Mintz On Air: Practical Policies – When Should You Hire an Employment Lawyer?

In the latest episode of the Mintz on Air: Practical Policies podcast, Member Jen Rubin discusses with colleague and Member Andrew Bernstein when the best time is to hire an employment lawyer. This episode is part of a series of conversations designed to help employers navigate workplace changes and understand general legal considerations.

Together, Jen and Andrew explore:

1. The benefit of objective, market-focused advice in the context of employment negotiations.
2. The importance of balancing the economics of employment offers against risk and goals.
3. How outside employment counsel can add value to business based on context, history and experience.
4. The importance of accountability to the lawyer-client relationship that AI cannot yet deliver.

Listen for insights on how employers and individuals can make informed decisions about when to seek legal counsel and how the right support can strengthen workplace dynamics.

Mintz On Air: Practical Policies – When Should You Hire an Employment Lawyer? - Transcript

Jen Rubin (JR): Welcome to the Mintz On Air: Practical Policies podcast. Today's topic: When should you hire an employment lawyer? I'm Jen Rubin, a Member of the Mintz Employment Group, with a San Diego-based, bi-coastal Employment Practice representing management, executives, and corporate boards. Thank you for joining our Mintz On Air podcast. If you have not tuned into our previous podcasts and would like to access our content, please visit us at the Insights page at mintz.com.

Today I'm joined by my New York-based colleague, Andrew Bernstein, who is also an employment lawyer. Andrew is a seasoned employment attorney who advises companies, as well as C-suite and business executives, on a broad range of sophisticated employment-related matters. With a deep understanding of complex issues pertaining to partnership, employment, benefits, tax, securities, and corporate law, Andrew has extensive experience handling executive compensation issues in mergers and acquisitions, venture capital investments, private equity financing, and other transactional contexts. He regularly represents executives, buyers, sellers, and management teams in connection with leveraged buyouts by private equity sponsors and in their negotiations with compensation committees and boards of directors. Thank you for joining Mintz On Air, Andrew.

Andrew Bernstein (AB): My pleasure, thrilled to be here.

Employment vs. Labor Law Attorneys

JR: You and I are going to be discussing when and how you know you need to hire an employment lawyer. By the way, this is an important question for individuals, as well as companies. Andrew and I are going to be discussing both sides of this equation because there are different considerations for personal and corporate representation. But before we dive into these questions, I'd like to set the table with a very simple question for you, Andrew: What does an employment lawyer do and is it the same thing as a labor lawyer?

AB: An employment lawyer does what you would think the name suggests – we handle all aspects of an employer-employee relationship. That could be something from compliance with all various legal statutes, negotiating all forms of employment-related agreements such as employment agreements, offer letters, restrictive covenant agreements, separation agreements, and equity award agreements.

And then employment lawyers litigate disputes around various employment laws, as well as contractual disputes between parties. It's distinct from a labor lawyer. A labor lawyer is somebody who focuses exclusively on unionized companies and disputes and issues between management and employees who are represented by a collective bargaining union.

JR: So, would you call yourself an employment lawyer or a labor lawyer? I'm assuming it's the former.

AB: I would refer to myself as an employment lawyer and at times an executive compensation lawyer, which is kind of a more specialized area of employment law.

When Individuals Should Hire an Employment Lawyer

JR: Okay, we're going to get into that in a minute, but what I'd like to do is start with the question of when somebody needs to hire a personal employment lawyer versus a company. Let's say I'm a mid-career individual and I've been recruited by a company I've admired for years. That company sent me an offer letter. I received it by email. The email says I should just approve and sign it. I'm looking at this document and thinking, okay, do I need legal representation to help me understand this? When do you need to consult an employment lawyer before you sign something like this?

AB: As a general rule, the earlier that you engage with an attorney, the more constructive the relationship will be. It's important even if you just receive something that the company considers to be a form document and isn't open to negotiation, that at least you understand the implications of everything that you're signing. Oftentimes, employees come to us after they've signed agreements. There's some sort of separation event that's going to transpire and they get frustrated when we advise them about some of the restrictions that are associated or embedded in the agreement they sign.

So at a minimum, once you receive a document, as a general rule, it is valuable to engage a lawyer just so that you understand two things: first, the full scope of what's being offered to you; and second, to what extent those promises that are being made offered to you are subject to trap doors. And if nothing else, that you understand the full implications of what you're signing.

JR: Okay, so obviously getting this information before you sign on the dotted line – or in this day and age, send that DocuSign link – is important. How do people know that they are being offered equity, or that there are some vesting terms relating to some of the compensation they’re being provided, or if there's a bonus with performance aspects and they don't really understand them? How do they go about finding a lawyer who can help them with that type of question?

