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Failed Legal Strategy in Staples-Office Depot Deal? How To Successfully Negotiate Your Way Through JV Agreements & Mergers

The proposed merger of Staples and Office Depot was a bold move. The #1 and #2 office supply big box chains confessed from the start that the consolidation would suppress market competition. In fact, the F.T.C. already blocked this merger in 1997. Nevertheless, it took a new decision passed down by a federal judge’s order last month to end what was sure to be a violation of consumer-, if not also anti-trust.

So why did these two business behemoths think they could get away with it this time?

First, the two box chain clients claimed that while a merger would, in fact, reduce competition in some ways, it would also expand competition via growing the overall market. Through this merger, Staples asserted that it could invest more completely in online businesses, going head-to-head with companies like Amazon, for example.

Second, the Staples-Office Depot legal team relied heavily on its hired gun (her firm calls her a “hired bazooka”) Diane Sullivan to make their case. The New York Times pointed out that more puzzling than the court’s decision was Sullivan’s, who rested her defense without presenting any evidence or calling any witnesses.

So, in the end, the merger—which would have created a company 15 times larger than its nearest competitor—was put to a stop. But not before Judge Emmet G. Sullivan of the Federal District Court for the District of Columbia released a written opinion emphasizing the importance of competition and antitrust in a world of big money and big mergers.

If there’s a lesson for lawyers, it’s that presenting evidence to defend your case (and this would seem obvious) is necessary for such high-stakes claims. Joint ventures offer companies the opportunity to quickly gain access to new markets or technologies. But recent legal opinion pushes a pro-enforcement stance on “market definition,” where experts via art or science describe the competitive effects of an action, like mergers and JVs.

Before your firm even reaches the courtroom, failure to carefully negotiate and structure a JV can create problems and legal liabilities for all parties down the road.

Do you know how to effectively negotiate, draft and structure joint ventures that best protect your client from the changes that occur over the life of the relationship?

If you can’t answer that question, consider taking C4CM’s audio course, “Joint Venture Agreements: Advanced Structuring, Drafting and Negotiating Strategies,” on Wednesday, June 29, 2016 from 2:00 PM To 3:15 PM Eastern.

During this information-packed CLE webinar, David L. Forney, Partner with K&L Gates LLP, and J Andrew Watson III, Shareholder at Maynard, Cooper, Gale–will explain key legal issues you should consider at the formation of a JV, and how to:

  • minimize risk for the parties
  • determine the proper legal structure
  • establish governance and control protocol
  • create exit strategies
  • address key issues surrounding disputes, resolution, and damages

Additional topics will include:

  • experience with specific joint ventures
  • competition issues
  • understanding the importance of the business plan
  • developing representations, warranties, and covenants
  • understanding the importance of ancillary documents

Staples ditched their last tag line “That was easy,” in favor of, “Make more happen”: advice that the Staples-Office Depot legal team needed to apply to their merger strategy.




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All-Day Breakfast At McDonald’s Feeds Profits & Law Firm Management Strategies

They say breakfast is the most important meal of the day. And with a sudden turnaround in the fourth quarter, McDonald’s can’t help but agree.

In October, McDonald’s announced it would finally be selling all-day breakfast, feeding both people and its profits.

“Finally” because consumers have been demanding breakfast after 10:30 a.m. pretty much since the inception of the McMuffin.

“This is the consumers’ idea. This is what they want us to do,” McDonald’s president Michael Andres told the Wall Street Journal (via Slate).

“That’s why I think this could be the catalyst for our turnaround.”

Call Andres a prophet for profit because it certainly was a turnaround. McDonald’s had been suffering losses since 2013. In fact, it suffered a huge decline in 2014 when its stock took a loss of 3.3 percent, reports CNN Money.

Today, a survey by market researchers NDP found that the move to offer all-day breakfast was “luring in new and lapsed customers,” according to the Wall Street Journal. Thanks to these new and old customers, sales have soared at McD’s, rising 5.7 percent by the end of 2015.

Why did McDonald’s hesitate so long? It’s possible that the restaurant chain feared breakfast menu would cannibalize sales from its more expensive lunch and dinner items. Burgers, on average, are pricier than breakfast menu items.

However, what McDonald’s did not achieve—up until now—was completely satisfying their customers. Listening to customer demand almost certainly brought back loyal patrons, but also attracted a new type of client—the all-day breakfast diner-type.

