Embracing the role of trusted adviser

Joseph Frasca knows a thing or two about big journeys. The general counsel for tech e-commerce firm Shopify Inc got to its Ottawa-based offices via a circuitous route that took him from a tiny town in New Hampshire to Russia and the Czech Republic.

Frasca grew up an hour north of Boston, in a small town where his father had worked as a lawyer for years. As such, the law was always at the back of Frasca’s mind as a possible career, but he wanted to do it his own way. While he enjoyed small-town life, he was always driven by a desire to learn new things.

“I had a pretty big desire from when I was young to get the hell out of New Hampshire, even though I love it,” he says.

This wanderlust would eventually lead him to the other side of the world. His high school offered a class in Russian. This was when Ronald Reagan and Mikhail Gorbachev were locking horns. There was a mystique about Russia, and Frasca, an ardent James Bond fan, couldn’t resist.

A term spent in the former USSR when he was in high school entranced him, and he studied for a degree in Russian linguistics at university before heading back there to travel through Russia and the surrounding countries.

From there, he worked several jobs, spending time at an NGO and at an online newspaper during the dot-com boom. Eventually, though, he knew that he’d have to return to his studies.

“I realized four years after university that having language skills wasn’t quite enough to support a career in what I wanted to do, so I decided to go back to grad school,” he says.

Frasca studied at Boston University and Tufts, getting his masters in International Relations and Business, paired with a law degree. He started with visions of working in human rights law at The Hague, but as his studies went on, he became more interested in business and transactional law.

When he finished his studies in 2004, this interest in business law landed him a position as an associate at law firm Skadden Arps Slate Meagher & Flom LLP. He also learned something important: the extent of what he didn’t know.

At four o’clock on his first day, a clerk wheeled in a hand truck with 10 file boxes. They were filled with paperwork related to an insurance merger being conducted out of the firm’s New York office. He had to digest them and produce a due diligence report for the following day.

“Not only did I not know anything about the reinsurance business, but I’d never done due diligence before,” he recalls. This kind of thing was common. He affectionately likens working at the firm to “a pie-eating contest, where the winner of the contest got more pie.”

“It was sink or swim,” he says. It also taught him that the most important thing law school teaches you isn’t the specifics of contract law or the specifics of anything else, really — it’s the art of knuckling down.

“It’s a lot of time, reading and preparation,” he says. “That’s what clicked for me in law school: If I really want to do this and be successful, a lot of it is down to time and attention to detail.”

With a baby at home and a gruelling series of increasingly intricate cases to work on in the office, things were far from easy for the young associate, but over time he began to understand the commonalities between some of the deals, describing it as “pattern recognition.”

The experience he was getting on the smaller mergers groomed Frasca for his big shot: working on the public spinoff of EMC subsidiary VMware. The technology giant had purchased VMware in 2004, and it released around 10 per cent of its shares on the market in August 2007 for US$29 per share, raising US$957 million at launch. By the end of a day when the Dow dropped 1.6 per cent, VMware shares finished at US$51. It was a huge coup.

EMC was spinning out a business that had grown substantially since acquisition, had almost no competition and was of extreme strategic importance. Consequently, it wanted to retain control while giving it the market capital it needed. Frasca and his colleagues developed a dual-class share structure that gave EMC high-voting shares.

The process took some intensive research, he recalls. “We looked at every transaction that had a controlled company in a dual-class structure, and tried to understand how they set up their corporate structure and their governance documents.”

“We also tried to come up with relationships on the commercial side and IP sharing between EMC and VMware. They were rules of the road for how they would interact when VMware was a public company,” he adds.

If there’s one thing that Frasca took away from this process it’s that a successful business lawyer must have a healthy understanding of both legal disciplines and real-world business concerns.

“To be a good business lawyer, you must give commercial advice,” he says, arguing that lawyers in the corporate world can’t simply point to the letter of the law and then sit back and let clients mull over the risks. They must play a more active role.

“An effective business lawyer evaluates those risks and discloses them, but also sets out a few paths that allow the client to achieve whatever goals they have in a certain transaction or circumstance,” he continues. In short, a lawyer must provide constructive, creative counsel.

His work on the VMware deal led him naturally to EMC, where he became senior corporate counsel, working for nearly seven years on a variety of M&A deals and joint ventures, including business in China.

He found himself bridging other, subtler borders in his new in-house role. At Skadden, he had dealt primarily with other lawyers, but that changed at EMC.

“When you’re in-house, you’re the lawyer dealing with the business person,” he recalls, “This was when I really became a business lawyer — with the emphasis on business.”

In-house law requires talking to business people in terms that they understand. Frasca draws comparisons with his language studies. “If I speak to my kids in Russian, they won’t understand anything I say. If I speak to them in terms that they understand and appreciate, it’s much more effective.”

His time at EMC prepared him for his in-house role at tech startup Shopify, which went public in 2015.
Headed by founder Tobias Lütke, the e-commerce platform floated for $131 million that May. Frasca faced similar challenges when steering the legal side of that IPO as he did with VMware.

“It was a founder-led company. Tobias has an amazing vision for what Shopify is today and will be in the future,” he says, adding that it was important to prevent any activist investors from derailing the vision of the founding team. That required retaining a level of control for the pre-IPO management team, which Frasca once again enabled using a dual-class share structure and outsized voting rights.

“I feel that my role is to support the goals of the business, while at the same time promoting ethics and integrity at the highest level,” he says. “At our most successful, we’re trusted advisers. And we can’t be trusted advisers just by spouting off about the law.”

Straddling the fast-moving waters between law and technology isn’t about just saying yes or no, Frasca concludes: It’s about getting stuff done.

60 SECOND SNAPSHOT

THE LAWYER
Joseph Frasca

THE COMPANY
Shopify
• Studied at Boston University and Tufts University
• Worked at Skadden Arps Slate Meagher & Flom LLP
• Was senior counsel at EMC
• Steered the IPO for Shopify in 2015