Lawyers as Strategic Advisors in the Trucking Industry

The transportation industry is an unpredictable environment in which to do business. The trucking industry is a heavily regulated industry that involves many pitfalls and hurdles. Advisors to the transportation industry know that the best way to handle this challenge is to plan for it. Transportation entrepreneurs often need a full range of services to complement their management team. Such services often include crafting alternate carrier practices, creative planning, utilizing innovative information technology solutions and the implementation of best business practices.

Businesses today don’t need armchair philosophizers; they need business-savvy “real life” counselors who can help guide their company to success. Those in the trucking and logistics segments of the transportation industry often need advisors who can focus on business issues such as carrier profit improvement, enhancing margins, gaining efficiencies and driving down operating costs. Consultants often provide a thorough analysis of the current business operations and identify issues that need improvement. But an outside consultant usually lacks the trust of the leaders of a company and does not often grant them a seat at the decision-making table

Succeeding in the trucking industry requires allocating time and resources to the areas that your business will most benefit your bottom line. Beyond developing your services to target the market, transportation entities most often need advisors who have the heart and soul of your business in mind. The most accomplished lawyers are those that become "trusted advisors" to their transportation clients. This means that their counsel is sought not only for discrete cases, but also on an enterprise level- and not just for "legal" matters. The trusted advisor has a profound understanding of the clients’ business, the industry the client works in and can provide professional judgment, emotional intelligence, candor and experience tailored to the client’s risk tolerance and enterprise objectives. The trusted advisor must be more than just someone who knows the law or who can handle a case. The trusted advisor must be a part of the company's DNA.

Business leaders in the transportation industry today expect their lawyers to counsel them on legal matters, but not all realize that a lawyer who is knowledgeable in the business of transportation can contribute to the success of their business by serving as strategic advisors. While everyone ultimately seeks to earn a seat at the table and be considered a strategic advisor, many lawyers fall short. Nothing is more frustrating for the business team and the lawyer when this relationship doesn’t exist.

A lawyer can only be viewed as a strategic advisor to a transportation entity if they know the industry and the specific business well enough to selflessly contribute to the issues facing the company. Moreover, if the lawyer views their role as to only weigh in on legal issues or the legal implications of issues instead of the business implications, they will be viewed as a legal advisor and will not be thought of as being able to add value beyond that. The business lawyer is the one who leaders want to invite to participate in meetings which are viewed as strategic. Oftentimes, legal issues are raised in the typical “non-legal” meetings and, if a lawyer is not present, decisions may be made that need to be undone or modified in the future. A lawyer will be viewed as a strategic advisor when they are not just available, but are solution-oriented and well-respected by their peers in the company

The job of the strategic lawyer is to provide advice to the business decision makers regarding the legal risks of the various courses of action, devise practical legal and compliant solutions that get management and the company where they need to go to achieve the company’s goals, and objectives and aid the CEO, COO and Board in making those hard decisions. The strategic lawyer communicates his or her understanding of that role and who the proper decision makers. Too many lawyers think that they should be making the decisions. That’s fatal. Of course, the lawyer needs to always urge compliance with applicable laws and regulations and reports up the chain of command. The strategic advisor lawyer must be focused almost entirely on the company’s business and not just on the competitors of the company. They must be the innovator disruptors in the industry, focusing on executing plans and making the competition irrelevant.

The main reason lawyers fail at being strategic advisors is risk tolerance. Most lawyers are programmed to be risk adverse. How many attorneys have you heard of that won’t make decisions when there is a risk involved in the decision? I know a lot. While I subscribe to the general principle that corporate attorneys are advisors and not usually decision makers for business operations, corporate attorneys in the transportation field need to be ready to help the leaders make decisions and then support those decisions even when those decisions present risks. The best strategic advisors identify the risks for the business and then assist the business to mitigate and manage the risks. If the risks are extreme, a good strategic advisor will highlight those to the business as completely as possible which may include “what if” scenarios and case examples of other companies or other decisions AND if available, alternate decisions that may accomplish the same or similar purpose. A strong lawyer strategic advisor will have to work against the way he or she is programmed to avoid all risk and instead will have to consider the best interest of the company in advising management or the Board. If decisions are made by the company with the right information available and the right approach to manage the known and potential risks, the lawyer has done his or her job.

