Chapter B5
Rule 5: Organization and Management
If you manage anything at all – especially a kitchen – I don’t have to sell this rule to you. You may be the hottest cook in town and you may be able to put together the finest parties, but your success probably doesn’t depend on your exotic recipes or your eclectic cuisine. More likely, it depends on your ability to get fresh meat and vegetables from the market, cut them efficiently, cook food and store it afresh till it’s time to serve it hot. Meanwhile, someone has to keep the soda and the water and the ice and the sliced lemons and who knows what else besides flowing smoothly to the bar. A good party is about organization and management, not exotica. If the food and drink fail to make the cut, it doesn’t matter how well chosen the menu mix is. Every party succeeds, or fails, in that space between concept and execution.
This is equally true of business ventures. You just can’t make a project happen unless you put in the human machinery necessary to bring every element of it together. This is also true of litigation. If you cut out the arty flourishes, the art of litigation is ultimately the art of employing all available resources in the most efficient way, in the widest sense. It is the art of putting together an organization that can deliver, a command control mechanism that can direct delivery, and the logistic support by which the delivery is optimized. What do I mean by this?
First, and before everything else, you need resources to fight legal wars. That means many things. You need money, you need executives, you need lawyers, you need law officers, company secretaries and runners, you need telephones, cars, paper, photocopier… okay, you got the picture. If you don’t have the resources, you can either go get them or you can go home and bury your nose in the television. There is no third way. This is pretty obvious so far and I won’t labor the point.
The larger reality is that you need to have organization and management to use these resources: not used badly, but used well, optimally, to the limit of their capacity. Organization and management is the grease that lubricates the machine, the difference between a group of harmoniously moving parts and a burnout. Ultimately, this is about people. It’s not about any people either: it has to be the right people. You cannot assume that if you have a resource, you will be able to find a way to use it well. If you don’t have the right resource, you have nothing.
After 40 years in the legal business, I have no hesitation concluding that most commercial outfits don’t have it. They may have the organization and the management to sell potato chips or put up a cracker project, but that organization and management is not automatically good for fighting court cases. You don’t take a Maruti 800 to the base camp of Mt. Kailas and you don’t take a Humvee to the narrow lanes of Johri Bazaar in the old town of whatever city you live in. There is a time and place for everything. Many technical people simply crack up when they have to deal with highly nuanced non-linear, non-quantifiable variables embedded in litigation. Many management people simply can’t evaluate high stake risks in the contexts in which they operate in their daily life. How often have I seen this: you ask someone from the sales department to find out what the competition is doing? A day later, he is back with all the intelligence on what everyone else is doing plus how to deal with it. His mind works flawlessly when it comes to dealing with the dealer and the customer. He is even better at figuring out how to manipulate both. But if a stay order comes along limiting his ability to sell or make deals with dealers or push certain products, he goes into freeze frame. You just can’t thaw him out. He’s a great sales man, but he’s the wrong man in a hostile legal environment. The trick in an upcoming litigation is to have the organization that is able to deal with dog fights on mean street.
While we are on the subject, let me also add that the rule on organization extends to your lawyer too. The halos we put around law and lawyers take attention away from the fact that litigation is 90% logistics, 9% legal training and 1% inspired thinking. Not everyone is prepared to agree with this. Predictably, lawyers who don’t agree with this have the worst organizations and the poorest management. As a general proposition, Indian lawyers are particularly bad at this. I first had independent verification of this a hundred times over the decades whenever clients complain about the skewed priorities of Indian lawyers. So many Indian lawyers simply didn’t understand that clients are customers to be managed as a business. “I am a revenue stream for you”, one such customer said to me once. “You spent too much time confusing clients with complex and conflicting legal percepts, enmeshing us in detail and chaos. All I want is a seamless service. If you live in a society with logistic problems, you have to build redundancy into your system. If you don’t have the organization to deliver the service I need, your problem will become my problem. I don’t pay you to buy your problem”. Twenty years after he told me this, I see that this is still true for a great many Indian lawyers.
In short, the business person spoiling for a fight has to make sure that he has quality organization and management in two different places: his own company and his lawyer’s office. If either is off the pace, basically, he runs the risk of losing the plot. But then, how does he know if the organization and management can keep the pace? I use three simple sub rules to make my evaluation: one Organization, two Command and Control, and three Logistics. Let us look at each in turn.
