Commercial Trends Affecting Businesses in 2019

Our cover story this month touches on six trends which have somewhat impacted businesses in the US; we speak with Angelo L Rosa, who discusses how the changes in the environment have affected this trend, as well as his role as a commercial attorney.

Green Technology

With experience advising clients in the recycling and green technology sectors, can you share ways in which environmental concerns have impacted clients’ businesses?

From outside the recycling sector, the perception of recycling is very simple: put your water bottle in one bin and your plastic wrappers in another. This is the first step in a complex and multi-faceted business model that has worldwide impact.  Government regulation must keep pace with the recycling sector, but regulations vary from country to country.  Several countries have implemented progressive regulation to nurture the recycling sector within their jurisdiction, while other countries have failed to keep pace and, in an attempt to “catch up”, have created far-reaching consequences. The prime example of such consequences has become mainstream news where China is concerned.  Historically, Chinese manufacturers have been the most important partner in international recycling, importing vast quantities of material for ‘transformation’ into finished goods for domestic and export consumption. However, environmental regulation has been out of step with the development of recycling infrastructure. In late 2017, the Chinese government (by its “National Sword” initiative) began imposing oppressive restrictions on imported recyclable commodities. Although the stated reasons for these regulations deterring environmental contamination are legitimate, the practical implementation of those regulations has proven to be arbitrary. Material containing a de minimis level of contamination is rejected as too dirty.  Removing the trace contamination would make production costs prohibitive. While promoting domestic recycling processes in China is equally legitimate, the required infrastructure required for such a system (similar or greater in magnitude to what is in place in the United States) will take several years to implement and manage domestic demand for (previously) imported material.  As a consequence, the world’s largest market of willing buyers have been cut off from willing suppliers and a catastrophic decline in the price of recyclable commodities now exists around the world.

Whether the impact is positive or negative depends primarily upon how energy companies choose to react to renewable energy generation.

Renewable Energy

It is estimated that as the demand for renewable energy increases, other energy companies will see negative impacts; what do you predict will happen and how should the industry prepare?

Whether the impact is positive or negative depends primarily upon how energy companies choose to react to renewable energy generation.   Reactions vary significantly from state to state.  For example, energy companies in California embrace alternative energy generation: customers with solar panels in their businesses and homes are able to supply their own needs and then sell excess energy through a process known as “net metering”.  Idaho has lacked a forward-thinking approach and resistance has discouraged the generation over the past ten years: utility companies would offer long-term power purchase agreements necessary to successful financing of projects; that practice has been reversed and made project development despite increases in (migratory) population, and correspondingly, increased energy needs.

In my experience, developing a relationship that establishes mutual-respect, rapport, and transparency will set the stage for a productive and practical working relationship.

Environmental Concerns

Nonetheless, overall, how have growing environmental concerns impacted other corporations and sectors?

It is an increasingly prevalent concern and an essential consideration for transactional due diligence, strategic planning, and general risk management. Establishing the criteria for site selection (whether greenfield developments or existing facilities) requires consideration of environmental concerns.  Permitting, land use and environmental impact issues require definition in the early stages of any project. This outlines legal transactional considerations and is also very much relevant to the business modelling, strategic planning and practical/personal interactions with the regulator(s), upon whose approval many projects will either succeed or fail. In my experience, developing a relationship that establishes mutual-respect, rapport, and transparency will set the stage for a productive and practical working relationship. In less favourable scenarios, the investment in trust- and disclosure-based approaches can pay significant dividends.

This is another area where counsel should give the necessary time and attention to the client’s management and make themselves available as a resource and member of the team given areas of overlap.

Environmental Demands

In your opinion, what is the best way for sectors, such as real estate, to adapt corporate best-practices and policies in order to adjust to changes in environmental demands?

