While it can seem like all lawyers just present cases to court, argue with each other, and litigate on television, there’s actually a wide gamut of practices a lawyer can undertake. In D.C., one of the most interesting is in the entrepreneurial and business consulting space. To learn more, we spoke with Andrew Sherman, corporate lawyer and host of WWiW’s Non Billable Consult.
ABERMAN: Why is it important for an entrepreneur to really have a good legal counsel?
SHERMAN: God, thank you for asking that. You know, as I think about 33 years of practice, and I think about some of the people that, you know, we interact with regularly, there are certain common characteristics, I think, that a lawyer dedicated to representing entrepreneurs has. I mean, that keen sense of business knowledge, the understanding of the entrepreneurial mindset, and the challenges, day to day, that an entrepreneur faces. And you have to bring a lot more than your wallet muscle to the table. You’ve got to bring your brain. You’ve got to bring your heart. You’ve got to have a lot of empathy and understanding. And it’s a whole different practice.
And so, if I were an entrepreneur today, choosing a lawyer, I’d want to make sure that this person not only has a mastery of the law, because D.C. is filled with people with a mastery of the law, but that they understand my challenges. How I think, what I’m up against, Thursday night, sweating out the ability to make payroll on Friday. You know, these are very real issues for entrepreneurs. And I really do feel badly if an entrepreneur is matched with a lawyer that has that Fortune 500 mindset, or even just a non-business mindset, because I just think at some point, there will be a disconnect. You know, there’s a lot more to representing entrepreneurs than just filling out forms, or pulling something off your computer.
ABERMAN: Well, I mean, that’s right. At the end of the day, if all you’re really doing is just telling somebody what the rules are, you’re not telling anybody much of anything.
SHERMAN: Exactly. And there’s also, I think there’s a real demand. There always has been, but it’s probably even more prevalent than ever: you’ve got to bring some value add to the table. Imagine a conversation between you and I. You’re the hypothetical entrepreneur. And you come to me, and I say: I draft the best shareholder agreements in the city. I mean, what does that even mean? It doesn’t mean I understand the context, or what kind of co-founder disputes may come up, or how those documents will have to evolve in the event of investors coming in.
We were raised, I mean, our early years as lawyers in the mid 80s, having a good document was enough. That was a sufficient value proposition. We never thought that we’d be asked about other things, or introductions that could be made, or suggested changes to the client’s business model, or any number of ways, these days, that we can add value to increasing the chances that the company will survive and thrive.
ABERMAN: It’s funny that you frame it that way, because I think that it’s not just legal profession, just about every profession, every industry that I know, it’s just table stakes now to be competent at baseline activity. I don’t care whether you’re a really good CTO, you’re a really good lawyer, you’re a really good accountant, really good radio host. At the end of the day, unless you’re providing something on top, it’s harder to stand out.
SHERMAN: The real value of this segment and this interview now, is understanding that table stakes term, because I think you nailed it. You hit it on the head. Understanding that there’s a core set of things that you should expect from any interaction with lawyers that represent entrepreneurs. But then, to know to ask, well, what else can you bring to the table? What other things can I expect out of this? Because otherwise, it’s just a transaction, and not a relationship.
And one thing I’ve certainly learned now at 58 is, I’m just not interested in transactions. I’m interested in relationships. And there can be transactions within the relationship, but there’s at the end of the day, if we can’t bond, if we can’t see eye to eye over what you’re trying to do with your life, and why you’re doing it, and why you started this business, and where you’re trying to take it, I’m just not that interested.
ABERMAN: I often find that entrepreneurs have a real love-hate relationship with lawyers. What is it about lawyers that makes entrepreneurs so unhappy?
SHERMAN: I think there’s a couple of pieces. There’s the reality piece of some lawyers who go to top schools and they’ve always been the smartest kid in their class. They can’t help projecting a sense that I’m smarter than you, or I know more than you, or I’m going to talk a lot of big words now, cite a lot of statutes, and impress you with that. The truth is, most entrepreneurs I know, the more humble, the more basic, the more down to earth and aw-shucks that you can be, and if it’s got to be, authentic, the better the relationship. So one is maybe just a mindset and emotional intelligence, and a client relationship management technique that is not working for some lawyers. The second is television. You know, people’s ideas about lawyers, unless they grew up with lawyers in their family, often come from television. So, they think Law and Order, and L.A. Law, and TV shows about lawyers, that lawyers are always litigating and arguing and advocating.
