/need to say?
What information needs to be included so the Board has the full picture?
How can I set out and discuss the issues (and my advice) in the simplest manner possible?
Am I teeing up what needs to be done by the Board and setting out their options?
Directors have limited time to consider company business. They already have a ton of material to go through leading up to any Board meeting (board books, financials, draft resolutions, etc.), they usually have other jobs or commitments to other Boards, and they have personal lives as well. At the meeting, assume they have read your materials in advance and get to the point quickly. You can even say something like “I’m going to hit a few highlights of the background and then move on to the key issues we need to discuss. But, if anyone has questions as we work through the materials, please let me know.” Read the room as you present. If they are staring out the window, pick up the pace and/or move to the heart of what you’re after – ditch the script if necessary. Everything you can do to be clear and straightforward and not just another lawyer babbling on about things will be noticed and appreciated. Brevity is your friend.
Anticipate questions. If you are meeting or talking with the Board, odds are good that you are there as a subject matter expert on the topic (e.g., the litigation, the contract, the acquisition). If so, spend a significant amount of time anticipating what type of questions you might get from the Board and how you will answer them if asked. This is harder than it sounds as questions can seem to come completely out of “left field” as we say here in the USA. Place yourself in the shoes of the Directors and think about what questions you would have if faced with the material you are presenting. What are the 3-4 critical questions that come to mind? Review everything you have set out in the materials and think about whether anything will “beg” a question or require further elaboration. If it does, is it really a question you want to beg from the Board? If not, cut it. Consider having someone else read the materials and see what types of questions they come up with (whether or not you can do this and with whom depends on the sensitivity of the materials).
Honesty. Closely related to all of the above is the need for honesty when dealing with the Board. Obviously, you never want to flat out lie to the Board. This issue often comes up in those situations where you do not know the answer to a question asked by a member of the Board. Bottom-line is don’t try to wing it or cobble together something that you do not know for sure to be correct (and you definitely do not want to give them an incorrect answer). Instead, just say you do not have the answer to the question right now but you will find out and report back to them as soon as possible. It’s okay for this to happen on occasion. There is just no way to possibly know the answer to every question that might come up (even though you’ve tried to anticipate as many as possible). That said, if you say “I don’t know” a lot, it does not reflect well on you and it will come across as either a lack of preparation or a lack of intellectual horsepower. Neither is a good label.
Be professional. When dealing with the Board, you need to be polished but not overly formal. Some deference is good, but too much makes you look weak. When you talk, watch out for the “ums” and the overuse of the word “like.” It is difficult to trust and take seriously someone who sounds like they are in high school. If you know you are going to be speaking with the Board in advance, i.e., it’s not a surprise call/meeting, practice your presentation or the key points you want to make. You may be an awesome speaker when you stand up in front of your team and speak off the cuff but don’t try this with the Board. It is a vastly different experience. When discussing things with the Board, be prepared to back up your points with evidence and facts. Show that you have been thinking through the angles. Likewise, dress appropriately. You cannot go wrong leaning to the formal side, i.e., suit, sport coat, conservative dress and shoes, etc. – all of which reflect well on you as a professional.
As an attorney, remember to ensure the proper use and preservation of the attorney-client privilege. Don’t forget to include the members of the Board when you are educating employees and senior management about how the attorney-client privilege works and how best to ensure that documents and emails containing attorney-client privilege material stay privileged. This means ensuring the Board uses the proper labels, specifically asks for legal advice vs. business advice (and understands the difference), and that the members of the Board do not accidently waive privilege. Don’t assume just because they are on the Board that they understand how the privilege works.
Always be helpful. As you engage with the Board (and hopefully that engagement grows as you become more senior in the Legal Department), keep an eye open for things that are helpful to the members. For example, at every regular Board meeting we provided a short update (10 minutes) on any material developments in the law dealing with corporate governance and their duties as Directors (e.g., regulations, case law, articles). Likewise, if I — or my team — came across something we thought would be useful to our Board members, we would share it, along with a short note explaining why the materials were important. Of course, don’t over-do it. This is a “once in a while” type thing and do it only when there is something of real value to share. Additionally, there are always the basics:
Promptly return emails and phone calls from Board members (even if it’s just say “I have your request and am working on it)
Understand that requests from the Board usually go straight to the top of your “to do” list
Be on time (i.e., early) to meetings and conference calls with the Board
Ensure that members of the Board received the meeting materials and have extra copies available in case someone forget theirs
If working on a big project that has Board involvement, make sure the right people have your contact details just in case someone needs to reach you
Spot risk/have a plan. One of the most important obligations of the Board is to constantly be on the lookout for risk to the company. While this usually conjures up images of “bad” things, risk can also mean opportunity, such as the risks associated with the acquisition of another business. In your dealings with the Board be aware of their need for help in spotting risk (good or bad) and developing a plan to deal with it. The latter is one thing that many in-house counsel often skip over, i.e., they are great at pointing out risk or problems but not so great at having a plan or potential solution in hand. Whenever you are dealing with the Board and discussing risks, be sure to have in hand your ideas on how to solve the problem or take advantage of the situation. For example, the Board is focused on a potential merger but is concerned about opposition from the anti-trust regulators. One potential way to help solve the problem is to identify experts (economic, others) who have helped companies get similar deals approved in the past and bring those names and those successes to the attention of the Board. While no guarantee your deal will get approved, engaging outside experts who have dealt with issues similar to those you anticipate having can help a lot both in terms of getting your deal approved and in bringing some piece of mind to the Board that the company is doing all it can to get the deal approved. For more on risk, see my column “Risk is the New Black” in the April edition of Corporate Counsel Connect.
Keep the CEO up-to-speed. There may be times when a member of the Board reaches out to you directly with a question or a request. That is generally fine. In fact, you should be flattered they are coming directly to you. Regardless, you need to keep the CEO (and the General Counsel) up to speed if this occurs. You do not want them to be blind-sided by anything going on at the Board level. Be sure they know not only that a Board member reached out to you but also be sure they know how you responded, including ensuring they get a copy of anything you send to the Board. This gets tricky is if the request involves some type of investigation of the CEO or the Board member asks that you not tell the CEO about the contact. The former is actually a bit easier to deal with because there should be a process in place at your company with respect to investigations of employees, in particular senior management. If you get a request like this, go to your manager for help with how to proceed. If the request is simply “don’t tell the CEO”, it gets harder and you are now in a tough spot. How you deal with this will depend on the circumstances and your position in the company’s hierarchy. The safest play here is to speak with your manager or the General Counsel. If that’s not a good option, contact outside counsel you trust for advice.
There is nothing here that is overly complicated. Rather, most of it comes with experience. And everything mentioned above should be weighed based on how your Board actually works (either from your own first-hand knowledge or information you glean from others). It can be a bit scary the first time you’re invited to meet a member or members of the Board of Directors. But, the fact that you are meeting them is a good sign for your career.