Lawyers succeed as strategic advisors by being appropriately balanced regarding risk and exercising good judgment. An excellent strategic advisor needs to constantly strive to find the right balance between supporting the business’s operational and strategic objectives and mitigating legal, regulatory, and reputational risk. The calls at either end of the spectrum are easy. The calls in the middle are typically far more nuanced and require good judgement in balancing multiple, often competing, considerations. The other way they fail is by not providing actionable advice or recommendations. A lawyer who simply describes the risks and opportunities of various options without providing a clear recommendation on which option the business ought to pursue is unlikely to be viewed as a good strategic advisor. A good strategic advisor will listen, truly understand, speak up and adapt to the changing needs of the business organization.

Properly serving the company as a trusted advisor means you have to be proactive with your business owner clients. Most lawyers who are serving business owners focus on incorporation or agreement review, intellectual property, trademarks, copyrights – things that are reactive. So they wait until one of their business owner clients comes to them with an issue and then they handle it. If there’s business litigation that’s needed, they handle it.

But what very few lawyers do – and I’m suggesting that transportation clients need – is to create a more proactive advisory relationship with your counsel.

The first thing that proactive counsel is going to do is to really get to know your clients’ business model. How do they earn their money? What types of customers do they have? How can you help them to collect payment and close deals more easily? This is one of the areas that the lawyer as trust counsel can provide, but is often overlooked by business owners. As a corporate trusted advisor, one of the things that counsel can and should do that will help the client make money (more money) right away is to help them to be able to close their deals more quickly and easily. The attorney as trusted advisor has a direct influence on this by how agreements are drafted and how counsel suggests that the agreement be signed. The Council as trusted advisor to a business owner must proactively meet with them at least one time per week. Speaking with the client on a regular basis empowers the trusted advisor to proactively make recommendations and be working on matters that will help to grow the business and secure the perimeter of the business.

The trust advisor must also meet with the company's leadership and financial team. This is one way that the trusted advisor can make a huge impact on their bottom line, by making sure that their financial systems and their financial controls are being maintained properly.

That also allows counsel to support them in getting in place a strong asset protection plan

Once you get involved in coordination and quarterbacking, transportation clients begin to see their counsel as the trusted advisor they can turn to when anything happens in their business and sometimes in their personal life. In the heavily regulated and dangerous field of trucking and transportation, there is simply too much at stake to rely upon old-school methods of business operations. Business leaders in the transportation world are always worried about disruption. Some high-tech rival might, after all, do to their sector what smartphones did to the photography industry, what e-commerce is doing to retail, and what financial technology (fintech) is threatening to do to consumer banking. 

When disruption does affect a company, it is frequently because the enterprise was already vulnerable in some fundamental way; moreover, many incumbent companies accelerate their decline through their efforts to forestall it. Panic-driven efforts to avoid or combat disruption can easily lead to hasty, reactive, short-term-oriented decisions that move a company in many directions at once, distracting its management and squandering its resources. The fear of disruption can thus be worse for a company than the actual disruption itself.

Of course, complacency or inaction can be just as problematic. Technological changes in the transportation industry, and other external competitive forces, affect many business realities in the transportation world. Proactive measures are often needed. But they should be well thought out. The best means to be proactive is to look to your trusted advisor. While many transportation entities these days have counsel to turn to when there is a problem, many do not have an attorney as a trusted advisor who can be proactive and beneficial in many more ways than the legal industry has traditionally provided service to their clients.

The disruption in the transportation, and in other industries, has also caused a disruption in the traditional modes in which business leaders seek advice. The best means to proceed with a business decision or a corporate transaction is not to seek counseling after the fact, but to receive proactive advice from someone. That someone is increasingly becoming the attorney as trusted advisor. But this type of relationship between the attorney of trusted advisor in the business owner and/or CEO does not develop overnight. Sometimes it takes many years to find a counselor as trusted advisor. This is partly due to the fact that it takes time to find someone who a business leader can share their deepest darkest secrets as well as their confidential business plans. It is also partly due to the fact that not all attorneys see themselves as the person who should be providing proactive counseling to a company.

