Message-ID: <11845768.1075860028257.JavaMail.evans@thyme> Date: Tue, 17 Oct 2000 18:21:00 -0700 (PDT) From: bswanstrom@lockeliddell.com To: mark.taylor@enron.com Subject: FW: Oct. 2, 2000 The Need For Speed.htm Cc: dwood@lockeliddell.com, rbays@lockeliddell.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: dwood@lockeliddell.com, rbays@lockeliddell.com X-From: "Swanstrom, Bill" X-To: "'mark.taylor@enron.com'" X-cc: "Wood, Don" , "Bays, Rick" X-bcc: X-Folder: \Mark_Taylor _Dec_2000\Notes Folders\Notes inbox X-Origin: Taylor-M X-FileName: mtaylor.nsf Mark Congrats on your new role heading up the legal team for financial trading and Networks! Now that you're the new Networks guru, I thought you might be interested in the attached front page story in the most recent Texas Lawyer regarding our Firm's e-commerce practice (and specifically our work for Trade-Ranger, the BP/Shell/Occidental/etc. B2B exchange). We'd like to introduce you to Rick Bays and Chip Rainey (or reintroduce you to Rick) to explore ways in which they can help Enron in its e-commerce initiatives -- they really do know their stuff better than anyone else in this region. Don Wood or I will follow up with you on this soon. Let me know! _____ TEXAS LAWYER, Oct. 2, 2000 _____ The Need For Speed Want to Do Legal Work for a B2B Company? Better Put on Your Running Shoes by BRENDA SAPINO JEFFREYS Talk about moving at Internet speed. Locke Liddell & Sapp lawyers John "Chip" Rainey and Richard Bays met with officials at Trade-Ranger, a new business-to-business company in Houston, at 9 o'clock one morning in May. Less than six hours after they gave their pitch at a beauty contest, Rainey was toiling away at the company, then known as Energy and Petrochemical Exchange. "If you are going to represent e-commerce clients, you better respond in e-speed because that's how fast it goes," says Bays, head of the firm's technology and commercial transactions group. "That's the sort of mentality that really is prevalent in the startups - whether it's an Internet startup with a large corporation or two people in the garage." Since that hectic day in May, Rainey has spent virtually all his working hours at Trade-Ranger's temporary offices in Houston, helping the global Internet marketplace gear up for operations, which began Sept. 25. While it's unusual, but not unprecedented, for lawyers to work at a client's offices, Rainey, an associate, isn't the only one on temporary assignment at Trade-Ranger. Every one of the approximately 100 people working at the fledgling exchange company is either a consultant or an employee of one of the 14 founding companies in the B2B company. Even the two energy-industry executives heading the company are seconder (on-loan employees). Rainey says he is essentially acting as a general counsel and running a legal help desk, where Trade-Ranger workers can get quick reviews on legal issues. The questions most often deal with are human-resource issues as the company prepares to staff up with permanent employees, with immigration issues related to visas, or with rules and regulations on imports and exports. Locke Liddell lawyers also are helping on antitrust issues, which is a concern since the investors in the new company are 14 energy and petrochemical companies from around the world. Some compete. Rainey says while Trade-Ranger did not go through a Hart-Scott-Rodino process, two of the investors, BP and Royal Dutch/Shell, chose to file with antitrust regulators in the United States. The Federal Trade Commission and the U.S. Department of Justice took no actions on those filings, he says, effectively giving approval to the business plan. Meanwhile, BP and Shell, along with investors The Dow Chemical Co., Tosco and Unocal, filed similar paperwork with the European Union's Mergers Taskforce, he says. That agency also did not object, according to Rainey. The Trade-Ranger business plan calls for setting up an online marketplace where members can buy everything they need to do business and also sell products to other members. Peter Lamell, one of two interim chief executive officers, says it should reduce costs for members. They are aiming to develop a way of using e-commerce to make the purchasing process more efficient and speedy, he says. The membership is open, although it's targeted at the energy industry. Products sold through Trade-Ranger will include drill bits to gas pumps to cans of oil found on convenience store shelves. It's not an exchange for energy commodities. The Right Culture Trade-Ranger has been moving at e-speed from the start. Lamell, who was global vice president for Shell Internet Works before taking the temporary assignment at Trade-Ranger, says he and a handful of people from a number of companies came together in Houston in April to get the company up and running. The workers hail from 16 countries, says Lamell, who has spent much of