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Distribution law

Legal Project Management – Practical aspects of legal engineering in distribution projects

Today, companies are increasingly challenged in legal terms: New laws, regulations, national and international framework conditions must be complied with. Thus, compliance is more than a peripheral issue. This article deals with some practical aspects of "legal engineering" with particular attention to franchise companies.

04.04.2019 Dr. Christoph Wildhaber

When it comes to the legal engineering of distribution systems, one tends usually to focus on drafting a franchise, distribution or agency agreement (or the like), putting together disclosure documents and registering the trademark. Project management when it comes to the legal organization of a distribution project and handling the legal challenges in the daily work of a distribution system is often not given sufficient attention. Legal project management (briefly LPM) helps with any distribution project.

General LPM process

A general LPM process can be divided into eight stages:

1. Goals and statement of work

Legal counsel and management should carefully describe the project and the goals to be achieved (more and more using agile project management methods). Target markets should be thoroughly investigated and the scope of work be described. The conceptual environment, the distribution strategy, the footprint management, restrictions - be it in supply chain management or the available finance - should be clearly addressed.

2. Activities and timeline

A detailed legal project plan should be prepared describing the main topics and duties and ancillary tasks. Timing is always crucial, decision-taking processes should be clearly addressed and the availability of internal and external resources should be checked in advance.

3. Responsibilities

Responsibilities need to be assigned. This needs to take into account the various levels and areas of management that will have input into the project, which will depend on the individual organisation and needs to be shaped from case to case.

4. Risk management

In the absence of a franchise (for instance) knowledgeable in house team, external lawyers’, including local lawyers’ input is needed. Setting a timetable for obtaining legal opinions and advice needs to be established.

5. Quality management

Both, in the course of developing basic documents, or while negotiating agreements and after finalizing a project, the results achieved and the failures experienced should be collated and lessons learnt.

A knowledge management system should be built up where each of the project members can benefit from each other’s input.

6. Change management

It is rare that a project completes without material changes in the course of a project. It is important to understand who decides on what kind of changes and what consequences will be faced and what costs are involved.

7. Budget

Financial planning related to legal work is essential, both in respect of internal and outside legal counsel.

8. Communication

Last but not least communication to be undertaken. If, for instance, a company listed on a stock exchange plans to enter a new market, communication to investors may be required as a condition of the listing.

Tasks and Responsibilities in particular

Tasks and Responsibilities in particular Identifying what needs to be done is core to LPM. Which tasks need to be addressed, by whom, when and how?

More and more the RACI method is also used in LPM.

RACI is an acronym which stands for responsible, accountable, consulted and informed. Each one describes a role that an individual or team can play on a project.

  • Responsible stands for the question who is responsible for the execution of the task (e.g. the development manager or the outside counsel?).
  • Accountable deals with the question who approves a certain result (e.g. the Head of Legal or a development committee?)
  • Consulted deals with the question who (apart from the person being accountable and responsible) needs to be involved to obtain relevant information for the execution of the job (e.g. marketing and finance departments, IT?).
  • Informed relates to who is to be informed about the task to be performed (e.g. the Head of Retail or the CEO?).

It is recommended that a RACI matrix be designed for the individual processes together with legal and business responsible people of the company.

Final remarks

Last but not least, it is recommended to develop tools supporting LPM, be it related to tools used, checklists, templates, transaction grids, due diligence lists or approval forms – just to name a few.

Implementing a reasonable LPM is cost-efficient and facilitates the effective and efficient distribution development.

This article first appeared in Marketing & Communication 4/2019.


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