In Aviad Meitar’s book, An Unimaginable Journey: How Pepsi Beat the Odds in Romania, he recounts his incredible experience in launching, building and selling the Pepsi business in Romania. His focus is on the business lessons and personal highs and lows (mostly highs) of that experience. Although he is also a lawyer (non-practicing), the book does not delve into the legal lessons of our journey.
As the General Counsel of Pepsi Romania from 1991-2006, here are the top 10 legal lessons that I learned, which I regularly have the chance to apply in current representations. Many of these lessons can be gleaned from the stories presented in Aviad’s book.
1. Control the draft – you get countless opportunities to impact the deal in ways that you never could if you merely commented on the other side’s draft.
- See my blog post entitled “Control Freak“.
2. Contracts matter, including so-called boilerplate – yes, it is true that contracts are often put in a drawer and not looked at for long periods of time; but very often, eventually, significant business and economic rights or obligations will flow from just a few words in a contract – and you will be glad if sufficient thought was given to those specific words at the time the contract was negotiated.
- See, for example, my blog post about “The ‘Notices’ Provision“.
3. People matter more than contracts – the value of the relationship established by a contract, and the ease of working with the contract over time, depend more on the quality and intentions of the people on both sides than on the precise terms of the contract. One key thing to evaluate during the contract negotiations is your sense of the other party’s style and character, which are likely to impact you in the future – for better or worse.
4. In negotiating with people from another country or region, don’t be overly critical of their system – for every outrageous law or business practice in their country or region, you can think of an outrageous law or business practice in your home area. This is a good exercise to avoid ‘getting on your high horse’, which is important for building trust and understanding with your negotiation partner.
5. If you’re building a business around someone else’s brand or technology, make sure you have strong, long-term rights – reduce the risk of losing a business or technology into which you’ve invested enormous amounts of time and money.
6. Always play by your own (high) rules of ethics and legality, or don’t play – the excuse that “everyone here does it” is neither a justification nor will it be a good defense in the press or the courts if bad behavior comes out. Operating with high integrity occasionally has a short-term cost but is by far the better long-term strategy.
7. In negotiating with people from another country (especially with a different primary language), don’t forget that understanding each other’s words is not the same as understanding each other’s meanings – the opportunities for misunderstandings, both in literal meaning and in context, are countless. Effective communication takes patience, double- and triple-checking meaning, and flexibility to correct misunderstandings once discovered.
8. What you don’t think of or don’t know can be as important as what you do think of and do know – it’s critical to constantly expand your horizons in thinking about legal opportunities and risks. The most valuable or most costly ones may be overlooked if you do not spend dedicated time trying to ‘think outside the box’.
- See, for example, my blog post entitled “The Taxman Always Rings Twice‘.
9. The worst compromise can be better than the best dispute – except in rare cases, the management distraction and dollar cost of a dispute is too great; and no one says you’re guaranteed to win anyway. It is rarely a good idea to pursue litigation out of principle; rather, litigation should be pursued only if it is expected to yield a good economic return on its ‘fully loaded’ costs.
10. At the beginning, plan for the end – it is sometimes awkward to talk about the end when you’re negotiating the beginning, but all things – good and bad – come to an end. The long-term value of a relationship often depends as much on your rights on ‘exit’ as it does on ‘entrance’ and throughout the term. Make sure to create a setting in which you can exit well.
- See my blog post called “Joint Venture Tips“.