A two-part approach is often helpful. First, counsel to a company affected by environmental regulations must be conversant in, at the very least, those regulations and be aware of regulatory issues as they arise.  If the depth of knowledge and experience in dealing with such matters justifies it, establishing a relationship with outside counsel specializing in environmental issues is critical.  Second, company personnel whose activities and responsibilities fall within the scope of environmental regulation should be trained in matters of regulatory compliance, provided with the necessary reference materials to “self-govern” on a day-to-day basis, and develop (in conjunction with counsel) training materials, compliance checklists, and access to company-specific information providing updates on this constantly-evolving area of regulation. This is another area where counsel should give the necessary time and attention to the client’s management and make themselves available as a resource and member of the team given areas of overlap.

The Californian economy (while significant in global terms, much less in comparison to its sister-states) is tragically crippled by poor fiscal policies and labyrinthine regulations.

The Gig Economy

With the rise of the gig-economy and evolving changes in employment structures, such as demonstrated in the California Supreme Court’s Dynamex Decision, how do you expect businesses and their workplaces to change?

Contrary to the significant outcry from California-based business communities, Dynamex presents an opportunity to comply with requirements of properly classifying work-oriented relationships. It is entirely possible to legitimately define and benefit from independent contractor relationships. The key is to do so in a way that complies with the law. Control over the work done is the gravamen of these determinations. In most respects, the Dynamex decision is no more “oppressive” than the multi-factor test applied by the Internal Revenue Service when analyzing the circumstances of an independent-contractor relationship.

The Californian economy (while significant in global terms, much less in comparison to its sister-states) is tragically crippled by poor fiscal policies and labyrinthine regulations. The cost of doing business in California is therefore significant. However, resorting to questionable practices of worker classification is not a solution, nor is attempting to shred the constitutional divisions between judicial and legislative authority (as some California business interests are attempting to do by challenging the Dynamex decision in the Legislature) to justify their practices.

A more elegant solution would involve a fundamental restructuring of work-generation to carefully define company needs and then implement policies and agreements that legitimately shift control over the process and therefore, legitimately justify a true “independent contractor” relationship, and then implement the policies/agreements governing those relationships to conform to the law.

In the long-term, strategic planning and realistic structuring of work-based relationships could yield a more favourable cost/benefit outcome than attempting to legislate around a decision that is aimed at addressing illegitimate worker designations.

To establish this level of communication and trust, I follow a general ‘multi-step’ process.

A little bit about Angelo

How do you ensure companies successfully grow with your counsel?

I approach every business client relationship with a sense of “ownership” about my work, best expressed in the line “I do what I do best in order to allow you to do what you do best.”  Caring about the client’s needs and understanding the nexus between issues and the “bottom line” allows for advice and counsel to be pragmatic and the consequences of various business and legal issues to be analyzed in the context best suited to the client’s needs.

To establish this level of communication and trust, I follow a general ‘multi-step’ process. The first step is gaining an understanding of the industry/sector in which the client does business; knowing the market and the client’s place in that market provides invaluable context.

The second step is gaining an understanding of the client’s own organization (structure, management styles, personalities, workflow, infrastructure, etc.); without knowing how a client operates, it is difficult to provide the level of understanding required to competently analyze issues in relation to the impact on the affairs and operation of the business overall.

The third step is to develop a rapport with all levels of management and (where feasible) the workforce. By ‘humanizing’ the relationship (albeit with the appropriate boundaries) the people working for a client understand my purpose is to play a supporting role and act as a resource so they can do their best work. This often creates a level of candour and also an element of accountability; knowing the company attorney is stalking the corridors can stimulate a greater amount of care and diligence in work-product!

Fortunately, this approach has led to most of my business clientele valuing my participation and input when dealing with business-oriented problems as much as legal questions. In this sense, I become approachable, trusted, and often accepted with a collegiality that allows for better communication as I carry out my work alongside those I am called upon to serve.

Project development is often the most challenging work, but by the same token, it is the most rewarding.

From risk-management to project development, you have a wide skill set; which aspect of your work poses the most legal challenges?