(1) The Organization
The Organization you need must bring together a group of people who between them have the skill and experience necessary to take care of litigation. There are several aspects to this. First, it’s about people with skills. Litigation requires a variety of skills to come together as part of a team. Even at its simplest, you need an internal company man who understands the basics of court cases. He needs to know how to support court cases: he should know where to find the paperwork in the company’s office. He has to know how to deal with his lawyer. He has to intelligently react to his lawyer’s requirements and he has to have a general idea about what is going on in the litigation. What you don’t need is an ass who doesn’t know litigation, the courts or what is lawyer is taking about.
When you get to the high stakes complex multiple case battles, organization gets a whole lot more complex. Organizational failures also become more pronounced. This is when you end up with a situation when you tell one court one thing, the other court in a different city the opposite thing, and get to dig your grave in both for lying! This is when activities are not planned in advance and frantic last-minute deadline-beating activities lead to blunders. In every complex litigation, where the theater of battle can spread across a lot of courts, you have to have an efficient organization everywhere.
Let’s go back to our Weizmann case and see what kind of organization was put together to fight the upcoming war.
The Weizmann case
Recall the Weizmann battle, the classic confrontation between a large global majority shareholder and a small but nimble Indian promoter shareholder. Weizmann discovered that Gupta had defalcating funds and faked the accounts of this publicly listed company. Weizmann had stripped the promoter group of their executive powers. When Weizmann convened a shareholders meeting to approve key resolutions, Gupta convinced a court to stay the meeting. Although the stay was later vacated, this was a serious management failure, putting the company back by months. Weizmann decided then that it will never allow another stay order to ever be passed against the company. It created the perfect litigation oriented organization, even if it bordered on overkill.
The organization needed depended on what and where the battles were expected to be fought. Here is an analysis of the thinking that went into the establishment of the organization.
(a) The Joint Venture Agreement was executed at Delhi and BIFR had its bench at Delhi. Gupta could file a case in any court in Delhi – trial courts and high court – and Weizmann needed a representative everywhere. This sounds like a logistic mess but it is not. Weizmann’s Law Firm called up a lawyer in each court and gave token advances to their clerks to watch new filings. The Law Firm promised these clerks that the first man to spot a new case against Weizmann would get a hefty reward.
(b) Since Gupta could always go back to BIFR with a new story and ask for a new protective order, one man was put in charge of watching for new filings in BIFR.
(c) Weizmann had its offices in a north Indian hill state. The District Court and the High Court in this state also had to be watched. Two more court clerks were put on that job.
(d) Finally, since Gupta’s real weapon was to go to the Company Law Board (CLB) and claim his rights as a minority shareholder had been trampled on, one court clerk was told to watch the filing register there on a daily basis.
In practice, the cost was minimal. One court clerk covered all trail courts in Delhi, a second one covered CLB and BIFR. A third clerk watched all courts in the hill state where Weizmann had its headquarters. In fairness, it was no work at all. These three court clerks simply contacted their local counterparts and set up their own intelligence networks. The monthly cost of this intelligence network was negligible.
As the action rolled on, this system never failed. Gupta tried three more times to get stay orders and not once did he sneak in a case. On each occasion, Weizmann’s lawyers were always present to resist a court order.
The organization you set up depends on the objectives you have. All Weizmann wanted was to stop the next potential stay order. All it needed was court clerks who could spot incoming cases quickly and lawyers who could appear in those courts within the hour. If the objectives had been different, the organization no doubt would have been different too.
The key thing to bear in mind is that this organization must have instant communication channels between them. It doesn’t help to spot a case but then be unable to find your lawyer. It doesn’t help to have the lawyer if he can’t talk to the company representative immediately. It doesn’t help to find the company representative if the company representative doesn’t know how to get a quick management decision. Connectivity is the key to the effectiveness of the organization. This connectivity must extend to everyone who is contributing to the litigation effort: finance, legal department, sales and marketing, corporate controller, the company secretary, even the company regional branches who are supporting the litigation. That principle is also good for the lawyers. The legal team must have a front-end interface, a partner-in-charge and responsible for the litigation, and a couple of identified juniors who do the foot soldier’s job. The smart client makes sure this information is down on paper, complete with email addresses and mobile numbers.
But that is not enough. Connectivity isn’t just about a bunch of people talking to each other if they don’t actually know what to do. Connectivity has to be effective and that means it must interface decision makers. You need an effective Command and Control structure to run the organization. To that we now turn.
