Concierge Outside Counsel: Compliance, Contracts, and Keeping Clients Deal-Ready

Katya Valasek:

We're joined today by Yuliya Flynn, a partner at a small business law firm who got her first law degree in Kazakhstan and an additional law degree in the U.S. When you came here nearly 20 years ago, you had your eyes on anti-bribery compliance. Did business and the movement of money interest you even as a kid?

Yuliya Flynn:

When I came to the United States, I was focusing primarily on anti-bribery research. And when I came to the United States, I intended to continue the same focus on research. However, having spent about a year in the United States, I realized that business was a bit more attractive to me.

I always say I'm an entrepreneur at heart, and having business skills and acumen is something I really wanted to expand and grow. So having spent some time in a law school in the United States, I started looking at movement of money, as you called it, a little bit differently. And I realized that the definition of bribery can have different aspects from a cultural perspective. And in some cultures, it was more of a norm than a violation. I'm not endorsing that it is right, but I think I just started looking at this a bit more open-mindedly. But going back to the movement of money, I think my preference was to start focusing on business and how businesses make profit, how they earn revenue, how they grow.

Katya Valasek:

So if we jump forward to your first job at a law firm, this was a few years after you graduated because you had initially been doing securities compliance in-house. And when you were in-house, you were doing a lot of research and writing policies but not practicing law in the traditional sense. The job you took at a firm was at a boutique with a lawyer title. What were some key differences between these first two roles?

Yuliya Flynn:

So the initial adjustment between the in-house position and the law firm position was being able to think on your feet and able to switch from task to task, from client to client quickly. When you are in-house in an operation, you primarily focus on one client. You essentially report to the same person.

In a law firm setting, the tasks differ and sometimes they may even produce different results or outcomes depending on the client and the industry your client is in. What I mean by that, if you have a, let's say, a gas station, it could be one set of rules and compliance versus a healthcare, which has a whole different set of rules and compliance. And so the answers may vary very much from one client to another.

But in terms of difference, when you're in a compliance in-house, everyone in the corporation looks at you as a, traditionally as a no department, right? Compliance personnel usually has bad news. Not always, but frequently that's how I was perceived in the corporation because they all wanted to do a lot of creative things and I kept saying no. In the law firm setting, it's a little bit different because you have, you can employ a bit more creativity, especially in my firm where it was all about transactional law, corporate mergers acquisitions. Generally, that's viewed more of a yes or kind of a fun part of law. You don't have to give the bad news.

Katya Valasek:

And when you started at the law firm, what practice areas were you focused on?

Yuliya Flynn:

Primarily, it was mergers and acquisitions, corporate for everything from formation to succession planning. And when I say corporate work, it kind of was a broad term. Business law, corporate law is usually a very broad area of law.

But generally, it was everything from forming a business to exiting a business, whether it's a succession plan, sale, like merger and acquisition. It was in the family or just selling to a third party. Everything in between we touched on was hiring people, firing people, negotiating leases, expanding.

Katya Valasek:

So spoiler alert, you're now doing the same kind of work, but at your own firm. How did you come to realize that it was time for you to be the one in charge?

Yuliya Flynn:

For me, it was an interesting path. I'm actually currently in partnership with my very first employer in a law firm setting. So my very first boss that hired me as a junior associate is now my business partner. And we went through sort of an unconventional path, perhaps. I worked for him for a long time. He was one of the best mentors I could have.

I took a break for a couple of years and went away to work for another firm, which I think in retrospect was a good experience for me to step away and see what else is out there, how different firms practice law differently. And at some point I realized that my book of business was growing and I didn't have to be dependent on others to do it or to make sufficient hours and revenue to survive. And I realized that it was time for me to test my entrepreneurial skills in real practice and actually go on my own and open my own firm.

At first, it was just me and an associate. And shortly after, I was joined by my former boss, current business partner.

Katya Valasek:

I think it is so fun that you brought in the first person who hired you when you started your own firm. How did you assess whether that was going to be a good fit?