AB: Well, that's something that executive compensation lawyers, like myself, specialize in, and you bring up a great illustration. Oftentimes people get “seduced,” so to speak, when they see all these potential dollars that they may realize from a new employment relationship, whether or not it's in the form of a performance bonus, a transaction bonus, stock options, or similar equity award. As you mentioned Jen, embedded in all of that is a series of terms that one needs to understand to ensure that what's being promised to you is something that can be realized in the ordinary course.

So, if you get an equity award and it's subject to vesting, what happens if you're fired without cause prior to being fully vested? Do you get to accelerate or retain the opportunity to continue to vest? If you're vested, what happens upon separation? Do you get to retain your vested benefit, or is there a repurchase option? The more complicated the compensation arrangements are, certainly the more critical it is that you receive proper guidance from somebody who specializes in this area.

JR: It's interesting to me that you use the word “seduced,” and I think that that's a great word because sometimes these terms come across and people feel, “Hey, I'm entering into this employment agreement and therefore I naturally trust the folks on the other side.” They wouldn't give me the employment offer if they didn't think that I was ideal for the job or that I wasn't going to bring some tremendous value to the business.

For those of you who have followed my podcast, you know that one of the things I really enjoy exploring is the concept of trust in the employment relationship. And I think it's a great example of, you don't need to give up trust, but when you have somebody by your side who can help look out for your interests, they can help you overcome that feeling of looking at all these shiny things that are getting you, really excited about joining this position and really getting into brass tacks of what's actually going to happen and when.

Special Considerations for Executives and Complex Compensation

So let me just segue into this. I used a very simple example, which probably applies to 90% of the employees out there. You get the offer letter from a company and there aren't any terribly complex provisions there.

I want to segue into the notion of an executive and particularly an executive who's being offered a fairly lucrative compensation package. I realize that lucrative has different meanings to different people, but let's say somebody's asked to join a management team to lead a startup or join an existing executive team. Are those circumstances different from a typical offer letter that's given to an at-will employee?

AB: Well, the compensation components of the arrangement are certainly different. You know, for the individuals you described at the outset of our podcast, perhaps they're getting a base salary and some bonus opportunity. When you're talking about the kind of circumstance that you're describing, you would have, in my experience, the added complexity of an equity award being given the opportunity to participate in future growth of the company in the form of various different kinds of awards, whether or not they're plain vanilla stock options or profits interests.

As we talked about briefly before, these awards come with a number of different terms that need to be fully understood and negotiated. First, understand the vesting schedule and the tax implications, because depending on what form of award you're going to get, the tax treatment will vary. That means if you do realize a profit, it could be taxed at ordinary income rates or at the more reduced long-term capital gains rates.

What happens to my equity upon various circumstances of separation? Do I get to keep them? Do I forfeit them? Does the company get to buy them back? If the company does buy it back, what price do they pay under various circumstances?

So oftentimes as well, certainly in the transaction context, if you just build that on your hypothetical; If you're an executive at a company that's being bought by, say a private equity company, you may also have to contribute some of your own money and buy equity, which comes with a whole list of additional considerations. At those points in time, you obviously need somebody who is very experienced and skilled, not only to make sure they identify the issues properly for you, but for someone like me who's been doing this close to 40 years, I dare say. One of the value adds that experienced attorneys provide is understanding market. We can advise you about whether a particular provision in any of these arrangements is a market-based term, is a generous term, is a less than generous term, both in terms of just the economics, the quantity of what you're receiving, but then with respect to each one of these sub issues that I just identified, there's a general range of what you should expect.

That's the real value that we provide: we understand what the market is with respect to all of these various components of what an offer would look like.

JR: It's a great point. It's the depth of knowledge that a sophisticated employment lawyer like you who deals with these things on a daily basis has that can help create balance. You're going to be sure, particularly for an executive who's receiving one of these packages, that the company offering it has very sophisticated counsel. That's another thing that I think is very clear, that it helps counterbalance the risk by having a lawyer who’s in your corner and is not only capable, but also understands the marketplace and can match that level of sophistication. That's something that's a value-add.

The Role of Counsel in Negotiations and Building Trust

Let me ask you one other thing, because this is something that comes up in my practice since I do some of this work as well. Sometimes people feel that having somebody who helps you on the talking side removes some of the awkwardness. Tell me your views about having – I hate to use the word lawyer's mouthpiece, whether you call this mouthpiece, hired gun, whatever it may be – what do you think about having somebody who's in your corner talking on your behalf in the context of one of these transactions?