In my experience over the past 20 years, the businesses who succeed the most and are prepared to deal with the worst-case scenario are the ones who have an attorney as their trusted advisor in the corner to help deal with all aspects of the operations of the company. The transportation industry is changing right before our very eyes. The trucking industry is in a state of flux. The peer to peer car sharing industry has provided a means by which to revolutionize the trucking industry. To stay ahead of the curve in the trucking industry you must not only have a trusted advisor, but such trusted advisor must be able to be proactive for the day-to-day operations while keeping their eye on the horizon for changes and developments in the industry. The failure to do so can lead to disastrous consequences. Remember what happened the Kodak?

A New Synergy Between Automakers and TNCs

Automakers are in a complex relation­ship with Transportation Network Companies (“TNC’s”) such as Lyft and Uber. In a way, Uber and Lyft and Uber are both competitors and customers. The Uber and Lyft of today do not own vehicles. Their driver’s own them and in the short run, auto man­ufacturers will likely start producing customized vehicles for TNC drivers. In the long run or as soon as the level-5 driverless cars come on the scene, Uber and Lyft may have no choice but to go into the auto manufacturing business.

The Uber and Lyft of today are a quasi-technology company and quasi transportation service provider. They are not one to the exclusion of the other. The transportation industry, as far as the transportation of persons by ground involves 3 parties: the driver, the customer/passenger and the 3rd party intermediary that puts them together. Once the autonomous vehicle takes the driver out of the picture, Uber and Lyft will have no choice but to embrace a new business model that involves ownership of vehicles

Owning and operating a fleet of automated vehicles is vastly different from operating an app-based demand-responsive company that facilitates transportation of persons. Technological advances in transportation have made it inevitable for Motor City to move into Silicon Valley, just as the power of fleet ownership will force TNCs into partnership with vehicle manufacturers.

TNC’s are well on their way to making their vehicles more “passenger centric” by creating a com­fortable and seamless passenger experience — as opposed to today’s driver-centric vehicles. Passengers do not have to concentrate on driving and as such, there will be an increased focus on entertainment, infotainment and connectivity within existing vehicles. This effect of vehicles being more passenger centric will become even more pronounced when we have driverless vehicles. TV, audio, media, video games, video conferencing and high-speed Internet will become more commonplace.

The auto manufacturing industry is already working on the autonomous vehicle, which may place them in a better position to create their own ride-hailing service. They have the experience with vehicle creation and ownership and Uber has shown the world the way to creating a ride-hailing service for on demand ground transportation. But why would big auto create its own ride hailing platform when they can partner with Uber or Lyft. The big auto manufacturers already have name recognition and capital to make the leap and the driverless vehicle will not embroil them in the never-ending saga of whether Uber’s drivers are employees or independent contractors. This is an issue that has the potential to cause Uber to implode, especially in California, its home state. The decision in Dynamex makes that potential crystal clear.

All this points toward an era of transition where automak­ers, TNCs, software companies and other innovators in media and infotainment, such as Vugo, will operate in cooperation and some competition simultaneously. Over the next 5-10 years, they will all fumble their way through a convoluted series of new partnerships and alliances.

Regardless of whether to own or manage a fleet of vehicles, administrators are going to use and monetize their assets to the fullest. That means doing more than just connecting passengers with vehicles. It means finding new ways to unlock hidden value based on the information, communications, processing capabilities and physical location of those assets and the customers that use these vehicles. The cumulative result will be a fundamental shift in the business model for existing manufac­turers and tech companies because a new business model is growing which involves the convergence of data consumption and advertising. The vast frontier of in vehicle advertising and infotainment will create new capabilities and business models that do not quite exist yet in the consumer-produced trans­portation system of today

When driverless vehicles arrive, they will dramatically lower the cost of conveying physical things and create more opportunities for integrating entertainment and advertising into the transportation experience. Inside passenger vehicles, entertainment and retail will turn into major revenue streams. More lucrative will be the ability to mone­tize the process of physically bringing people together through dynamic pooling. All these services will also act as a plat­form for data gathering — helping companies build more sophisticated customer profiles and better understand tastes and preferences which will help advertisers target audiences even better that google already does. Since we all use computers on a regular basis, google has a semi-captive audience. What could be more captive than taking a trip in a vehicle from point A to point B and having ads targeted to you based upon a variety of data driven factors. 

