🤓 REPORTS

You Can’t Sit With Us: In-House Lawyers Are Being Blocked from the Company Lunch Table

It's the report card your legal department didn’t ask for, but might learn something from: the Association of Corporate Counsel and Everlaw have released a 2023 State of Collaboration Report. Armed with surveys from 373 in-house legal professionals in the US, this report dives deep into the intricacies of corporate legal teamwork – or lack thereof. With the bold claim of being trusted by Fortune 100 corporate counsel, 91 of the Am Law 200, and all 50 state attorneys general, this report gives in-house collaboration a grade that might need a bit of extra credit – or a guide on how to play nicely with others.

The report indicates that approximately two-thirds of legal departments are bringing more work in-house as a cost reduction strategy, which is a 59% increase from last year. Regarding satisfaction with law firms, in-house teams expressed contentment with aspects like quality and responsiveness of communication, collaboration on key strategy, understanding of company objectives, and project management.

THE REPORT: NOBODY'S ON THE SAME PAGE

However, less than half reported being satisfied with transparency of processes and cost predictability. The report also reflected a desire for increased collaboration among legal staff, recognizing the associated benefits and obstacles preventing legal teams from fully realizing their collaboration potential. In fact, internal partners were asked about their opinions of in-house legal departments, and they mentioned the following critiques:

The crux of the issue: in-house lawyers are “viewed as roadblocks” by their non-legal peers, leading to their exclusion from executive tables, strategic initiatives, and important decisions. Hurtful? Sure. A step toward figuring out how to work together better? Probably.

As in-house attorneys are blocked from sitting at the cool kids table, law firms were also perceived as lacking transparency, and other partners and vendors were criticized for not understanding company objectives. However, building strong relationships has been recognized as a key to success for legal departments.

THE VERDICT:

In the Report, legal teams expressed their desire for standardized collaboration processes and integrated collaboration tools to facilitate improved external collaboration. In facts, the respondents believed that increased collaboration would result in enhanced operational efficiency (32%) and more focus on risk management and business issues (27%). It seems that in-house lawyers’ goals and reasonings aren’t always understood, and heightened efforts to communicate would make collaboration more frequent and helpful.

🪙 CRYPTO

The Crypto Market is in Retrograde

It’s Sagittarius season, but the crypto world is buzzing about Gemini Trust Co. Last week, Genesis Global — a crypto lender — sued its partner Gemini Trust Co. for almost $700 million. It seems that crypto failures are written in the stars (and in every Newsletter) recently, but the outcome for Genesis and Gemini remains up in the air.

Together, Genesis and Gemini had an investing program called Earn. Genesis re-invested Earn customers’ crypto assets, paying customers the interest. In a custodial role, Gemini is Genesis’ largest creditor and processes these deposits and withdrawals for a cut of Genesis’ payments to the customers. Unfortunately, all Genesis earned from this deal was bankruptcy: in its suit, Genesis claimed that Gemini withdrew $689 million, at the expense of other creditors, in a “run on the bank” before Genesis could file for Chapter 11 bankruptcy protection. However, Gemini argued that Genesis should repay its customers instead of focusing on clawing back all the withdrawals the customers made. Currently, Genesis is involved in a NY civil fraud lawsuit that might force it into a bankruptcy liquidation. This liquidation would return some crypto assets to customers, but would not resolve Genesis’ many legal issues.

The beef here has a bunch of tiers. There’s the issue of Gemini knowing Genesis’ loans were under-secured (and very concentrated at SBF’s crypto hedge fund Alameda, which has dug itself a hole). There’s also the allegation that Gemini, despite internal analyses revealing Genesis’ financial backing was shaky, billed the Earn program as a “low risk investment” opportunity. (And we all know the stereotype that Geminis are two-faced.) Further, the SEC sued Genesis, Gemini, and Genesis’ parent company Digital Currency Group last January, alleging that they defrauded investors out of over $1 billion. And NY Attorney General Letitia James seeks to ban all three of these crypto firms from the NY investment scene.

THE VERDICT:‍

Genesis urges the court to remedy this “unfairness and return Defendants to the same position as Plaintiff’s other similarly-situated creditors.” But it seems that nobody involved stands to win — with almost $700 million in limbo, it’s likely that Genesis and Gemini’s legal troubles are far from over.