Yuliya Flynn:

I think for me, it was the byproduct of my mentorship. My partner was the best mentor I could have. I learned a tremendous amount from him. And when it came up whether to have any business partners and then secondly, if so, who would the candidate, the best person be? I couldn't help but to think that it would be amazing to have Roger Samek, my partner, as my business partner, because I learned so much. I knew how much he knew. I also knew how much people trust him and clients come back to him all the time. And I think it's that kind of a cozy feeling. I think it's the same really when you hire someone. But certainly when you partner with someone, you have to have that gut feeling. It's not just about what's on paper and on the resume.

Katya Valasek:

I want to dig into the actual legal work that you're doing now. You help get and keep a business's legal ducks in a row. You call this concierge outside counsel. On the show, we've also referred to it as outside-inside counsel. But regardless of what you call it, what does this sort of work entail?

Yuliya Flynn:

I think there are multiple aspects to interpreting what business and corporate practice of law is. Again, I referenced previously, it really is touches everything from inception of a business. Sometimes it's even inception of a business idea.

We have clients who come in and they have an idea of maybe designing a product and it starts that early. And we always say the earlier you start, the better, of course, because you can be the most compliant. They have the cleanest corporate papers and everything.

It inevitably always runs into a budget because startups don't have endless monies to spend on lawyers or accountants. So we usually try to be sensitive to the degree of compliance we impose or advise clients to have. But it really starts from inception to succession, sometimes just shutting down the business. Sometimes it's going bankrupt. Sometimes it's selling to a multi-billion company and sometimes just passing it on to your family and employees. But I always talk about succession planning as a result of what you plant as your seeds in legal compliance from the beginning. So the more we do from the inception, the better or easier and least expensive it will be at the end.

Katya Valasek:

So you have talked about the beginning. You've talked about the end. What happens in the middle?

What sort of work are you doing for a business that is just existing but wanting your legal guidance?

Yuliya Flynn:

On any given day, I may do 10 different things for either the same or different clients. And it can start with something like we want to hire a new person. So what do we do?

Let's put together an employment agreement to I'm getting a letter of intent to sell my business, please help. I want to have this deal, but we don't have our ducks in order.

And then we jump on and try to figure out what's the most efficient way to get ready. But in general, I think I have to say at least two types of projects. Those that are kind of emergency situation or one off where people come in and they have some emergency to deal with, let's say, and vice versa. Somebody wants to quit and we need to send some kind of a severance agreement or something like that. So those are one off projects that we do and then we move on to the next client. And then there are regular compliance projects that are kind of a part of our ongoing effort to keep the clients ready for the next phase, whatever that is for them. And that would include reviewing corporate documents, reviewing contracts they sign. It depends on the client's budgets. So some clients don't want to have lawyers review every contract they sign because it can get expensive. And some clients have a standard process. They don't sign anything until we look at the contract. And then, of course, we always have a conversation that how much leverage do we have? How much can we push back on the provisions? Is this a negotiable contract or just do you just want to know the risks? But we really can't negotiate it. But in that kind of an ongoing compliance work, we have like a standard package. We go through the list, make sure everything that we absolutely must have, we have. And then from there, it gets customized depending on the client.

But it really mirrors the work one would do in-house, except that we do it for multiple clients and it's more of a concierge or on-demand. Clients decide when they want to bring us in.

Katya Valasek:

So I want to go back to that emergency situation you mentioned where someone needs to leave. You need to work on severance paperwork. In circumstances like that, does it matter how much you understand about the business or the circumstances behind when someone is leaving? Or do you just live in the law and work purely from that framework?

Yuliya Flynn:

I think to be a really good corporate and business counsel, you have to understand the industries you work in. There is a general aspect. Yes, most of us business lawyers can review a contract and we know that there are some provisions that just must have or usually are included. But there are a lot of contracts that are industry specific. I would use health care as a great example for that. There's just so many compliance checklists that you have to go through. And it really depends on not only whether it's health care industry, but what kind of health care business it is. You know, a contract for a hospital is not going to be the same as a contract for urgent care or a pharmacy. And so I think having the background understanding of one, the industry and two, how the business works is really important for a business lawyer. Most lawyers go to law school. They come out. They've never practiced their own business. They've been trained to be a good lawyer, maybe even had great internships to practice law. But understanding how businesses work is a really completely different animal. The best thing is to have a hands on experience, because I think that really helps us lawyers to speak the same language with clients who come to us and they view everything from a business perspective. They want fast, but also efficient and best solution for their business. And when the law says, no, you can't do it, it's it's easy to say no. But being creative and knowing how operationally you can still implement a no into the business is important.

