Juvan's Health Law & Private Equity Report : Corporate & Health Care Lawyer & Attorney : Jayne Juvan : Benesch Friedlander Law Firm : Private Equity, Corporate Governance

Last week, I participated in an inteview with @22twts, a Twitter page run by @LanceGodard.  The full "twitterview" (or so he calls it!) is set forth below.  As you'll see, we covered a variety of areas, including recent private equity and health care trends, changes in the legal profession, and advice for unemployed attorneys and law students.  Enjoy!

Today we’re tweeting with M&A and private equity lawyer @JayneJuvan, one of Cleveland’s “Top 25 under 35” movers and shakers

1. @JayneJuvan, thank you for joining us today on Twitter. Tell us: who is @JayneJuvan?
   Pleasure’s mine. I’m a tireless advocate, mentor, student of philosophy and economics and martial arts black belt
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2. Tell us about your law practice.
   Deals, deals, deals! A 24/7 corporate lawyer, focusing on M&A, corporate governance and regulatory compliance
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3. What type of clients do you represent?
   Market leaders changing the future of health care and other industries…
   Public and private companies, many in health care, and health care focused private equity funds.
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4. And what is the single most important legal issue affecting those clients?
   Reactionary reforms from the economic crisis and potential health care crisis, causing uncertainty and nervousness…
   Challenging times we’re in, no doubt.
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5. No doubt. What do you tell every new client before you start working for them?
   I shift the focus to my clients - it’s all about them, not me…
   Which means I question & listen. Tell me about your products & service lines, your mission, & what keeps you up at night.
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6. That’s a very sensible approach. Tell us about one of the more significant client representations you’ve had.
   I’m proud to say I recently advised a client on a $300M tender offer. We worked day and night on that deal. ;-)
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7. Congratulations on that! Why do your clients hire you?
   Thanks. If I had to say it in a single word, it comes down to “trust”…
   Being a lawyer isn’t enough-I also seize upon the chance to help them grow their businesses and show them new opportunities.
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8. Am sure that is extremely valuable to them. What’s the most active area of your practice right now? Is that typical?
   Not typical, there’s been an uptick in gov’t enforcement actions and I’ve advised on corp compliance & reg investigations.
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9. What do the proposed Health Care reforms mean to your health care clients?
   Many PE funds have adopted a “wait and see” approach-they’ll delay acquisitions until there’s more certainty on HC reform.
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10. Has the econ crisis affected your clients’ ability to do business? R they changing the way they structure transactions?
    Impacts deal flow & timing. We’re spending significant time in due diligence & utilizing creative structuring techniques.
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11. I imagine the impact is far greater than 140 characters could cover…. How do you market your practice?
    You’re not kidding! Most referrals are performance based - ibanker is impressed w/our work & invites us to the next deal.
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12. What are the strategic objectives driving your Web 2.0 activity? Are you meeting them?
    Developing longlasting, authentic relatnshps. Results r better-than-expected - I’ve made many new personal & prof’l friends.
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13. How is your active Web 2.0 profile perceived by your firm’s leadership? Is it difficult to convince them of its value?
    I’d characterize our leadership as avant-garde and innovative, naturally. They’ve welcomed my efforts from the onset.
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14. That’s great for everyone. Why did you decide to become active on Twitter? Are you achieving those objectives?
    These new technologies can advance our practice’s growth. I embrace them & all they have to offer & am meeting my goals!
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15. How much time do you spend each day developing / enhancing your brand?
    We must remember that our reputation as lawyers is built day by day, decision by decision, brick by brick…
    Which means that all day, everyday is spent on brand development - every decision, every judgment call matters.
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16. Absolutely. What is the most significant issue currently facing the legal profession?
    IMHO, this ? is at the core - how do we train & mentor the next generation of lawyers & at same time remain fee sensitive?
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17. What will the legal landscape look like in 10 years?
    I’m hopeful that firms will recognize that our future is dependent upon training the next generation of lawyers…
    I believe strongly this is our duty, ought to be one of our highest priorities, and ultimately will determine our legacy…
    And I trust that the profession will be far better off tomorrow with the efforts of these rising stars
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18. That sounds like a great future. What would you do if you weren’t a lawyer?
    I’m passionate about practice of law, but an ibanker, trader on Wall Street or economist? Or, future politico? No comment!
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19. I look forward to saying “I knew her when….” How do you want to be remembered?
    LOL. In a few simple words, I hope I’m remembered as: Bold. Authentic. Smart. Tough. Purpose Driven. Principle Centered.
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20. What do you do when you’re not working?
    Always working, but on occasion move from negotiations to the sparring ring.TKD olympic style fghtng & medalist @ AAU nat’ls
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21. Wow. We’ll cover that in the next iview! What advice do you have for lawyers under- / unemployed due to the econ crisis?
    As the daughter of a breast cancer survivor (saved by Herceptin @genentech), I’ve had my share of challenges…
    Our response to crises ultimately defines us and, if we choose, can stimulate us to take action to enhance lives of others…
    Be resilient. Look closely for the opps that lie beneath the wreckage. Trust that they’re there. Find them, then give back
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22. And our last question for you: what advice do you have for people going to law school today?
    Dare to dream. Always. “The world you desire can be won. It exists. It is real. It is possible. It is yours.” Ayn Rand

Thank you, Jayne for this great twitterview and especially for your beautiful and eloquent advice!

And thank you so much for having me today, Lance! RT @22twts Thx Jayne for this twitterview & eloquent advice!

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President Barack Obama will hold an online meeting to discuss health care reform tomorrow.  In the video announcement, he calls reform the most important issue for the long term fiscal health of the United States.  

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About a week ago, three House committees released legislation designed to reform America's health care system.  The more than 850 page bill proposes the creation of a public health insurance plan and bundling of payments to hospitals and certain post-acute care providers. 