(2) Command and Control
Command and Control is all about power structures and decision-making trees. I don’t conceive of Command and Control as a separate head quarter that sits somewhere else and tells the company what to do. Command and control is built into the structure of every corporate entity. Power and responsibility is disbursed throughout the entity and people at different levels have different levels of autonomy. As you go up the food chain, individuals have increasing levels of powers and responsibility: they command more and they are controlled by fewer. The main thing with organizations is to make sure that everyone understands what the Command and Control structure is. Everyone, and that includes the big boss himself, must also understand the need to progressively delegate powers down the food chain.
Thus, the Managing Director needs to take policy decision, perhaps approve strategy, but he does not need to approve every taxi hired to take a company official to the lawyer’s office at 6.00 AM for a pre-hearing conference. The Company Secretary has to keep all his corporate records consistent with the Company’s position in court but he can’t demand that his records be the final test of what the company says in court. The CFO needs to control cost but this job doesn’t extend to unnecessarily stalling payments and upsetting service providers. The trick is for everyone to know what their job is, what they can and cannot do and what their paramount objectives are. Fundamentally, they have to know where they can get off their ego trips!
The Command and Control structure is efficient only if it is pragmatic. If you can’t get a case filed because you couldn’t authorize the payment without the signature of someone who is not back in India for two weeks, you may want to ask yourself if you have your marbles quite where they belong. Too many legal actions are lost for the silliest of reasons and many of them proceed from a lack of delegation of power and control.
Let us look at how Command and Control was established in the Weizmann case.
The Weizmann case
The Weizmann litigation was led by an independent consultant, a qualified company secretary who ran his own consulting practice. This was Weizmann’s choice. Since Weizmann’s skill lay in running the business, they decided to outsource the running of the legal cases to an independent Company Secretary. The independent company secretary reported to the shareholder in Europe, not the Indian company. That was smart thinking. This war was ultimately a battle for control of the company between two shareholders. It did not make sense for local business people to drive the litigation. The litigation could not be run by expats either: they simply didn’t have the tools to take practical decisions. Indeed, they didn’t even have the vocabulary to understand what Indian lawyers said from time to time!
In the lawyer group, a mature litigation solicitor sat at the apex of the pyramid, pulling all the legal strings. He did the ideating and took the strategic calls, and he commanded two team tagging front end partner level lawyers who ran the war on the ground. The solicitor did not take to the battlefield, but he always knew what was going on. The front ending partners had a lot of autonomy in the field. It was their job to react quickly and they did so when necessary, without waiting for headquarters to clear this or that. So long as the strategy was clear, they knew what needed doing, and they did it without interference. All outstation and third-party external lawyers and clerks and consultants reported to the front ending Partners, never to the Solicitor.
At the level of the outsourced external help, each potential battle location had one senior and one very junior lawyer on retainer. The junior was hired to do the leg work and the senior to do the in-court work. The junior could manage his own court clerk, for which he received a small monthly retainer.
Bear in mind that Gupta extracted an order because Weizmann had no Command and Control structure in place. It wasn’t that Weizmann was short of legal help. Weizmann employed a top-quality corporate law firm who had written their joint venture documentation. They could explain the contract but it wasn’t part of their mandate to solve the ensuing litigation problem. Weizmann also had a litigation law firm in place but they were not mandated to engage local lawyers. Weizmann started out by engaging its own local lawyers and then recommending them to the litigation law firm. These Weizmann recommended local lawyers identified Weizmann management as the client but found themselves receiving instructions from an external law firm even as the company was silent. They had no idea how seriously to take these instructions. They did nothing, with disastrous results. It could not have been otherwise. There was no structure by which intelligence could be gathered and pushed through to the decision-makers for action. There was no clear understanding of the level at which any decision would be taken. The company and its consultants were simply not geared up to fight a war. Even if a local lawyer had found out that Gupta had applied for a stay order, he didn’t know who to talk to. There was no way to deal with the crises.
“Political” instability is the bugbear of every organization. Companies are often ridden by factional feuds and seniority disputes. So are Law Firms. Any effort to set up a team that does not also specify command and control structures is going to look like a rural wrestlers’ mud pit. This means a messy litigation. Even if you don’t lose, you are going to end up with a legal team at war with itself. That is not smart management.
