Outside-counsel-dependent teams

Keeping the first read in-house.

You are a small team, or the whole department, and the exceptions go to outside counsel at an hourly rate. The draft arrives at 11 and the call is at 3. Leela takes the first read, returns the issues ranked by what they cost, the redline, and the two or three points that need a lawyer's judgment, so what goes to outside counsel is the question, not the document.

Leela Received. I am checking the side letter against the executed term sheet. 11:11 AM

7 provisions checked against the term sheet: 2 agreed, 1 narrower, 4 not agreed

Dear Renata

Seven provisions. Two were agreed: the observer seat at paragraph 1, which matches term sheet section 6 including the threshold, and the pro rata right at paragraph 5. One was agreed in a narrower form: paragraph 3 asks for monthly management accounts, where term sheet section 8 provides quarterly. Four were never agreed: a fixed $2,000,000 co-invest right at paragraph 2, where the term sheet grants pro rata only; an MFN election at paragraph 4, which appears nowhere in the term sheet; a consent right over new debt at paragraph 6; and an information right over the subsidiaries at paragraph 7.

In order of cost, the co-invest right and the MFN are the ones to refuse; the consent right can be traded for a threshold; the subsidiary information right can be accepted. Two of the four belong in the investor rights agreement rather than a side letter, and the memo says which. You can reply to Northstar's counsel from the memo without a call.

Leela

W Northstar side letter - conformance memo.docx49 KB

The issues list before the call

The draft read in minutes, the issues ranked by what they cost, and the two or three points that need a lawyer's judgment separated from the ones that do not.

A playbook in an afternoon

A page in an email is enough, or the five agreements you have signed. She drafts the playbook from them, with the clause each position was taken from.

What goes to outside counsel

The question, with the clause quoted and the options stated, rather than the whole document at an hourly rate.

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