It’s a reminder to law firms not only to listen to their clients, but to consider the idea of encouraging a boost of smaller sales in the grand scheme of the bottom line.

Although low-yield clients may not seem like the most efficient way to earn profits, they can get you through the tough times. Think about taking on additional, smaller clients while business is slow instead of waiting for that shark-sized bite of a case. Like a line out the door at McD’s, keeping busy sends a positive signal to both associates and clients alike that your attorneys are practiced, experienced, and in-demand. This then raises your appeal to higher-paying customers.

An increased average revenue may be due to volume, not quality of case matter, but—in the end—does that matter? You may find that an uptick in small cases keeps your legal assistants busier, not your high-billing attorneys.

Support staff are often able to handle discovery, transform case management, and play a critical role in assisting attorneys. Moving forward may mean carving a new future for legal secretaries, technology, and management—to the advantage of all.

Take a tip from McDonald’s menu to increase your bottom line (and probably your belt).

Looking for more ideas to grow profits?

Take The Center for Competitive Management’s audio course online, “The Productive, Profitable Law Firm: How Agile & Lean Practices Can Reduce Costs, Increase Quality and Grow Profits,” on Thursday, February 11, 2016 from 2:00 p.m. Eastern to 3:15 p.m. Eastern.

Savvy firms are implementing Lean/Agile methodologies to reduce costs, improve quality and speed turnaround time for legal matters. In order for your law firm to start building a profitable, scalable business, you need to understand and get a handle on its systems and processes.

During this power-packed webinar, you’ll get step-by-step instructions for improving legal processes through systematic identification of workflow inefficiencies; prioritization of process improvements, and elimination of process inefficiencies.

In addition to real life examples of how firms have used Lean/Agile methodologies to improve efficiency, you’ll learn how to:

  • Identify and analyze your firm’s processes, and make incremental process improvements that can improve your bottom line
  • Develop methods to complete routine tasks quickly
  • Identify the bottlenecks that cause delays
  • Use ‘Increments’ and ‘iterations’ for improved legal productivity
  • Identify Key Performance Indicators (KPIs) that your firm should be examining (beyond billable hours)

Bon Appétit!

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What’s The Most Confusing U.S. Code? How Law Firms Can Make Simple Rules For Complex Legal Work

Nobody would dare to call our laws simple. But exactly how complicated are they?

In a working paper titled “Measuring the Complexity of the Law: The United States Code”, Daniel Katz and Michael Bommarito of Michigan State University attempt to measure exactly that, reports Wired magazine.

It may seem impossible—in the least, it’s daunting—the idea of quantitatively measuring the complexity of the United States Code, especially coming up with a metric for exactly how hard it is to understand the law.

As lawyers know, the U.S. Code is essentially the collection of all federal laws, and consists of 51 Titles, or sections, that each deal with different topics, some of the most well-known including, Title 11 for bankruptcy, Title 26 for the tax code, and Title 39 deals for the postal service.

The authors used two metrics, rule search and rule assimilation to measure the complexity of law. Respectively, the terms answer: “How complex is the task of determining the rule or set of rules applicable to the conduct in question?” and “How complex is the process of assimilating the information content of a body of legal rules?”

What were their findings? After ranking the codes according to rule search and rule assimilation, as well as other metrics, the study found Title 42 (Public Health and Welfare) to be the most complex and interconnected of the U.S. Codes. Unsurprisingly, this Code tied with Title 26, or the Internal Revenue Code, which is especially frustrating to Americans this month.

It comes down to some simple rules to define a complex world. The same could be said of your law office management.

Although building a mission statement and outlining your ideal corporate culture is important, a short set of simple rules may help your firm implement its more complex business strategy.

A new book titled Simple Rules by Donald Sull and Kathleen Eisenhardt lays out an old concept. A concept that Sull and Eisenhardt presented in the Harvard Business Review (HBR) back in 2001. “Successful companies shape their high-level strategies by relying not on complicated frameworks but on simple rules of thumb,” wrote the authors in HBR in 2012.

“Managers in these organizations translate corporate objectives into a few straightforward guidelines that help employees make on-the-spot decisions and adapt to constantly shifting environments, while keeping the big picture in mind.”

A strategy must be remembered and understood to be adopted by associates.

So to create, capture, and sustain economic value, law firms should consider distilling their strategy into a few, simple rules.

