Automattic Inc.’s general counsel, Paul Sieminski, works with about two dozen outside law firms, all from the comfort of his home in the Hayes Valley neighborhood of San Francisco.
Automattic, the operator of WordPress and Tumblr website and blog hosting sites, has had a fully remote workforce since its inception in 2006. âAutomation Engineersâ work remotely in 76 different countries, and Sieminski believes working from home is here to stay now that the coronavirus pandemic has given many industries a taste.
âWe could still do the same things as any other business in terms of legal work, in terms of buying businesses, raising funds, defending our litigation,â Sieminski said. “I didn’t really find the distributed work a hindrance to any of the work we were doing – if anything, maybe we did it a little more efficiently because we could do it in a more efficient way. flexible. “
Bloomberg Law is leading a question-and-answer series highlighting some of the legal industry’s most important relationships: the often successful but sometimes complicated connections between legal advisers and their outside law firms. We talk to general counsel from all industries about how they select outside lawyers and handle issues such as invoicing, fees and performance monitoring.
Sieminski joined San Francisco-based Automattic in 2012 as General Counsel. Prior to that, he was a partner at the law firms of Gunderson Dettmer, Proskauer Rose and Goodwin Procter.
He spoke with Bloomberg Law about the benefits and challenges of working remotely, how law firm compensation systems can create a mismatch between cost and value for clients, and the the importance of creativity in everything from legal advice to billing arrangements.
This conversation has been edited for clarity and length.
Bloomberg Law: What was it like working for a completely remote company before remote working became mainstream during the pandemic?
Paul Sieminski: We never had an office. It’s totally remote and always has been since the company was founded in 2006. It was really unusual at the time because few companies were created like we are, and there was even some doubt among them. my friends and family that this was even a real business. Some people have called businesses like Automattic âvirtual businesses,â which implies that there is something not real about the work or the business itself. For example, if you don’t have an office, if you don’t have a door, phone, or conference room, you’re not working.
It was definitely something I dealt with in the early days when it wasn’t the norm. And that’s something that’s more of an issue for more traditional environments, like law firms and banks. When you met accountants and told them that you were working from home, there was definitely a mental hurdle they had to overcome that you don’t see as much anymore.
BL: Now that more and more people are familiar with working remotely, have your interactions with external suppliers or external lawyers become easier?
PS: I wouldn’t say easier. From my perspective, Automattic has always done the distributed job very, very well. And because we’ve been doing this for so long, the company is designed to support exactly that style of work.
We could still do the same things as any other business in terms of legal work, in terms of buying businesses, raising funds, defending our litigation. We did all of these things perfectly well, we just did them with a different way of working. I didn’t really find that distributed work was a hindrance to any of the work we were doing – if anything, we maybe did it a little more efficiently because we could do it in a way. more flexible.
Now, I get a lot of phone calls from other GCs, from some of our other outside lawyers and many other partners that we work with, asking me for advice on how best to do it, and how we do it here, and how we made it work.
BL: What kind of advice do you give them?
PS: The number one tip I have is just to communicate in a way that feels like over-sharing. This level of communication is fundamentally what makes the distributed environment work. Without a desk to fall back on – or a cafeteria, or meet random people in the hallway talking about something you’re working on – you have to be much more intentional when it comes to communication. For lawyers in particular, it can sometimes be very difficult because it goes against our training and our nature to be so transparent.
BL: How many companies are you currently working with?
PS: I would say probably between 20 and 25. Because we are spread out and have employees in 76 countries, and the long line of companies is due to the fact that we have so many problems in so many different places. A lot of it is litigation, for example. We get lawsuits from all over the world because we are a global platform. Some of the law firms we deal with might handle a single case in Turkey, Israel, Cyprus or Argentina. If you put that aside, there are probably a dozen or fewer companies doing our basic legal work.
The work itself has become more sophisticated, higher stakes, and complicated, which influences our decision making, but the main thing we look for in outside advisors is an understanding of our business and an appreciation for the things we think about. be significant, which may be different from other corporate clients. Truly understanding our values ââand the things we love to fight for and care for has been consistent over time.
BL: What are these values?
PS: We are a very mission driven company and we are very aligned with the open source WordPress project. WordPress itself, which is the software at the heart of our business, is free and open source software. So here we are quite different in terms of the business model from a lot of other companies.
We care very, very deeply about our users, our customers, and our community, and very important values ââlike freedom of speech and the ability of every person online to express themselves and host all of their content. All of this leads us to think about legal problems in a different way. We focus on protecting our customers, protecting their intellectual property, leveling the playing field against things like copyright trolls or patent trolls, and we try to find answers. in the very long term to the legal and business issues that put these values ââand these customers first.
BL: Does this creativity lead to unique fee agreements with your external firms?
PS: This is an area where the creativity of the legal profession has not really been so great. We still do pretty standard things about fees. To some extent we are still doing billable hours, we have tried subscription type models where we have a flat rate for an unlimited number of hours in a month or something like that. And it worked pretty well.
But on the law firm side, they never really set fees too far from what you would pay on an hourly basis. In practice, it has been quite difficult to pin down companies at an estimate or at a company number for a deal. They still try to set by default what the fee would be on an hourly basis, and then there’s a discount that they’re going to build from that, but it’s not very creative or very beneficial for us.
In an ideal world, the cost is very much related to the long-term value of what they do to the customer. There are some things where I would have paid double or triple what they charged.
BL: Why is there such a disconnect between value and cost?
PS: It probably goes back to the compensation system of the companies themselves. The associates are simply paid at the market rate for the associates, and therefore they have very large fixed costs that they have to cover. I always thought that very junior associates were overpaid and third, fourth and fifth year associates were not paid enough. Second, associate pay really depended on the value they brought to the client, and that wasn’t always determined, in my perspective, by the client.