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Back in 2001, Milton Friedman weighed in on health care reform.  Gain insight into his views by reading his article entitled How to Cure Health Care.

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Closer to the beginning of the recession, at health care investing events, many health care deal makers spoke a common theme – the downturn would have little impact on health care services companies, as consumers will not delay or forgo medical treatments. After all, many health care services are necessary, much unlike other discretionary items such as a fifty-inch flat screen television set or that convertible at a family vacation house used only part of the year.  Consumers will put off the latter, not the former, and reimbursement concerns, not recession related concerns, would continue to take center stage.

But this recession has impacted industries in ways never thought possible, and health care is no exception. In a recent post, Kristen Gerencher of Marketwatch’s Health Matters blog cites two studies suggesting that consumers have cut back on care and are delaying payments to providers for treatment received. 

The American Academy of Family Physicians study indicated that nine out of ten members reported patient concerns over the ability to pay medical bills, and six out of ten reported a rise in appointment cancellations. Additionally, delaying preventive care has created a surge of more expensive procedures needed to treat health problems. Providers have also seen an uptick in charity care and have been forced to discount fees.

Raleigh Durham-based Sageworks also reported delayed payments to providers. For example, home health agencies are, on average, waiting 34 days to receive payment, up from 30 days. The drop in household income makes it difficult for consumers to pay medical bills timely. 

Unfortunately, the data suggests that this downturn is indeed different for health care companies.  Thus, some health care portfolio companies could potentially struggle – or already are struggling – from the downturn in ways that industry experts previously did not anticipate.   

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If you're interested in knowing differences in the ways boards of PE portfolio companies and publicly traded companies function, the publication entitled Private Equity vs. PLC Boards in the U.K.: A Comparison of Practices and Effectiveness (highlighted in this morning's edition of Bowne) is a must read.  The study concludes that boards of publicly traded companies are more effective at compliance and risk management, but that their PE counterparts outshine them when it comes to value creation, commitment of board members and strategic leadership.  The only caveat is that the paper is dated August 2008, before many of the events surrounding the financial crisis unfolded. 

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What does it take to be a success in business?  If you ask Cardinal Fastener & Specialty Co., Inc. President John Grabner, he will likely focus on the following three elements:  (1) persistence; (2) perseverance; and (3) pit bull (being aggressive is key, he says). 

Why should you take Grabner seriously when he offers these remarks?  Because the Cleveland based Cardinal Fastener has grown since its founding in 1968 to the largest and most responsive company in the hot forge bolt industry, is becoming an integral part of the renewable energy industry, and received a nod from President Obama himself back in January 2009 when President Obama and members of his transition team visited the plant. 

Presenting before the Cleveland Chapter of the Association of Corporate Growth at the monthly breakfast meeting last Thursday, Grabner explained that the company was not always as efficient as it is today.  But focusing on the three "Ps" allowed the company to successfully adopt "Lean Thinking," causing the company to now be in a position to provide same-day service on most orders.  The company uses raw materials that are mostly made in America, and bolts for wind turbines account for approximately 20% of the company's sales. 

If you're a company like Cardinal Fastener, how do you know when you've made it - when you've developed into a truly "great" company?  For Grabner and his team, the numbers were telling, but it was likely when they received a call from President Obama's transition team requesting a visit to their plant.  After secret service spent days sweeping the premises, President Obama visited and publicly promoted his economic agenda, his focus on renewable energy sources and Cardinal Fastener. 

The visit led to worldwide media attention, valued at approximately $22 million for the company.  Most importantly, Grabner noted that the occasion was an unforgettable experience for the Cardinal Fastener employees, who now feel like they can change the world and already are doing so one bolt at a time for the wind turbine industry.

Congratulations to Grabner and his team - a true success and leader in Cleveland!

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Jayne Juvan is now on twitter.  Check out her page at http://twitter.com/JayneJuvan. 

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On Friday, Andrew Cuomo announced a "landmark agreement" with The Carlyle Group resulting from the alleged use of intermediaries to obtain investments from the New York State Common Retirement Fund.  The forty-five page Assurance of Discontinuance (the "AOD"), issued pursuant to Executive Law section 63(15), centers around the use of placement agents to obtain public pension fund investments, a practice the attorney general deems to be fraught with abuse. 

In essence, the AOD states that an aura of suspicion is created when campaign contributions are made to the New York State Comptroller, the elected official with oversight powers over the Common Retirement Fund, currently valued at $122 billion.  These contributions are made, albeit indirectly, in exchange for investment commitments.

Cuomo found that such conduct is contrary to the central goal of ensuring that public pension fund assets are protected from manipulation and invested solely in the best interests of public pension fund beneficiaries.  Such conduct creates the appearance of "pay to play" practices that undermine the public's confidence in state government. 

According to the AOD, Carlyle - which obtained about $730,000,000 in investment commitments -cooperated with the investigation and approves of reform efforts.  In connection with the investigation, Carlyle agreed to pay the State of New York $20,000,000 and to comply with the Public Pension Fund Reform Code of Conduct, which requires the following:

• A ban on placement agents and lobbyists;
• A ban on campaign contributions to avoid pay to play;
• Increased transparency through disclosure;
• A higher, fiduciary standard of conduct in connection with public pension fund business; and
• Strengthened conflicts of interest policies. 

Currently, the Code of Conduct applies only to Carlyle.  Federal or state legislative intervention could make the Code of Conduct binding industry-wide, though there could be changes to the language if the Code works its way through the legislative process.  Even though non-binding, the Code of Conduct serves as a warning to other private equity funds and hedge funds, and such funds should consider the appropriateness or necessity of voluntary compliance with the mandates.

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