Narrator (00:00:10) - Welcome back to Bringing New Ideas to Life and part two of the discussion between Alex McPherson of Ignition Law and Steve Cleverly, CEO of Center. This time around, Alex and Steve will be discussing more about the timing and types of legal support that start up and scale ups typically require ignition laws, own B Corp certification journey, and the common pitfalls which you can try to avoid during scaling up a business. So we hope you enjoy this episode and please do get in touch with us if you have any questions. Enjoy.

Steve (00:00:44) - It's interesting for us to reflect on when we wish we had sought legal advice, and it's probably the answer is always a few weeks ago. It's always before the issue becomes a major a major source of concern. So I think I would certainly advocate always talking to legal counsel early when any such issues arise. 

Alex (00:01:06) I think that's right. And I think certainly our property team, and disputes team bang that drum a lot and say, you know, it's always early even than us sort of corporate lawyers think of actually it's much better to get in early corporate commercial law. Truth be told, you can you can sometimes bootstrap a little bit longer, but it can fundamentally change the calculus if you've got a dispute bubbling away. The correspondence that's being sent, whether it's open correspondence, whether it's legally privileged, the strategy about what one's writing, and we've had that ourselves. You know, it's not for a second that we're in an ivory tower. We've had that where issues have arisen internally and there are perhaps emails that aren't perfect and you very much aren't drinking your own kool aid, but that's part of it. 

Steve (00:02:00)  Yes. I mean, how tailored does legal support need to be for each scale up? What value do you feel that adds? 

Alex (00:02:09) I think with scale ups, it's there's definitely some areas where it needs to be bespoke. So certainly to give a practical example of a client that's engaging this afternoon, they are very sophisticated property entrepreneurs and they've got a really clear idea about what they want and more importantly, what they don't want. And so in that case, there's some real red flags as to what our advice has to be. And to be specific, they've got their version of what constitutes a good joint venture agreement. And it's really important that even if our House view were to differ, that we listen to them and respect their views because they're moving law firms as a result of that, perhaps not happening before. So very bespoke in in that instance, even if it's not the world's most complicated piece of advice, the client needs to feel listened to and actually that their commercial decisions are paramount in other cases, especially earlier along the road, there can be a need for a little bit more hand-holding. So perhaps saying listening extremely carefully, but saying this is probably an area you really want to focus on. So to be specific, in a SAS or software led business areas such as intellectual property and the way those clauses are dealt with in consultancy agreements or employment agreements or B2B agreements, those areas, probably one would proactively flag, as is really needing instructions or guidance on what is a House view. But there are other areas such as confidentiality agreements or certain regular commercial agreements, even some areas of employment agreements where one can perhaps be a little bit more certain as to what constitutes a normal practice or a sensible view so it can be less bespoke in those areas.

Steve (00:04:17) - Now it's interesting and I think reflecting on the last 6 or 7 years of our journey, a number of times that we've had to call upon the Ignition Law in yourself for support for all the way back to business transfer agreements or shareholder agreements, trademarks, the lease on this building, HR support or even viewing our terms and conditions in our contracts. So I think that legal support has been invaluable a number of times throughout the growth of our business at Accenture. 

Alex (00:04:50) Thank you, Steve. Yeah, I think that's right. And it's I mean, increasingly there's more work we're trying to do of helping clients start to scale up themselves and bring things in-house because that necessarily is part of the journey. So there's more and more work we're doing on a kind of know how program and practical training and materials and, and also giving away some tools and templates because bright clients, quite rightly are wanting to bring more and more in-house. And as they scale as Oxentia is, it's quite right that there's more house views and House template agreements going on. And I think one area of mutual collaboration is starting to work out with clients what constitutes the correct form for, say, Accenture B2B agreement, what the clause is that you would give ground on, what you wouldn't give ground on. And, and that's quite. An interesting area where clients more and more are recording things in house. So we won't give an uncapped indemnity. We limit our liability or our terms of termination. We're very careful on. And actually that's an area where more and more that can that can migrate in-house to keep a handle on risk. Really? 

Steve (00:06:03) Yeah. Yeah. It's interesting. One thing you touched on earlier was around the structure of ignition law. And did you make can you transition now to be a B Corp? What were the what are the drivers behind that decision? 


Alex (00:06:18) It's a really good question. I'd say I'd say the journey to becoming more of a values led business was wasn't part of the strategy in 2015 that evolved on the fly. And I'd say it was born out of a lot of clients, to be honest, being really nice, really pleasant to deal with, having a real clear set of values in the SME community and expecting the same out of us. And that was coincidental to the fact that there were a lot of lawyers that were disproportionately women, although there's several back to work dads in ignition, a lot of lawyers who ironically set their own businesses up and felt they were struggling to get to do legal provide legal services as well. So there was there was this whole coincidental opportunity to work with an extraordinary talent base that maybe wanted to work a little bit more flexibly. And almost without exception, all of our clients provide the communications a clear and proactive and a very responsive. And obviously the advice is very good. Clients really relate to the way the lawyers wish to work. So I think that led us into a place where we felt we had really, really, really interesting clients and incredibly talented lawyers working in a slightly more flexible way. And that very much led us towards there's clearly some values based logic to the business going on. And certainly a couple of clients were becoming B Corp's. Even our bank had become a B Corp. And and one client in particular runs a ESG and B Corp consultancy.

