Legal Blacksmith: A Q&A with the Authors

“Supply chain legal disputes don't start out as legal disputes. They typically start out as badly written contracts, poor communication with supply chain partners, and an inability to resolve conflicts. While legal battles are sometimes inevitable, most of the time, they can be avoided through planning and an informed approach to the supply chain and associated processes.”

So write Rosemary Coates and Sarah Rathke, the authors of Legal Blacksmith: How to Avoid and Defend Supply Chain Disputes, a new book that sets out to teach attorneys about supply chain processes and supply chain professionals about the legal aspects of their day-to-day businesses.

The pair view the problem through a unique lens: Coates is a supply chain consultant with more than 25 years of experience while Rathke is a trial attorney whose practice focuses on supply chain disputes and related litigation involving manufacturing. Together, they look at each chapter from a supply chain and legal point of view.

By Bob Trebilcock, Editorial Director

You can read an excerpt here. Meanwhile, I recently had a chance to speak with Coates about the book.

Q. Good afternoon, Rosemary. Tell us a little about the book and why you and Sarah decided to write it.

A. Sarah and I worked together on a legal case. I was the expert witness and she was the attorney defending an aerospace company. As we talked, we realized that there were real gaps in understanding between the functional side of supply chain management and the legal side of the business. So we wrote the book to fill those gaps. We really wanted people outside of the supply chain profession to understand the supply chain management and for supply chain people to understand the legal aspects of a contract.

Q. Each chapter is told from two different perspectives?

A. Exactly. I'm forever educating attorneys about what is procurement or what is forecasting. Sarah realized that when she is defending supply chain people, she is explaining the legal ramifications of what they do. So, the way we approached it is that I wrote the front end of each chapter about the process, which is based on my 25 year plus experience in the supply chain. Sarah wrote about the legal aspect: She explains how supply chain managers can stay out of trouble. Just one example is that putting something boastful in in your marketing literature can come back to haunt you if it turns out you can't produce it in a way that lives up to your claim. There are a lot of what we call “failure alerts” in the book. We provide real life examples from cases that one of us has worked on that got someone got in trouble in. They're not case studies, per se, but they're failure alerts that show where the legal aspects broke down.

Q. How common are supply chain disputes?

A. More common than you think and it's usually because contracts are vague. They're not well thought through. Keep in mind that a purchase order is really a contract. A buyer may think they're executing a contract to buy parts, but there could be more to it than that. They could be offering the supplier a forecast that they are taking to the bank. One of the cases I worked on involved a component supplier that was struggling to keep up with the volume of parts the customer said it needed. Based on the forecast, the supplier borrowed money to expand and then, of course, the bottom fell out of the economy after 9/11. They were stuck with a half-built building and sued. The customer said, no way, it was a forecast. It's not much better than to say it's going to rain tomorrow. But, you're taking on risk if you decide to produce to a forecast.

Q. What should a reader take away?

A. I think the goal is to educate the supply chain population about how to avoid supply chain disputes. Our audience could include in-house council and other attorneys on how to approach a supply chain contract. The biggest and most important thing is to communicate well, in detail and to make sure that all parties understand what they're agreeing to produce and deliver. If you're really talking to your suppliers and supply chain partners and try to come to a resolution, you won't end up in court. Too many people stand their ground and aren't willing to compromise and end up in a multi-million dollar lawsuit.

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