his career with Shell in Australia. Lamell says he flew into Houston on a Wednesday and by Sunday the first group of on-loan employees was moving into temporary offices. A month later, Trade-Ranger held a beauty contest for Houston firms with experience in the energy industry and with dot-com companies. (Lamell won't identify the other contenders.) Locke Liddell got the job because Bays and Rainey were enthusiastic, Lamell says, noting that everyone at Trade-Ranger has been working 16-hour days, often seven days a week. "That's pretty important for us because we are really trying to build the right culture," says Lamell. Clearly, speed is part of that culture. Rainey says he and Bays interviewed for the job at 9 a.m. with the BP executive who is the interim chief financial officer for Trade-Ranger. At 10 a.m., they got a call asking them to respond - via e-mail - within an hour to six questions. Rainey says the questions were interesting. The Trade-Ranger executives wanted to know, for instance, how the executives would bill the company, and then to list their six top concerns with an Internet exchange. "I found it very refreshing that they were questions aimed at the legal issues instead of clearly r,sum,-type questions," Rainey says. The firm was hired under an alternative fee arrangement that includes an hourly component, he says. Rainey says he has spent 95 percent of his working time at Trade-Ranger, or on company projects, since he started working there. Others from the firm's technology group working at Trade-Ranger are associates Berne Kluber and Barbara Radmonovich and senior counsel Jill McDonald. The work for the startup runs the gamut, he says, including contracts for the company's permanent offices, intellectual property work related to the firm's branding, trade issues stemming from the import and export of goods, and employee benefits packages. Antitrust questions come up across the board, he says. "We want to make sure that not only de facto, but de jure, they are neutral and fair and don't do anything that's anti-competitive," he says. Initial funding for Trade-Ranger is coming from the 14 shareholders. There's no timeframe for an initial public offering, according to Rainey and Lamell. Revenues will come from membership fees and transaction fees, and later, auctions, Rainey says. Lamell says Trade-Ranger will staff up this fall and have about 100 permanent employees in place by the end of the year. Because the organization will be lean, he says many functions will be outsourced, such as accounting and communications. There are no plans to build an in-house legal department, Rainey says. Beauty Contests Firm consultant William Cobb of Houston says he expects more and more companies, especially startups in the New Economy, to require outside lawyers to work on site. While startups typically cannot afford to hire a general counsel right off the bat - or need time to find the right one - they have a constant need for legal advice. An outside counsel working on site can solve that problem, he says. "They are making deals so fast they don't have time to call a lawyer," he says. Cobb says firms need to accommodate requests to truly provide seamless service, even though that can require firms to shuffle work among lawyers back at the home base. But he suggests that clients will be more satisfied because they get full attention from lawyers who are in the building. "When you get them back in the office, they are going to be torn, [thinking], 'I've got a telephone call coming in from blah blah and a telephone call coming in from so and so,' " he says. To a degree, though, it's a paradox for dot-com companies to want a lawyer down the hall rather than a mouse click away, suggests Kenneth Hawari, head of the corporate section at Hughes & Luce in Dallas. "You would think Internet companies particularly would be perfectly satisfied to handle things virtually, but frankly they are like any other client that wants proximity," Hawari says. Hawari and Terry Schpok, a partner in Akin, Gump, Strauss, Hauer & Feld, another firm targeting New Economy clients, can cite recent instances when their firms have been hired in speedy fashion by a dot-com following a beauty contest. Schpok, a partner in Akin, Gump in Dallas and chairman in Texas for Akin Gump Technology Ventures, says it's because New Economy companies often have pressing legal needs. Sometimes they don't even realize how much they need a lawyer until after they hold a beauty contest and contestants point out some areas where they might run into problems without legal advice. "An old economy, large company that conducts a beauty contest with law firms is looking at it as interviewing potential service providers," Schpok says. "An early-stage company is looking for a strong ally with significant resources." Copyright 2000, Texas Lawyer. All rights reserved. law.com/texas Home