Katya Valasek:

One of the things you mentioned earlier is that you are aware that when a new business comes to you, the budget is going to be an important factor in the work that you do, especially if they are, as you said earlier, just coming to you with an idea for a product. But regardless of budget, when you get a new client, do you still do an audit to get a sense of what issues may be on the horizon and then bring to them some top level concerns? Or do you let them steer the ship in terms of asking for what they want you to do?

Yuliya Flynn:

Yes, for our firm, we look at their business and we say, OK, the immediate issue is to address your emergency. But let's step back and make sure that in the process we don't miss some other things that are obvious that may result in more emergencies. But I do not force my clients to address them right away.

I definitely do understand that sometimes budgets are constrained, sometimes time is constrained. It's not necessarily even about money. There are other things that are happening in the company and they have to address it first.

But we usually highlight all the issues or red flags. And then I would say most of the times I would put it on my calendar or my internal memory calendar to follow up with this client maybe in a month or two if I don't hear back or don't see an action taken on the risk we highlighted.

Katya Valasek:

Are you always on the lookout for changes in the law, changes in regulation, changes in policy that are going to impact your clients?

Yuliya Flynn:

I try to stay on top of changes, regulatory changes. Maybe just to take a little step back, when we talk about compliance, at least in my perspective, there are at least three types of compliance and we try to stay on top of all three of them. There is a legal compliance with law, then there is a contractual compliance.

There are maybe provisions in the contract that we agreed to or the client agreed to that also have to be complied with. And I'm not talking about the basic stuff about keeping records, for example, for audit. But there may be some benchmarks or thresholds for revenue production or something like that.

And so those are a little bit harder to, of course, stay in touch with because the client controls the data and information. But even for those, we usually have some kind of a mechanism or a reminder or we leave highlighted for the clients to make sure that they stay compliant. And then there's a third bucket of compliance and that is internal policies or maybe corporate initiatives that are not as consequential necessarily because they're internal, but they still could be important, especially depending on the industry you're in.

So in terms of staying on top, so I think for the first level regulatory compliance, we tend to stay on top of and I'm subscribed to some trade associations, emails, newsletters. You know, I try to attend roundtables and meetings to be in the know, to be the first one to know and sometimes maybe even participate in the development of those regulations. But the second and third tier is a little bit more difficult, although we still try to have mechanisms to stay on top of that as well.

Katya Valasek:

So these companies that you're working with as concierge outside counsel, some are growing, some are hoping to wind down, some are just living their best life going with the flow. But you also have a substantial mergers and acquisitions practice or an M&A practice. Can you explain how those practices complement one another?

Yuliya Flynn:

I think the most important is that they do intersect and they complement each other. When I do my M&A transaction, the first thing I start looking at is let's do due diligence and ideally internal and see where's the red flag or where do we have the most hotspot where we have to immediately start addressing. Usually it comes down to contracts, assignments.

You have to deal with third parties, making sure they agree to the sale and all that external pressure. But to avoid that or to prevent any issues, it is really important to invest in compliance. And I always refer to compliance as a kind of a preventative medicine.

If you invest in compliance, then you probably will not address a hot topic issue at the end when you try to sell the business or maybe even the natural flow, something happens. But most of times in the merger and acquisition context, if something was overlooked in the beginning, whether it's a corporate document, not having corporate resolutions or unsigned bylaws, and I can give you a whole list of things, but it may have significant consequences at the end. And I've been involved in transactions where the purchase price is great until we go through due diligence and find a lot of compliance gaps that have to be addressed. And then the purchase price just keeps tanking at that point. And you go from millions of dollars to a million. And that is upsetting.