Not that smart Command and Control management ends the story. You can have the sexiest organization you ever saw, and you can have a Command and Control structure slicker than a Teflon coated politician. Still, if you don’t give them the tools to do the job, the axe man cometh for your neck. It’s to these tools – logistics – that we turn next.
(3) Logistics
A European client recently told me we Indians are so philosophical we have no common sense! I was not offended because he took me around the business class lounge of Delhi’s spanking new airport and showed me exactly why it was a shoddy piece of work. It’s true: we can’t even see the details leave alone deal with them.
I find this everywhere, especially in my world of legal service. It seems to me that logistics are critically underestimated because the need for logistics is insufficiently recognized. We blunder along, like an Indian wedding, and eventually stumble into a happy ending heralded by the wailing of the bride as she departs with her husband. As often though, especially when we deal with commonwealth games, the ending is less than happy. We struggle with the idea that it’s no use having a great idea which you cannot implement, because you can’t manage the logistics of it. We will set up a large organization, we will specify the Command and Control structure but we will then forget to provide the cars, the phones, the laptops, the stationary and the thousands of other little detail things. We never seem to do forward-planning down to the minute details and we never write down standard operating procedures. When a bunch of Pakistani terrorists attacked Bombay, it took our crack counter terrorist team half a day to react. Every day on the Gurgaon highway a short distance from my office, a traffic tragedy unfolds. Day after day, the administration does not put in place the logistic support necessary to deal with it. Victims die bleeding to death and onlookers peer at them in a macabre zoo-like environment. This is our national culture.
Unfortunately, the national culture does nothing for you when you end up in a legal war. It seems that in India, we address logistic issues after we have made a decision to deploy: logistics neither precede deployment nor does the decision to deploy depend on whether we have the logistics to deploy. This is suicidal contrarianism. To decide whether you should fight a war, you have to know if you have the logistic support to do it. You cannot first decide to fight a war and then find that you haven’t the logistic support to actually do it. Think about the average stay order attempt. If your enemy makes a move and you catch it, you have to be in court within one hour. Imagine losing the case because your in-house lawyer doesn’t have a car, is not authorized to hire a taxi and can’t reach court. It is worse if he does get to the court but your lawyer is clueless about what to do. No doubt, he will jump up in a desperate attempt to stop a stay order, but if he is not ready with very good reason why the court should do nothing, he would be better off not getting up at all. His second-best option would be to buy time. The judge will at best postpone the case by a day to allow your lawyer to prepare his reply. If your lawyer still can’t react in that one day, you’re going to face a really tough order.
Let us now return to the Weizmann case one last time in a very long time to see how logistics are handled.
The Weizmann case
Following the fiasco of the EGM, Weizmann spent a lot of time and money to get the stay order vacated. They decided that they will now pay for the Organization and Management necessary to make sure this never happened again. The company then issued public notice for a new shareholders meeting. Sure enough, Gupta was at his games again.
At this stage, Gupta knew that he couldn’t go and get a stay for himself. He now persuaded a marginal shareholder of the company to go to court instead. This new case claimed that a shareholders meeting should not be held because its proposed resolutions violated his rights as a minority shareholder. It was rubbish of course but a lot of rubbish gets fair mileage at district court levels. The local court clerk spotted this matter as soon as it was filed about 3.00 PM on the day before the shareholder’s meeting. He immediately informed the local lawyer who promptly told the court that this issue had already been rejected by another court. He took a day’s time to show the paperwork.
Within the hour, he then electronically transmitted the case papers to Delhi where Weizmann’s Law Firm prepared a defense overnight. By dawn next day, they had transmitted the entire defense back, compete with the case law. In this time, one front end Partner also traveled overnight and reached the office of the local lawyer. The case was called at 10 am, argued for less than five minutes and dismissed out of hand. The shareholder meeting was held without interruption.
It wasn’t smart lawyering that won the day. It was the ability to work overnight, overwork some IT infrastructure and travel at short notice. In a country with a lot of power cuts and poor connectivity, it was logistics that won the day.
It is important to always bear in mind that litigation is largely a method act. If you know the method, you don’t have to do too much maverick acting. That apart, brilliance finds an audience only when the stage has been set for it. After all, if you are battling with the air conditioning in the desert summer, sweat dripping down from your brow making little puddles on your Agenda papers, your ball pen leaking all over your starched designer shirt, you are not going to have a great deal of energy to devote to the Next Big Idea.