Infrastructure Services Law in Support of Business Process Management
Strong, well-conceived infrastructures provide the indispensable launching pad for today’s successful market strategies: niche product positioning, focus on core competencies to maximize comparative advantage and investor value, and aggressive management of risks and liabilities. The outsourcing lawyers who have contributed to this website view themselves as “Infrastructure Engineers,” working collaboratively with clients and their other advisors, in pursuit of our clients’ efficiency and competitiveness.
Your humble “infrastructure services lawyer” (aka BPM lawyer) concentrates on providing legal services in support of business, financial and real estate infrastructures and sophisticated corporate and commercial transactions. Their goal is to assist the new “virtual” multi-national business provide “seamless” delivery of goods and value-added services. In doing so, your outsourcing lawyers form part of the client’s own “outsourced” infrastructure.
Infrastructure Life Cycles:
As with any human endeavor, infrastructures have their own life cycles.
An infrastructure’s design should be established after considering alternatives within the current and foreseeable commercial, financial, legal, regulatory and tax environments. The design phase requires an interweaving of client intentions with the many strands of these sometimes conflicting, frequently hostile, environments. This phase ends with activation of the structures for their intended purposes.
Once activated, the client’s enterprise is ready for the operating phase. In this phase, we advise and assist in the core transactions for which the enterprise was founded. This includes new product and service launches, the negotiation of complex business and investment transactions and attention to risk management.
Infrastructures must change to meet competitive and legal challenges to the status quo. Adaptation may involve, for example, “business process reengineering,” outsourcing, new alliances, divestitures and other restructuring and infusion of additional capital. Through creative, tailored strategies, we help plan and implement the way to achieve cost benefits, operating efficiencies and access to new adaptive opportunities.
Conflict and Renaissance.
Like an old key in a worn lock, an originally balanced infrastructure may need replacement or rejuvenation. Aside from litigation, bankruptcy and change of management or ownership, a relationship may require renegotiation or abandonment of fundamental relationships that have proven unequal, antiquated in light of evolving environments, or otherwise unable to respond to competitive challenges. In this phase, we assist our clients in structuring, negotiating and closing transactions for the renewal of the enterprise and any personal transitions of its individual participants.
They come in many legal “sizes and shapes.” The classic legal taxonomy of infrastructures includes corporate, commercial, financial, tax, intellectual property, services and real estate “vehicles.”
Corporate law was born of a legislative intention to limit liability. With the recent addition of American limited liability companies to the variety of options for business structures, investors and managers can easily implement strategies for accomplishing this goal. They will make important choices in selecting a corporate structure.
Capital is the grease of a market economy. Financial structures include equity and debt, special allocations of risks and resulting shares of profits and losses, leasing, supplier or seller credits, asset-backed loans and unsecured loans, options, incentive compensation for managers and other flexible structures. Capital can be pooled (in regulated investment companies or in “non-mutual fund” investment pools), or provided by affiliated parties. Transborder flows of goods, services and capital require appropriate tax and financial planning.
Intangible Assets; Intellectual Property.
The value of a business, sometimes called its “franchise,” reflects the strength of its intangible assets. Such intangibles extend beyond intellectual property (patents, copyrights, trade secrets, trademarks, computer software, etc.) and include financial engineering (corporate finance, pooled asset partnerships, corporate restructuring, mergers and acquisitions), corporate structures and human resource profiles. In the global services economy, businesses depend upon legal and contractual “infrastructures” for the creation, protection, financing, exploitation, joint venturing, licensing and sale of these ever-changing business assets.
Effective management of managers and employees requires structures for legal and tax compliance, recruitment, compensation (including incentives and benefits), supervision, training, promotion and termination. Yet, more and more, as enterprises are disaggregating and forming alliances with others, clients focus on outsourcing “non-core” business functions. With increasing outsourcing of business processes to “vicarious” service providers, the design of vicarious management structures and liability containment merits careful attention.
Real estate has its own infrastructures, beyond bricks and mortar. Land acquisition, zoning, construction, management, leasing and sales activities, and environmental compliance, are the obvious infrastructural transactions. More complex issues involve financing, tax planning (particularly for nonresident alien or foreign corporate investors) and restructuring of ownership in light of financial or managerial challenges.
Commercial infrastructures in international trade and investment reflect diverging cultural, political, economic and legal systems. The interaction of such comparative systems underpins productive global business transactions. The successful “engineering” of such transactions — through structuring, negotiation and documentation — requires not only a substantive understanding of several particular legal disciplines. It also requires a synthesis of potentially competing disciplines within a framework of national and supranational law, including concepts such as extraterritorial jurisdiction, conflicts of law, treaties, tax conventions and regional trade pacts.