This new wave of creative destruction is likely to devastate traditional auto manufac­turing and is poised to disrupt the business of car services. At the same time, mobility is the perfect hedge. While the profits of auto manufacturing might stagnate, the total revenues in the mobility space might well dwarf anything that currently exists. That is why Big Auto and many others are already betting on mobility. Investments are already in the billions. The rising masses of mobility patrons will create an opportunity for proprietors at a scale the world has never seen. The repercussions for our society and labor sectors will be far-reaching. The proprietors of tomorrow will sell trips and services rather than horsepower, and those services will be delivered more efficiently than ever before. Patrons will consume these services in new configurations. Mobile com­puting and human-dependent transportation have been a toxic cocktail from a safety standpoint, leading to distracted driving and more frequent car crashes.

On the other hand, automakers may be more determined to stop the rush to automation and focus more on the software inside the vehicle because technology can be far more profitable than auto manufacturing making. Unless auto manufacturers are well positioned, they may discourage regulatory approvals of level-5 vehicles, or they could create roadblocks to their usage by having their army of lobbyists put the proverbial brakes on the movement towards automation.

Either way, there is great hope for the future. New technology and new consumer demands already have us on the road toward a more technologically dynamic, less environmen­tally destructive and safer transportation system. Getting there depends largely on policy leadership over the coming 5 to 10 years — and a willingness of societies to bid farewell to the past and embrace the future of technology. History has taught us that if you don’t embrace technological change, you will become the next Kodak.

Vision Zero- the Mayor has no Vision

New York City’s Mayor Bill de Blasio said in an interview Monday that he would categorize drunk driving “that doesn’t lead to any other negative outcome” a minor offense. This is absolutely absurd. Is Mayor de Blasio serious about this. Drunk driving a minor offense so long as no one gets hurt!!!! I guess all that really matters to Mayor Bill de Blasio is that traffic accident statistics go down. The means to achieve such are irrelevant to him. In other words, driver fatigue rules look good on paper, but in reality all they will do is add window dressing for Vision Zero. To say that drunk driving a minor offense so long as no one gets hurt is kin to dying that armed robbery is a minor offense so long as no one gets hurt. Driving drunk or walking into a bank with a gun, both have potential to cause massive harm and are akin to a scourge on society, but according to this Mayor, no big deal.

How about the big deal of limiting the ability of for-hire vehicle drivers to make a living. Limiting the number of hours they can work without any proof, statistics, studies or data (data and/or studies that apply to New York City) is an absolute outrage. For-hire vehicle drivers are doing the best they can to make a living in this day in age. considering the state of the market right now, that i a hard feat to do. the market is flooded with part-time Uber drivers, thus limiting the amount of jobs a regular full time professional driver can perform. Less money for drivers means they are going to seek a job elsewhere. NYC will be left with nothing but part time in experienced drivers. Would you rather be driven by an experienced driver who knows how to manage their time and fatigue or a part time inexperienced driver who knows how to manage neither.

How many NYC taxi medallions need to be foreclosed upon until the Mayor understands that limiting the number of hours a for-hire vehicle driver can operate is not going to be good for local small businesses in the outer boroughs of NYC, is not going to be good for persons who drive people for a living, is not going to be good for the ability of drivers to continue to service those persons most in need of transportation, is not going to enable the driver to make his/her car payments, etc, etc. In other words, limiting the ability of drivers' ability to operate is not going to be good for the consumer or the the economy.

If the Mayor or the NYC Taxi and Limousine Commission had some empirical data or studies to support their arbitrary time limit, then there may be nothing to complain about, as we are all in agreement that limiting accidents in NYC is a laudable goal. But limiting drivers ability to work and make a living based upon no proof of a problem and no proof that the means sought to be imposed by the NYC Taxi and Limousine Commission are the best means to prevent accidents wholly unreasonable.