Katya Valasek:

So because you're building this relationship with your clients as you're advising them in the course of doing business, helping them with compliance, essentially helping them take their preventative medicine. Are you the first person they turn to when they're looking at a merger or acquisition? Or do you sometimes have to persuade them that you're the right person to handle that too?

Yuliya Flynn:

I think for most of my clients, they call me either in advance or just as they are about to start conversations with buyers. Normally clients who use my firm as a concierge in-house counsel would not go look for another M&A client. Sometimes we bring co-counsel if either an industry is very specific or if there's some other matter that's pending. Let's say sometimes there's a litigation pending and we need to bring a litigator on board to work together if there's a sale. So that's when we go outside of just our firm. Our firm does not do litigation. So we usually retain someone or just partner up with existing litigation counsel to work on a M&A transaction together. But, you know, everyone gets a very specialized task. We handle M&A and they handle litigation and we all merge together in a due diligence and then schedules to the mergers and acquisitions agreements. But most of the times, yeah, I would see myself doing the M&A if the client is already existing client.

Katya Valasek:

Do you have outside firms you prefer to work with or do you allow your client to identify the firm or the lawyer they want to work with?

Yuliya Flynn:

I think I actually take this kind of a very liberal approach both when it comes to working within the firm or outside the firm. There are definitely, I think, specialists or I would say even in my firm associates with the best background to handle a task. When it comes to outside counsel, it really is similar. We always look at the best player on the board, not the one that refers to the most business or not the one that's closest, you know, next building or something. It really is who is best suited to handle a particular matter. And then the second issue is always availability because with litigation, it goes in phases. And if the best players can't be available until a month from now, then we have to look at the second best player. We have counsel we work with regularly and we're kind of similar to my business partner and there is a little bit of traction. You know how people work, so it makes it easier if you have more exposure to the same firm. But that wouldn't be the defining factor for me. I always would first go look for the best person or if our client already has one, whether it's another lawyer or actually frequently comes up with accountants. They may be working with an accounting firm, but for a specific task or specific transaction, it may be best to bring a different accountant who has more knowledge in the pharmaceutical industry, for example, than we will recommend. We always will let the client make the final decision, but we'll make our recommendation.

Katya Valasek:

You help your clients structure their businesses. How has that experience impacted how you set up your own business?

Yuliya Flynn:

I think it actually, for me, goes a little bit the other way around. As I mentioned at the outset, I'm naturally entrepreneurial. It was so natural and so interesting to me that I actually decided to go and do an executive MBA program just to take my hands on experiences to the next level. And learn the theory behind it. I think I actually have had the opportunity to have a couple of my own entrepreneurial experiences as separate businesses from the law firm throughout my adult life. So I've started a startup, a business. I've exited. I have negotiated investments and brought the board and built the board of directors. So I've gone kind of in a way, have gone through the same pains my clients go through when they build and operate their businesses.

So I think for me, when I connect with my clients and when we talk business, it's not just talking about legal issues, but it really is business advisory as well as legal advisory. Quite a few of my clients call me sometimes on questions that are completely unrelated to law, but it relates to their business and they want, they almost look at me as maybe an extra board director or advisory director who would give them an unbiased opinion. Or sometimes it's biased in the way that from the compliance perspective, what's the most biased in compliance?

So for me, I frequently translate what I have experienced in building my own businesses to my clients. And then sometimes it's the other way. I look at businesses my clients operate and see and try to bring them into my own practice. I think the example that comes to mind is technology. I see how AI, of course, is dominating the universe right now. And I am attempting to innovate as much as possible within the law firm industry or law firm business model. It's helpful to be connected to a lot of industries through my clients because it kind of helps me to have a versatility in my own experiences with my own firm.

Katya Valasek:

I'm wondering if you do a lot of work with your clients that involve compensation. You referenced earlier that sometimes the emergency calls you get are about severance packages. Did that exposure in your practice shape how you thought about compensating your associates that joined you at the firm?

Yuliya Flynn:

It's a little bit of the other way around. I think we have a model that my business partner has developed a while ago as a compensation plan that I believe works best in the services oriented industry, whether it's legal, medical, other sort of consulting services. And what I generally do is have a few different models for my clients to consider when I advise them on compensation structure.

