One of the unique features of our services at The General Counsel is our ability to step in quickly, understand the business of the client and make an immediate contribution that goes beyond simply being the person from “legal.”  We can do that because we already have experience working as a member of a senior management team and having a clear understanding and appreciation of the “real world” pressures that impact executives on a day-to-day basis.  Normally we will conduct a formal risk assessment before the engagement begins so that we can identify areas that need to be tackled first.  But, even before that we collect as much information as we can about the business and operations of the client so that no time is wasted.  While we’ll eventually want to sit down and speak with all of the key executives, managers and employees, as well as the company’s major outside business partners, we know the best way to get started is to obtain and review certain basic documents before we actually begin our new assignment.  The information in these documents can be used for initial issue-spotting and can also serve as the foundation for asking the right questions in subsequent interviews and understanding how contracts that we’ll be asked to review fit into the overall business plan of the client.

The range of documents that we review will vary depending on whether the client is a reporting company and thus required to make certain information publicly available in periodic filings with the SEC.  Assuming that is the case, we ask for, or download on our own from the SEC website or a commercial service, the following documents:

• The reports on Forms 10-K, 10-Q and 8-K filed by the client over the last three years (or such shorter period that the client was required to file such reports);
• The client’s S-1 registration statement it completed its initial public offering within the last three years;
• The proxy statements filed by the client, and disseminated to shareholders, over the last three years (or such shorter period that the client was required to make such filings); and
• The contracts and other documents that have been filed as exhibits to the client’s SEC filings over the last five years (or such shorter period that the client was required to make such filings).

While we read everything closely there are certain disclosures that we know should be carefully reviewed—the description of the client’s business and the risk factors associated with the business, the notes to the client’s financial statements and the Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A); the disclosures made in the Form 8-K reports; and projections of future performance and anything else that might be deemed a “forward-looking statement”.

If the client is not subject to the reporting requirements we generally ask for copies of comparable documents such as the business plan or offering circular distributed to potential investors and other formal communications to investors and shareholders over the last two or three years that include material information regarding the client.  Material contracts for a privately-held company will need to be obtained directly from the CEO and other senior managers of each of the departments.   When asking for contracts we apply and explain the same standard of materiality that would be used if the client was required to file the documents with the SEC and that means obtaining, at a minimum, copies of the charter documents (i.e., articles and bylaws with all amendments); all employment-related agreements, including stock option plans and agreements and change-of-control agreements with senior executives; major real and personal property leases; major contracts with outside business partners (e.g., contracts relating to R&D, manufacturing and sales/distribution); and pension and benefits plans.  Stock records, or at least a list of the shareholders and option holders (including the number of shares owned or subject to option), are also be obtained.

We’ll also ask for contracts, documents and policies from several other areas regardless of the reporting status of the client.  First of all, we will request copies of “boilerplate” contracts and terms and conditions that are continuously used in business relationships with employees, vendors and customers.  For example, we always make sure to look at the client’s employee confidentiality and assignment of inventions agreement and the client’s personnel handbook and policies.  Also, we want to review the client’s standard terms and conditions of sale and purchase on its invoices and purchase orders.  Second, we make sure to review the minutes of the board of directors and the charters of each of the committees established by the board, particularly the audit and corporate governance committees.  We also ask for background information on each of the directors and senior managers including resumes and, the case of management, a timeline of their progress and advancement within the company. Third, we like to see copies of communications with the client’s outside auditors regarding legal matters over the last few years.  Finally, we ask to review the client’s recent press releases and copies of promotional materials that the client regularly disseminates to the public regarding its products and services.

Again, the best scenario is for us to review all of these documents before our assignment begins.  I like to try and allow sufficient time to complete the full review and, if possible, prepare my own index of the documents and summary of important recent developments relating to the business, organization and legal situation of the client.  For example, it is useful to try and develop a list that includes, in chronological order, major contracts, product introductions and personnel changes.  All of this takes a lot of time and concentration and some of what I learn will not be immediately useful to us in the first stages of the assignment; however, by doing my homework early I’ll eventually be way ahead of the game and in a position to demonstrate knowledge and value to our clients.

Even if you don’t think that you are in market for a TGC attorney right now please contact us about a preliminary risk assessment.  We think you’ll be pleasantly surprised about how much you can learn and the solutions that we can offer.