It is clear that the Mayor and the NYC Taxi and Limousine Commission are more concerned with what looks good to the public rather than what is good to the public. Accidents in NYC will never reach zero. It is a fact of life, just like crime in NYC. It will always be there. We can try to limit it, but both will be there. Police don't go after criminals and solve crimes without proof, evidence an/or data. They don't operate based upon a hunch. The NYC Taxi and Limousine Commission should not be allowed to make rules based upon a hunch either.

The Mayor's comments about drunk driving not being a big deal so long as no one gets hurt is proof that the Mayor is not really concerned with limiting accidents, but simply with the appearance that he is doing something to limit accidents. That is fine, but before you take away the ability of a for-hire vehicle driver to make a living, perhaps the Mayor should consider having some proof or evidence that the NYC Taxi and Limousine Commission proposed rules on driver fatigue be based upon some proof or evidence. Otherwise, the for-hire vehicle driver is being hurt and punished more than the drunk driver who does not cause any accidents or harm to others. Think about it. It is not just the end result that matters. The means used to achieve those results are often the difference between a well executed plan that leads to good results and a poorly executed decision that causes harm to many without any justifiable basis.

Permissionless Innovation in the FHV Industry in NYC

While Uber may have come up with a fantastic app, their business model of dispatch (i.e. closest car) is hardly novel. Their superior technology allowed them to hit the industry hard when its back was turned. The problem is that the main players in the industry are now, after having been hit hard, looking for solutions in the traditional mode. The problem is that we are well past the traditional means of solving issues in the industry.

The days of having the leaders of the industry sit down and work things out are over. If Uber showed us anything it surely was that new updated ways of thinking are necessary in this day in age and at this stage of the game.

Immediate, massive Uber adoption allowed them to flout the laws/regulations all while gaining PR at an unprecedented pace….and remember….all PR is good PR. .” In a short period of time, enough people started using the regulation-flouting service which made it both impractical and politically unpopular to crack down upon. Ask NYC Mayor Deblasio who he supported when he was the Public Advocate. When it came time to stand up to Uber, our Mayor backed off.

When confronted with legal obstacles, such as tickets for operating illegally at Newark Airport, Uber utilized its massive checkbook to circumvent any problems by paying the fines incurred by its drivers and fighting their court cases. In the meantime, the company lobbies politicians, and of course, their massive pockets go a long way to obtaining time with leading politicians who are all tool happy to take their money to help in their re-election campaign……and in the meantime, most of the public are oblivious as to what Uber is doing….doing to its drivers, doing to the industry, doing to their own safety….but in the end, then win over unwitting consumer. In every instance thus far the NYC Taxi and Limousine Commission relented and brought Uber’s practices within the four corners of the law.

In nearly every city it’s entered, Uber’s strategy has succeeded with far-reaching consequences. By muscling into urban center after urban center, Uber hasn’t just changed how people work and get around. It’s transformed what it means to be a consumer..

Uber’s strategy is called “permissionless innovation”. It is the idea that we should make just about everything legal and let the individualized choices of consumers dictate the shape of society…..and when people get hurt, lawyers, laws and lawsuits can try to retroactively sort things out. I believe that experimentation and innovation with new technologies should generally be encouraged, but not without any limitation. Before Uber came along, the for-hire vehicle industry in NYC was vibrant. Yes, the yellow taxis needed to become more responsive to the needs of consumers and the car services needed a bit of a kick in the butt to get them to innovate a bit, but at least they played by the rules. Unless a compelling case can be made that a new invention will not bring serious harm to society, innovation should not be allowed to continue unabated and just wait to address the problems when they occur at a later point in time.

Generally, permissionless innovation means a start-up is allowed to break the law so they can give consumers what they want. Regulation sure shackles entrepreneurialism, but regulation is mostly in place for a reason. It is the job of the government to look after the health, safety and welfare of its citizens…and hopefully to regulate in a fair manner. It is not laws that corrupt people, such as politicians. It is money that corrupts people. Money corrupts politicians, eventually corrupts the process and in the end causes more harm than good.