Frequently, the clients come to us with questions about the best, least expensive way to retain employees. You know, it's a retention plan as well as a compensation plan. And naturally, many clients think that giving employees equity is the way to tie them down. We call it golden handcuffs, keeping them involved and interested. Sometimes it works. It, again, depends on the industry, but sometimes that's not the best answer. And so usually we will schedule a call and go through various permeations of that plan and how one may play out. And then it kind of goes back to succession planning to what happens if equity is the answer, but then it doesn't work out and you have unneeded or unwanted shareholders on the cap table.

So a comp plan usually is complicated. It's one of the most complicated issues to deal with when a compliance or a legal advisory aspect, because it involves regulatory compliance because you have employment laws and employees are subject to great protection. And then you have succession planning that's also important to be taken into consideration. And so in terms of comp structure, it's, you know, money is probably the easiest part of it. You know, deciding on what's market pay, what kind of benefits you can afford as a business is one issue. And that's the easiest part. It's really, it goes back to basically financial statements.

You look at the P&L balance sheet and you can help your clients figure that out. The more complex question becomes the retention. Paying cash or paying wages is an ongoing and kind of a, you know, expected thing. But giving employees choices with equity participation or incentives with equity participation is where it becomes really interesting, but also complicated because you have, at that point you start playing with a board and move things around and say, OK, well, do we tie it to performance benchmarks? Is it performance based on financial output or some kind of other not monetary output?

Katya Valasek:

So you've mentioned succession planning a few times. And speaking of succession planning, we already talked about how after you started your own firm, the person who hired you initially joined as an equity partner. Is that something that you would consider in the future if one of your associates left and opened their own shop?

Yuliya Flynn:

That seems unimaginable. I don't know what would happen if my associate left. And I hope he doesn't hear that because I don't want him to take advantage of that. But I think my goal would be to make my associate never leave. My business partner and I are very mindful of that, very mindful of the talent and how important it is to retain great employees, great associates. And especially in this day and age where so much is happening in the legal industry, really in any industry in the employment world with artificial intelligence. I think having the right people to work with is important. Human aspect will not be replaced by technology. I think for us, looking at associates, we're already contemplating what would it take to turn them into partners. We do want to grow them to the next level. We actually frequently remind them of that.

Katya Valasek:

All lawyers bring their life experiences with them when they go into practice. How do you think your legal education in Kazakhstan impacts the work you do with your clients in the U.S.?

Yuliya Flynn:

I think the United States is such a huge melting pot of different cultures, different nationalities, different languages, that the first thing that comes to mind is its cultural understanding of different clients and how people around the world maybe perceive law compliance or contracts differently. For I think Western world papers mean more than words and maybe in some cultures it's the other way around. And so I think for me, again, the first thing that comes to mind is having grown in a different culture and Kazakhstan is also a Muslim country.

It's that different cultural aspect that helps me interpret and sometimes understand what my clients really mean versus what they say. And I think just a kind of a global aspect being from a different country, sometimes it can be challenging because people perceive that you are from outside, you know, you may not know enough or whatever the perception would be. And sometimes people look at it differently that if you came from another country and have overcome the challenges that were put in front of you to earn the right to practice law in this country, that frequently is viewed as a plus or a positive because you've had to go an extra mile. So I try to find some balance in those opinions and just forge ahead without overthinking it.

Katya Valasek:

I have one last question for you. What is it about the work that you do that you find so interesting?

Yuliya Flynn:

What comes to mind is the versatility and ability to touch others' lives in a meaningful way. And when I say others' life, it's my clients, of course. Most of the clients we serve are small to medium sized businesses. We rarely work with large public corporations. Usually it's not listed on securities and exchange board. And when you work with someone who started their business and put a lot of time, effort and sweat equity into it and you help them to succeed and grow to the next level, hopefully sell the business successfully, at the end of the day, I think I personally have more satisfaction than maybe even the clients themselves. They sell and they look at it from the monetary perspective. They did well for me to be able to touch someone, to contribute to their success. That's the most valuable thing I take from my practice law. That makes me come back to it every day.