BusinessTN

Mention the Sarbanes-Oxley Act of 2002 and watch most members of upper level management reach for the closest bottle of Pepto-Bismol and the phone number of their law firm. Although legislative concerns vary by industry, most lawyers would agree that Sarbanes-Oxley is one of the most pressing and complex pieces of legislation public companies grapple with today.

In the simplest terms, the Act was a response to publicly traded companies producing misleading financial statements at the direction of senior executives, sometimes with the assistance of outside auditors. With the ensuing fallout of additional governance requirements regarding the NYSE, NASDAQ and the SEC, you have what Gary Brown, chair of the business department at Baker, Donelson, Bearman, Caldwell & Berkowitz, calls “a confluence of events that probably is unprecedented in corporate history. It’s straining the resources of companies as well as the professionals who serve those companies.” Brown, who served as special counsel to the Senate committee investigating the collapse of Enron Corp., also provided advice about Sarbanes-Oxley while the Senate debated the legislation.

According to J. Page Davidson, a corporate and securities attorney with Bass, Berry & Sims, the legislation of the post-Enron era has dramatically affected the landscape at many public companies. “[Corporations] will continue to spend significant time and effort and expense in meeting the requirements of the Sarbanes-Oxley Act and related requirements. The oldest of these requirements are now just over two years old and continue to evolve. U.S.-based public companies have reportedly spent billions of dollars in compliance. The key will be to see whether the boards of directors of these companies are able to get beyond the mind-numbing structural requirements that have been and will continue to be adopted and focus on those changes that will enable them to become more effective stewards of these companies.”

J. Chase Cole, member of Waller, Lansden, Dortch & Davis, says corporate compliance received far less attention pre-Enron. “One hopes that the level of corporate compliance and attention to internal controls under Sarbanes-Oxley will be such that there will not be a need for significant new regulation in the future,” he says.

Although the Sarbanes-Oxley Act is probably the foremost issue that public companies are trying to address, there are plenty of others that are industry-specific and create their own morass of legal complications and compliance, such as the Health Insurance Portability and Accountability Act (HIPAA) in the health care industry. And if you deal with a large work force, says Robert M. Holland Jr., member of Miller & Martin, then you face the recent sweeping changes to the Fair Labor Standards Act. Holland also says there are growing risks involving mass tort claims for industries that provide consumer or pharmaceutical products.

In short, one bottle of the pink stuff might not be enough. Finding a firm that can cover all of these areas of concern, and do it well, is a challenge. Across the state of Tennessee law firms are rising to meet the challenge, offering clients as diverse as Verizon Wireless, Coca-Cola Enterprises and Gaylord Entertainment Co. legal services that are tailored to the client while using sophisticated human and technological resources.

Although large corporations usually have in-house counsel, pressing issues have practically demanded they seek attorneys who are current and can stay up-to-date with the rapid changes in legislation. Many law firms have responded to these changes by having more lawyers specialize in certain areas. “You will not find many generalists these days,” says E. Berry Holt of Boult, Cummings, Conners & Berry. “The law is too complicated to allow attorneys to be really competent in more than a couple of areas. Clients look for lawyers now based on expertise rather than location.” Holt points to his firm’s use of teams to respond to the varied legal needs of their clients. Several attorneys from different sections of the firm with expertise in specific areas work together for the client. “The idea is to have a team of attorneys that knows the client, understands the client’s business and has the breadth of expertise to tackle any legal needs the client may have,” he says.

At Bass, Berry & Sims, the team approach helps them understand the client’s business, competition, regulatory landscape and business strategy. Page Davidson also points out an advantage for his firm, which has offices in Nashville, Memphis, and Knoxville—being in markets with exceptional law schools that attract many of the best law students in the country.

To have such a powerful circle of competent legal advisors is becoming a growing necessity for corporations to remain compliant with the law. Finding them all under one roof is a growing trend. Holt says in the past a company might have used several different firms to address their many different needs. Now, many of them try to move all their legal services to one firm. “They can get better service, and sometimes better rates, by using fewer law firms,” he says.

It’s a growing trend across the board for companies to focus on just one firm. J. Allen Roberts, an attorney with Wyatt, Tarrant & Combs, believes clients like the convenience of being able to obtain legal services from a single firm, since it creates prompt service and a quality legal product.

Brown calls it “one-stop shopping” and says it is one of the most useful benefits a firm can provide. He emphasizes that having all of your legal needs met under one roof simplifies the lives of executives and allows them to focus on running the business.

To provide a corporate client with what it needs in today’s marketplace also requires good judgment and timeliness. Brown says their clients do not pay them to be technicians. “Companies pay us for our judgment,” he says. “Lawyers must add value, and the most useful service a law firm can provide is a knowledge and appreciation of the company’s business and the ability not only to address inevitable problems as they occur but to be proactive and assist in placing programs and mechanisms in place designed to prevent or decrease the likelihood of certain problems. In other words, the law firm needs to be a company’s trusted advisor rather than a mere vendor.”

This proactive stance is key to providing a client with benefits that will protect the company. Stuart Campbell, Nashville managing partner at Stites & Harbison, says the area of preventative advice is crucial. “Advising a company on the structure of a potential transaction or providing advice with respect to risk management issues are examples where timely input and planning from a law firm can help large companies save a significant amount of time and money,” he says.

It is all a part of increasing efforts by firms to understand their clients from every angle. According to senior partner W. J. Michael Cody, with Burch, Porter& Johnson, appreciating the financial pressures and business needs a company faces is key. He says it’s important for firm to provide company leaders honest, clear advice that does not overwork the issue and gives them what they need to make an informed business decision.

Oscar C. Carr III, partner at Glanker Brown, sums it up succinctly: “What I have experienced is that large corporations want a lawyer who already is very familiar with the subject matter and law—the type of suit/claim, efficient handling of the suit, creative and thoughtful ideas and suggestions on strategy. Clients want good judgment and prompt service.”

Aside from timely advice and good judgment, law firms are also realizing the need to adapt their methods to a technology-driven world. “We use technology to help manage the flow of work and information for our large clients,” Holt says. “Specifically, we have developed customized Web-based interactive systems for these clients that allow the client to request additional work, monitor ongoing work, and collectively review and access documents. There are all sorts of possibilities, and we can develop whatever suits the particular client.”

It’s a good system to have in place as large corporations see their businesses expand across the globe. Technology has broken down geographic barriers, allowing Tennessee businesses to seek ever-increasing international markets. And while Sarbanes-Oxley creates some upset stomachs now, the increasing necessity of navigating foreign laws can be counted on to cause more than a few stomach aches of its own in the future. “Companies will be required to confront not only foreign laws,” Brown says, “but issues such as the prohibitions of the Foreign Corrupt Practices Act. It also implicates a number of other areas, such as immigration, international intellectual property protection and a host of technology-related issues.

Regardless of what tomorrow may hold for large corporations, Tennessee’s law firms are on top of it, from labor law to international licensing, shareholder rights to intellectual property protection. With innovative client strategies, creative technology, and a deep pool of talented attorneys, they are prepared for whatever the future may hold.