What is Uber today if not the biggest lawbreaker in the world. Uber’s lawbreaking is unprecedented in the transportation industry. Uber’s open defiance of municipal law sets it apart from others Permissionless innovation is just another way of saying “it’s easier to ask forgiveness than permission”…and for every rule that Uber breaks, the NYC TLC seems all too happy to forgive Uber. Permissionless innovation suggests that the correct order for dramatic technological changes should be first harm, then fix. Perhaps the resolution is to totally deregulate and let the consumer make their choice.

Uber pitted regulators in NYC between the existing regulatory system and the desire of thousands of consumers to utilize a new service. Some permissionless innovation proponents equate consumer choice with democracy. Every purchase of the services of a Uber driver is akin to a vote for a product, it service and its business model. Yet, what is good for consumers is not always good for the public on the whole. Tensions between workers’ interests and consumers’ interests often collide. Even more than that, workers and consumers enjoy fundamentally different levels of power under capitalism. Most workers cannot choose between competing employers the way a shopper chooses which TV to buy. Millions of workers cannot even find employment. Uber claims to be a creator of jobs, but its recent entry to the creation of the driverless vehicle proves that Uber is not looking to create jobs, but is looking to use drivers to roll out their product to the consumer and when the driverless vehicle comes into being, to drop those drivers like a bad habit.

Uber benefits from and exacerbates the precarious situation between worker and consumer by drawing many of its drivers from the ranks of the unemployed and/or underemployed— and then completing the circle of death by classifying them as independent contractors. But misclassifying its drivers as independent contractors is not what sets Uber apart from the others. What’s different is Uber’s unconcealed contempt for the rules set out by citizens’ elected representatives. Therein lies the danger. You don’t have to regard monopolistic taxi laws as democracy incarnate to recognize the threat Uber poses to basic norms of popular governance.

Permissionless innovation has produced a world where a paying customer justifies any and all business practices, where certain laws— like the minimum wage and overtime pay — is entirely warranted if the market deems them unnecessary. But citizens are not synonymous with consumers. Consumers act according to different imperatives, and in ways that often undermine the rights of workers. And if you confer on them supreme power — sidestepping the ballot box and other forms of democratic control — you create a reactionary new order.

Personally, I am OK with deregulation of the FHV industry and letting he market decide for itself what it wants, but then don’t come crying to me when someone gets hurt or a workers is paid less than the minimum wage…..or for that matter don’t go running to your local politician for help because they usually do more harm than good. Finally, don’t go running to the courts when you feel you have been wronged. In the civil justice system, justice is like beauty, as it is often in the eye of the beholder.

I am all for getting rid of the regulators and letting the FHV industry fight it out amongst themselves. Let the strong survive or let the meek inherit the earth. Regulators serve only one purpose and that is to create more regulations. This does not help the situation, especially in NYC. We don’t need more regulations. We need the ability to compete on the merits without politicians and regulators telling us what to do. The NYC TLC has shown its contempt for competition on the merits. If they had any respect for the rule of law, Uber would have had its license pulled years ago.

In the end, the consumer wants Uber…of simply Uber-like service. So then let the public have what it wants, but there will be consequences and I believe the politicians and regulators in NYC, a liberal state, will simply not allow this to happen. Politics in NYC has largely been corrupt since the beginning of time. Uber has adeptly taken advantage of the loopholes in the law and the regulators have turned a blind eye.

So where does that leave us after my long rant…….Fair competition is the key to a healthy market. The regulators and politicians either cannot allow it or will not help maintain it……since all else has failed thus far, why not let the market be deregulated for a period, let consumers choose and suffer whatever consequences may come their way from their choice of providers/suppliers…… and let innovation reign supreme…..but in the meantime, get the regulators off our backs or at least put on a show and act like they are truly seeking to maintain a fair and open marketplace. Until, we put the brakes on all of this, the consequences of the Uber disruption will be felt for generations to come. If it is good, then our children and our grandchildren will benefit. If it is bad, then we have ourselves to blame for not taking a minute to put the brakes on innovation and growth of the for FHV transportation marketplace. The stakes are very high for all involved, but for the moment very few people are looking at the big picture. Ask yourself the hard questions, look at each point of view, consider what is best not just for yourself, but for society in general…and then you may begin to wonder, is permissionless innovation a good thing that should continue unabated…or should we take a minute to stop and consider the long term ramifications.