Steve (00:08:12) - And they flagged, you know, you guys really ought to take this very seriously. And it's more of an undertaking than perhaps one might realize in a pre-existing business. It's quite a long road to get everything sorted, but we've been going along it for about 15 months and about ready to submit the application this week or next week. And what's been really fulfilling about it is all the little changes you make we've tended to agree with. So improving medical and dental care for the for all the employee team, having a lot of client products in the office, being mindful of what's sustainable. So coffee pods being compostable and then realizing actually we've got a client that does those and these sorts of things have led us into a really nice place where there's no end of client stuff in the office and people really engage with what's going on and, and equally then that's got a lovely cross-pollination of us recommending clients to people. So I think that's really how we sort of got into it, to be honest with you. And it's, yeah, it's great. It's a long road, but a good road.

Steve (00:09:21) - Do you see it as an increasing trend in the in the market?

Alex (00:09:25) - I think so. I think the UK, if I remember rightly, the UK hit quite recently about 1,000 B Corp been approved and there's quite a lag because there's a lot going through the process. But certainly it's full tilt and there's a lot more coming through. I think that's, that's very fair. I mean, there are other ways of, of demonstrating, being values led. So there are a lot of clients that are, I suppose, what one might call social enterprises and have got certain pledges and commitments, whether it's the environment or reinvestment of profits. And that's huge as well and is actually very analogous to becoming a B Corp, an ethically oriented business.

Steve (00:10:16) - And it's a fascinating area. And that's something we're certainly exploring ourselves. So just a question around pitfalls, Alex, what are the common pitfalls that you see clients coming to you with as they undertake their scale up journey? Are there any common themes that you.

Alex (00:10:35) - Yeah, there are. We've definitely got a lot of them wrong ourselves as well and learnt the hard way on them. I think there's two things. It's probably a raft of. Pitfalls. And then there's also it being a tougher environment at the moment economically, which is also leading to some very clear pitfalls to avoid. On the former, I'd say there are areas such as not papering stuff and not having contracts in place properly. And that's not to say that one should have contracts in place everywhere for smaller courses of dealing, as we call them. You can you can definitely bootstrap and get away with it. But clients, tech heavy clients, perhaps not having a binding contract in place on a really material agreement such as a sort of censure, it most certainly papers very sensibly. But a business like that, if you're early and you've bootstrapped and something goes wrong, you've not got anything to dig out. And one area that's really common pitfall is intellectual property. So if you've not recorded who owns what and that that can go wrong, especially with a consultant type relationship because the law assumes that the consultant owns it and that the that you only have a license to it often.

So that's a common area. I'd say with employment. Not recording employment contracts properly is key. I'd say funding rounds, people. And this brings us onto the second part where there are more pitfalls in a trickier environment. Early stage entrepreneurs in in businesses that are perhaps more reliant on lots of funding rounds than Accenture or us taking quite aggressive terms is really tricky. And we've seen this quite recently with the business that instead of perhaps also interrogating their investors, it's series a post seed series A they've acquiesced to quite punchy terms. So losing control of the board, accepting what we call down rounds. If the valuation doesn't keep going up, the investors gobble up more and more of the shares and the control using aggressive debt where one can be beholden to a debt instrument if there's a breach or a default. Those sorts of things are more very tricky pitfalls that you see more in a recession where one often the startup will scale up at an earlier stage needs to negotiate very hard and remember that that it's a two way relationship and it's important investors are going to hopefully follow on and be there in a loyal way for the course rather than just getting through an early stage round and then being exhausted. So, I think that yeah, that's a key area.

Steve (00:13:43) - That's very interesting. And I guess the analogy people tend to use is starting or entering a business is a bit like getting married. You go in all excited and you don't necessarily think what could possibly go wrong. That's right. And I guess it's taken out legal advice very early on to think of the what if circumstances.

Alex (00:14:02) - I think it's a really good it's a really, really good point, Stephen. I think even if even if early stage clients this happens quite a lot decide we're not ready for legal spend Bootstrapping and recording a back of a cigarette packet recording of those are quite interesting to see sometimes because early stage entrepreneurs have often thought of everything and they've got a really good relationship where they've said, Look, if we fall out or if we're going separate ways, this is what will happen. And in a funny way, that's often as good as a legal document. And it's and it's something that certainly with early stage businesses, we try and share documents and guides they can be informed to, to at least have that discussion. Because if you've had that, chances are you'll be better placed should something not go according to plan.

Steve (00:14:45) - Yes, very, very invaluable advice for many of the spin outs and startups and entrepreneurs that we that we work with ourselves. So with that, Alex, I'd just like to thank you very much for your time this afternoon and for sharing your valuable experience with us.

Alex (00:15:03) - Thank you, Steve. Thanks so much for having me in your beautiful offices in lovely Oxford.

Steve (00:15:05) - Thank you very much. 

Alex (00:15:09) Thank you.

Narrator (00:15:11) - Thank you very much. We hope you've enjoyed this two part exploration of start up and scale up businesses and the legal support they require during their growth phases. If you have any questions, then please do get in touch with us at Ideas Pod at Oxfordshire. That's Ideas Pod or one word at Oxfordshire and we'll get back to you as soon as we possibly can. Thank you very much for listening. Take care and bye for now.