AB: So obviously every situation has its own context, and it's very personality driven, not just the personality of our client if we're representing, say the CEO, but also the counterparty on the other side that our client would be dialoguing with. What I say to clients is that if they're comfortable with certain business issues, if you're really talking about issues that relate to dollars and cents, those are issues that lawyers can't really decide amongst themselves. If they feel comfortable having those conversations, then I see nothing wrong with that.

With respect to the more complicated issues that we were just discussing that are truly kind of lawyer points, absolutely there's value in having lawyers handle those conversations. It obviously reduces any potential friction between our client and business principal on the other side.

Assuming we get to yes, which is what we're all about. If you’re familiar with that concept of “getting to yes,” by the way, it's the most influential book I read in three years of law school. I apply its principles every day in our practice. For those who are not familiar, it's like in any negotiation, regardless of if you're the buyer or the seller, there's a shared common objective between the two counterparties. And according to the principles in Getting to Yes, you should never lose sight of that common goal.

Obviously, we keep that front of mind. So, you presume that if you've gotten this far in the discussions that you're going to get to yes, and you want to make sure everybody's excited about the commencement of the new marriage. Having lawyers handle some of these issues between lawyers, without involving the principals directly, clearly has its benefits.

Can I also add something about trust as well, Jen? I've been doing this for the past 40 years, so I go back to the 80s “Trust, but verify,” as Ronald Reagan used to say about nuclear arms disarmament deals with this old Soviet Union. I know I'm really dating myself there.

In any arrangement, regardless of how well-documented things are, there's always an element of trust. And I say that intentionally. It's important that we do as comprehensive a job as we can to ensure that what's being offered is protected. Our job is to make sure people understand what they're being offered. And then equally as important that what's being offered actually represents what they're going to get and to protect the downside.

In any negotiations, you're not going to win 100% of the points, right? You get to the point where you have to generally absorb something or concede something that may cause you some level of discomfort. But I would say at that point to the client, every deal has some element of compromise. And even if it's perfect, if it goes wrong, it's never an enviable position to be in where you’re saying, “The documents are on my side, and I'm going to sue.” Nobody wants to find themselves in that situation.

JR: If I can just add to that, what you're not getting at, but is part of the trust issue is knowing that you have, and this is when it goes back to the point of why you hire somebody to represent you personally, you know that that person has your interests in mind, right? Andrew, I mean, when the executive comes to you and says, “here's the deal,” you tap into the vast knowledge that you have about the marketplace, about being a lawyer, and about what the person wants. But at the end of the day, you're there to give that person that objective advice.

You might say, “Here's some things maybe you're going to compromise on, but if you really want this position here's how from a market perspective it's going to operate.” That's part of the greatest value of hiring somebody who can provide that. I'm going to use this term “counseling aspect” of our practice, which I know you enjoy very much.

AB: Absolutely. Look, you could tap something into ChatGPT or whatever your favorite AI kind of tool is and get a response, but at least as far as I'm concerned, and maybe we have our own self-interest, getting the answer is only the beginning of the process. The process then is to evaluate that answer is, provide judgment, and assess the real-world practical risks associated with any particular position that you're taking in a negotiation. That's the value of an experienced, seasoned expert in any area, but you know we're obviously employment lawyers in our particular area.

Why and When Companies Should Hire Outside Employment Counsel

JR: I want to pivot if we could from individual representation, which is important and that's the purpose of this podcast, but I also promised our listeners that we would talk about the corporation side. Most people would agree that competent legal counsel is important to a company's success.

But when it comes to employment matters, which by the way, and this just irks me as an employment lawyer, sometimes they're referred to as “HR matters,” and that can be a derisive term. What's the value proposition of hiring outside counsel as a corporation when you could, as you point out, just ask your favorite AI bot what the answer to a question is?

AB: Part of that depends on how large and sophisticated the in-house capability is. I want to make sure we give due deference to people who have been doing this a long time and just happen to be doing it internally. But again, it comes back to value and judgment. It's one thing to understand what the law is, and it’s another to apply it in the real world, weighing the pros and cons of any decision you're going to make as it relates to an employee, while applying whatever particular law that may be in play.

I also think that, going back to what we were just talking about in other contexts of representing individuals in a transactional sense, oftentimes, we work with clients longer than the in-house people we interact with on a daily basis. And in those circumstances, we have the opportunity to be the institutional history to represent the values of the institution, we understand the culture of the institution, and we understand the importance of consistency in terms of the application of decision-making across various issues related to employment law and employees.