And, you know, for us transactional business lawyers, sure, we advocate, but we advocate in a very different context. I, to this day, have never been to court, except for one traffic violation that I had the time to contest. Otherwise, I’ve never been to the courthouse. I’ve never litigated or fought with anyone in an adversarial kind of way. And we’re a different breed of lawyers than people might expect when they walk in. You know, I always say I like to get my work done in a conference room, not a courtroom.
ABERMAN: It’s often been said to me that a lawyer can either be sort of a high priest of rules, and stand up on Mount Olympus and say, you can’t do this. You can’t do that. Or it can be somebody who says, well, there are constraints, there are rules. You have to be aware of them. What are your business objectives, and how do you work within these constraints? It always seems to me to be the big difference.
SHERMAN: It is. There’s an entrepreneur in town that we both know, I won’t name him just in case I don’t have the right to attribute the story to him. But he tells this great story, and you’ve probably heard him say it on different panels. And he says, look, I was going into a negotiation with a venture capital firm, and my lawyer warned me of all the terrible things that were gonna be in the term sheet. And I finally just said to him, OK, I get it. This is my decision, not yours. Thank you for all those warnings. I knew, going into the meeting, that there were going to be things in the term sheet I wouldn’t like. And then he laid out a few explicatives that we won’t say on the air, telling him, basically, back off. I get it. You’ve done your job warning me.
And I think the difference between a good business lawyer, and a great business lawyer, is that the good business lawyer says: here is a hundred things that could happen to you if you sign this document. The great business lawyer says, all right, now let’s navigate through some of those things. Let’s think of the plan B. What are the real ramifications? How likely is this clause ever to even kick in? I mean, I hate it when younger attorneys, even those on my own team, might be caught in an elongated negotiation over a clause that has an under-1 percent chance of ever triggering. Let’s put our time and effort into the clause that has an 80 percent chance of coming alive after closing, and not the 1 percent. And these are the kinds of time management, priority management, communication management issues that it does take a few gray hairs, I think, before you learn. And you realize that you’re either cut out to represent entrepreneurial growth companies, or you’re not.
And there’s also, I think, another issue worth talking about. That is, the pace and cadence. Entrepreneurs move faster. Their expectations are different. If you’re not ready to get emails at 1:00 in the morning, and answer emails at 1:15, you may not be wired for this. And now I’m talking to future lawyers or current lawyers that are thinking about it. You know, big companies move at their own pace, and have a different set of expectations.
One of my most favorite book titles was from 40 years ago, which is: A Small Business is Not a Little Big Business. Entrepreneurs are not just miniature versions of Fortune 500 companies, and they operate differently. They think differently. And we, as lawyers, or frankly, if you’re an accountant listening to today’s show, or a consultant listening to the show, any of us providing advice into an entrepreneurial community needs to understand that entrepreneurial ecosystem.
ABERMAN: Andy, why’d you start doing Non-Billable Consult? What stands out for you as the most useful content you’ve done so far?
SHERMAN: I dropped out of college in the late 70s, and I became an entrepreneur. And I was an unsuccessful entrepreneur for a couple of years before I returned to college. My father, may he rest in peace, tried many, many businesses that did not succeed. I had an epiphany, when I went back to school, that my life should be devoted to the support of entrepreneurs. I decided, my dad was not successful as an entrepreneur, and I was not successful directly as an entrepreneur. I wanted to be part of the ecosystem, but I had an epiphany that I would be an advisor to the ecosystem.
And so whether it’s teaching, whether it’s writing the books that I’ve written, whether it’s in the practice of law, and on the segments that I’ve been doing, like on Non Billable Consult, my job is to share information that will be helpful to entrepreneurs and business owners and managers, and to get that information out as efficiently as I can. And then, let the ecosystem benefit from it.