Project development is often the most challenging work, but by the same token, it is the most rewarding. The predominant legal challenge has less to do with the individual components as it does the process of coordinating multiple issues toward a timely and fully integrated conclusion. Most projects involve multiple areas of work, including corporate compliance, development team coordination, environmental and other regulatory concerns, land use/permitting, and of course financial modelling as well as the financing itself. Assembling these components and working with a large-cap finance entity (usually a bank of international distinction) demands competence and accountability, backed up (again) by resolving the multiple legal issues in a coordinated and interlocking manner.

How have you overcome these challenges?

Organization and clear communication are essential. Without both, a project is doomed. Building and refining an action plan, delegating responsibilities and following up on essential items is a balancing act that cannot be approached casually. The source of most conflict between parties and the most common reason for deals failing is, in my experience, a failure to clearly, coherently and proactively address challenges before they evolve into barriers or problems.

How have you seen the legal sector progress from when you first qualified?

Technology has become more sophisticated in terms of efficiently communicating and managing high volumes of information quickly and easily. More can be accomplished with efficient planning and organizing matters (whether litigation- or transaction-oriented) allowing the client’s needs to be better served, if those tools are properly utilized to enhance the abilities of counsel, rather than as a substitute for diligence and knowledge.

It is also gratifying to see an evolution in legal education from a primarily theory-based curriculum to the growth of opportunities for future attorneys to actually learn and apply practical skills, through clinical programmes, practical legal writing courses, and with a greater number of adjunct professors who are practitioners first and academics second. During my final year of law school, I was privileged to have taken one of the first commercial drafting courses offered anywhere. It was an invaluable insight and “bridge” between theory and practice.

Why did you choose the commercial legal sector?

Commercial work provides a wide scope of opportunities to understand and promote economic growth in various degrees, to facilitate a more responsible sense of business practices (through strategic planning, compliance, risk management, etc.) and—perhaps best of all—it allows one to participate in a creative process involving a wide variety of people and professions.

How does your commercial litigation experience help when advising clients?

By the time you are reading this, I will have published a (much-needed) treatise on pre-trial civil procedure in one of the jurisdictions where I am licensed. When preparing the manuscript, I was reminded of how invaluable and, in my opinion, essential it is for transactional counsel to understand the mechanics and substance of commercial litigation, because in nearly every dispute there are lessons and cautionary tales to benefit from. In this profession, it is very possible to learn from the mistakes that others make. If you understand how business relationships break down, you have an enhanced frame of reference for putting new relationships together and, hopefully, minimizing the potential for disputes over certain issues.

Angelo L. Rosa*

Commercial Advising & Legal Counsel

950 West Bannock Street, Ste. 1100 | Boise, Idaho 83702

Tel.  1(801)440-4400

Fax. 1(208)515-2203

About Angelo

I am a commercial attorney and business consultant. I have practised for over 15 years. For the past 10 years, my practice has focused primarily on commercial advising, project development and finance, and commercial litigation. I have represented clients in litigation matters before administrative bodies, state and federal trial courts, and in appellate courts throughout the United States. I have advised on commercial transaction matters in the United States and overseas and served as lead counsel in project development, finance, and acquisition matters totalling approximately $750MM. After practicing in mid- and large-size firms, I chose to dedicate my service to a select clientele through my own practice, with an emphasis on business consulting and strategic planning, complemented by comprehensive advising on project development and finance, providing ‘quasi in-house counsel’ services, consulting on litigation matters, and occasional representation in significant arbitration/litigation/appellate proceedings. In this capacity, I have been fortunate to have advised clients ranging from Fortune 500 companies to multi-generational (including three- and four generations of family members) business ventures.

I also dedicate a significant amount of time to publishing practice-oriented and academic legal articles, and am publishing a (much-needed) practice treatise on pre-trial civil procedure, written specifically for the small (but dedicated) legal profession in Idaho, whose commercial significance has grown exponentially in the past decade due to population influx from other states and abroad.

Finally, and perhaps most rewarding, is the time spent providing low-cost and pro bono representation to single-parent families in domestic abuse and discrimination matters as well as incubating entrepreneurial ventures for clients seeking a “second chance” in life after periods of difficulty.