If you get into the more dicey areas of potential disputes, then we bring our judgment in terms of: What are the pros and cons? What are the dollars and cents? What are your potential risks? What's the timeline? What's the likely result of any potential litigation? I'm not so sure an AI bot could do that analysis for you at this stage, and most in-house people are not exclusively focused on the kind of broad array of issues that outside counsel do. That’s where we bring our best collective experience to the table in providing counsel.

JR: Let me ask you about that because it's interesting to me, and we’ve done a podcast on AI in the workplace with our Partner Drew Matzkin. But to me, two words come to mind in this context.

If you're a company, you're hiring an employment lawyer to represent you with respect to employment matters, you may be able to sit down. Again, I understand this relates to the expertise and there could be a wide range of expertise in-house the company. Some of the companies we deal with are very small. They don't have access to those professionals, unfortunately. But two words I'd like your thoughts on here in this context with hiring, let's say a more expensive, sophisticated employment lawyer who's dealing with some kind of high-level issues on a day-to-day basis. And the two words are accountability and nuance. What are your thoughts in terms of the benefits of hiring outside employment counsel when it comes to accountability and when it comes to this concept of nuance?

AB: I think it's like anything else in life, you kind of get what you pay for. We have a model in which our firm can bill by the hour. Sometimes people compare us to other employment lawyers who are on a different business model, a different platform, or who charge lower rates. And I'm not impugning the integrity of any of those people, but I think the value that we add is because of our collective experience, we can provide counseling and legal advice in a very streamlined way.

That value may be difficult to quantify in dollars and cents, some circumstances yes, some circumstances no. But having the right person who is accountable, who understands context and nuance can either make or save a company a tremendous amount of money based on decision making. So, I don't know if that answers your question, but that's how I interpreted it.

JR: Yeah, it does. My thoughts on this or on the nuance point, are that I don't think we're at a place yet, even with the talk about general artificial intelligence, where AI can understand the nuance of giving advice to a company. That includes knowing what the company's missions and goals are, knowing that, by the way, in today's environment, where the legal paradigm seems to be changing on a daily basis and we as lawyers need to keep current with those developments and understand how those developments impact our clients' businesses as they prepare for what's to come.

And obviously, we are lawyers, we are professionals, and therefore by virtue of that and our ethical obligations, we are accountable to our clients. That folds into that concept of why you need to hire a qualified employment lawyer who does understand your business, who understands the marketplace, and who's thinking about how these rapid changes impact not only your business today, but what's going to be happening in the future and how do you plan for that? I'm not suggesting I know how anybody should plan for what's going on in this day and age, but we're trying, right?

AB: The word I would associate with it, maybe that's complementary to nuance, is context. So often, especially in this day and age where a lot of work comes in electronically, clients send us discrete questions. What I say to younger associates is oftentimes we can't really provide the right counseling because we don't know the context in which the question is being asked.

As lawyers, need information no different than a doctor. A patient walks into a doctor's office or an ER and a doctor needs medical history. Just getting a discrete question, “Can I do X or can I do Y? Is it legal to do X? Is it legal to do Y?” It's very dangerous for lawyers in our field to just reflexively answer those questions without understanding why they’re being asked and what the broader context is, because the answer needs to be weighed against a variety of factors.

For example, can I fire a 40-year-old woman or am I going to get an age claim? Well, then that leads into a whole series of questions about what's her performance history? What's her tenure? What does your population look like demographically? In many cases, what seems like a simple question can't be properly triaged without more information.

That also relates to your point about AI bots. If the inputs aren't right, the output's not going to be right. And I don't think we're at the point yet where AI can wrestle with that level of complexity and context.

JR: Yes, and to put a finer point on it and to actually wrap everything up in this concept of trust, it's really a partnership. When I say that, I don't say my partnership with you and with Mintz, but an employment lawyer's partnership, whether it's with an individual and giving that individual advice about employment or other matters, or a partnership with the corporation and having that context so that those discrete questions can be answered with that context.

All of those things, partnership by its very nature, implies trust. And so, that is what the upshot is of an excellent relationship with your outside counsel. That leads us to close out this podcast. Andrew, I want to thank you for this very interesting discussion.

AB: It's been my pleasure; it's been a lot of fun. Let's do it again.

JR: We absolutely will. I am Jen Rubin and thank you, Andrew Bernstein and those who've tuned into our Practical Policies podcast. Visit us at mintz.com if you're interested in following our content and commentary. Thank you.

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