Why In-House Experience Matters

Who would you rather have counseling your emerging biotech startup - the megafirm lawyer with no practical biotech business experience, or the boutique law firm attorney who spent years as in-house counsel for a successful biotech venture or for the R&D group of a pharmaceutical company focused in the same therapeutic areas or modalities as your company?

At Faber Daeufer & Itrato PC, our professionals have felt first-hand the pressures faced by emerging biotech companies. We know the worry of depleted capital and the consequences of an inadequate partnership deal. We are a firm of former biotech in-house counsels, venture capital senior managers and pharmaceutical contract specialists. This knowledge and experience marries to create an exceptional law firm experience that benefits our clients in unique and profitable ways.

Providing practical and actionable advice
Risk aversion and legal practice often go hand-in-hand, but smartly accepting and managing risks is essential to the successful growth of an emerging business. When seeking outside legal counsel, these professionals need more than the ominous warnings and overly cautious direction that they often receive from large firms. Instead they require business-savvy advice that adequately considers risk, as well as action.
Senior Counsel Timothy LaBua is a former in-house attorney at a private equity investment firm. He explained that this issue was a constant point of frustration when working with large law firms. “They tend to be more risk averse, and the advice given wasn’t actionable. [At Faber], we have a sensitivity to the challenges of in-house attorneys, a trait rarely found at the big-box law firms. We understand how they think about the guidance they solicit from outside counsel. They are in need of actionable advice, and we are much more likely to give it to them.”
Working with law firms that lack in-house experience can actually hamper business interests, according to Associate Jodi Stanfield, who worked for several years at the European headquarters of a global contract research organization, working on clinical trial agreements and compliance matters for pharmaceutical and medical device clients. “We focus on structuring an agreement that aligns long term interests with solutions to potential problems. The time that we spend as in-house counsel provides us with practical experience regarding what works and what doesn’t work for our clients in the real world.” Stanfield explained that lawyers without this valuable experience may not fully understand the implementation of their agreements in the real world, which can actually create future problems for the client. With a combination of calculated risks and insightful precautions, we guide our clients towards profitable outcomes, while addressing potential conflicts from the start.
Principal Robert Aboud, who before joining Faber served as VP and Head of Business Strategy for GSK’s Center of Excellence for External Drug Discovery (CEEDD), also offered his thoughts on value to clients of this different perspective. “Deeply experienced in-house attorneys, who have lived with the full lifecycle of a deal, are able to come up with smart real world solutions that risk averse large firm lawyers, with no deep in-house experience, cannot offer,” he explained. “We are skilled in the art of bridging the gap between the risk/benefit approach that our business exec clients need and the ‘always play it safe’ style of legal service provided by lawyers who have not had to solve the real world problems that in-house lawyers face in their deals.”

Experience living in the deal

Unlike many of our big law counterparts, our lawyers don’t solely focus on the immediate outcomes of a transaction. Our in-house backgrounds have provided us with the first-hand experience of living in these deals for their durations, and seeing how modest adjustments to governance provisions, or financial incentives, or liability allocations can improve alignment of interests toward achieving our client’s long-term goals for the transaction. “When you work in house, you have to live with the consequences of your deal,” explained Principal Attorney Gregory Ikonen, who before joining Faber served as CEO of a successful chemistry platform based biotech and agbio company in the Bay Area. “It gives you an understanding about the practical consequences that are driving the deal. You have the experience to apply judgment about what risks should and should not be taken… what provisions to negotiate and what provisions to let go.”

Living in the deal also involves collaborating with an individual or entity that was previously on the opposite side of the table. When negotiating against someone you may end up working with, helpful resolution is essential. “There are frenemies everywhere and knowing how to handle frenemies is not something that all firms do well,” explained Mr. Ikonen.
“While in-house, I have been in deals where my company had good and bad leverage,” stated Of Counsel Mark Cooper, who recently joined Faber after serving as VP and Assistant General Counsel for Business Transactions, Research & Development at Pfizer. “There are a lot of points where it makes sense to to come up with practical resolutions. Your opponent becomes your partner, and if you cram leverage down a partner’s throat, it does not foster a productive partnership. As in-house attorneys, we understand that it is sometimes in the client’s greater interest to foster collaboration going forward.”

Consideration for our clients’ finances
As former in-house counsels, our attorneys also know first-hand what’s at stake in a pending deal. Startups deal with limited budgets and the outcome of a deal can mean the difference between business success and failure. This is a concept that mega law firm attorneys may not adequately comprehend. “Big firms don’t understand the constant fear of the wolf at the door,” stated Mr. Ikonen. “They lack a sense of urgency or appreciation for an emerging company’s existential existence of getting the deal done.”
Senior Counsel Brian Connelly, a former Senior Manager for Business Development at IDEXX Laboratories, further spoke about the economic consideration gained from in-house experience. “When in-house, you have sensitivity to the scale of things. With that understanding, you’re not spending $200K on a project where the client is only going to make $100K. Particularly with clients at the early stages of their businesses, cost sensitivity, scale and pragmatism are important.”
All of these considerations -- for providing practical and actionable advice, for providing real experience-based judgment, and for providing service at a cost that matches its value -- drove the launch of Faber Daeufer & Itrato nearly 15 years ago. Managing Principal Joe Faber is also a former in-house counsel and one of the firm’s founders. ”As in-house counsel, sitting at the table for Management Team meetings or project team meetings, we do our job best when we are seen as counselors (and not just lawyers with particular technical skills).  That means not just supporting drafting and negotiation of a transaction, but advising the client about how to prioritize goals and achieve the most important goals, how to make trade-offs to finalize transactions within timeframes often set by external forces, how to think holistically about maintaining leverage in a collaboration, and how to achieve all of this within a budget that we recognize may be siphoning critical resources from R&D activities.” 

Hiring in-house counsel with the needed scope of expertise is a luxury that many emerging biotech businesses cannot afford. And megafirm lawyers, while providing strong technical expertise, typically demand hourly billing rates exceeding $1,000 per hour, yet are unable to truly counsel clients based on their own real experiences. Faber strives to offer a more compelling solution -- a boutique law firm uniquely focused on the business of the life sciences community, delivering expertise within a more cost-sensitive construct, but distinguished by the real experience of nearly all of our senior lawyers and contracts specialists working “in house” for pharmaceutical and biotechnology companies.