The book uses the example of a Brazilian freight train, America Latina Logistica, company that was rapidly losing money. It implemented the following simple rules:

  • remove obstacles to growing revenues,
  • minimize up-front expenditure,
  • provide benefits immediately (rather than paying off in the long term), and
  • reuse existing resources.

And the company communicated these simple rules to its employees.

Upon hearing these simple rules and—consequently—understanding them, an employee spoke up to management and proposed a very simple idea that cost the company nothing—upgrade the size of its fuel tanks so the refueling process would take less time.

When your employees understand the prioritizes of the firm, they are better able to contribute to its growth.

In law, it’s easy for associates to get bogged down in the details, the complexity of it all. Make it simple. Distill your message into short, specific, and memorable rules like (1) Always conduct client meetings in-person; (2) ensure one senior partner is present in all client meetings; (3) cross-sell services; and (4) ask for referrals at the end of meetings so the client remembers to do so as he or she walks out of the room.

This very crude version of a strategy prioritizes certain behavior, is easy to remember, and applicable to a very specific situation—client meetings.

Read more in Simple Rules, which comes out April 21.

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Steady Growth or Innovation? What Your Law Firm Can Learn From Microsoft’s Crossroads

Last week, Microsoft Chief Executive Steve Ballmer announced his retirement. And, some sources are saying this is a good opportunity to reboot the company’s disenchanted corporate culture.

Is Microsoft in such dire straits?

Consider 2010, the advent of Apple’s iPad announcement. Microsoft had already created a buzz in the tech community for its mockups of a tablet computer. Dreamed up by the inventor of the Xbox videogame, the tablet folded like a book and its users could sketch directly on the screen.

But, Microsoft waited. And, while the Apple iPad transformed into a worldwide phenomenon, for its turn, Microsoft scrapped the entire tablet computer idea.

According to Steve Ballmer, Microsoft needed to refocus its efforts on the Windows operating system for which the company first earned its reputation.

“So ingrained is Microsoft’s culture of protecting entrenched interests that swinging for the fences is sometimes punished, and so people stopped trying, say current and former employees and outsiders,” reports the Wall Street Journal.

“They say that an outsider CEO may be the best choice to welcome back technologists who think outside the box.”

In any venture, it’s important to decide on a vision. There are two extreme choices in business: (1) invest in innovation or (2) invest in the sure-thing.

For centuries, entrepreneurs have known there exists a trade-off between risk and reward. Too much risk in finding the next, new, cutting-edge technology and your company may be left in the red. However, too conservative and your company may be left in the dust.

It seems as though Microsoft isn’t sure where it should land on this thin, insensitive line of risk and reward. To those law firm managers surviving the recession, do you?

Of course, a tradeoff does not imply one without the other. For law firms, there is middle ground between innovative legal resources and services and traditional practices.

“Whether to manage a company for growth or for efficiency is a classic business conundrum, and the choice isn’t simple,” Shira Ovide reminds us in the Wall Street Journal.

Before you throw out nautical décor and ask I.M. Pei to design your new law offices, consider the following:

  1. Is there a large innovation gap between your firm and others in your same practice area?
  2. When was the last time you updated your legal technology?
  3. What is the average age of your associates?
  4. What is the spread of ages for employees at your law firm?
  5. What is the type of profile for associates you hope to attract in the future?
  6. What is your mission statement?
  7. How large do you want your firm to grow in the next 5 years? 10 years?

Often innovative companies attract bright young talent. However, if your youngest associate is in his late thirties, how well will a 20-something tweeting law grad assimilate in your firm?

On the other hand, if your firm is top-heavy, it’s likely your firm is lagging behind in the best latest technology and methods for managing your firm.

If you haven’t yet, it’s important to create a 5 to 10 year plan for:

  • Risk Management
  • Global operations
  • Incorporating technology
  • Growth targets
  • Leadership training
  • Social media/mobile devices

In the case of Microsoft, Mr. Ballmer may scoff making radical ideas come true, but he knows how to make the company green—with money, that is. Since becoming CEO in 2000, Microsoft has become one of the world’s most profitable companies by quadrupling its annual revenue, making about 75 cents in gross profit for every dollar in sales.

Google takes in half that amount.

So, yes, maybe Microsoft’s digital music player was too little, too late (do you even remember the Zune?). And, perhaps Apple’s brand is little a bit more “cool”. But, if slow and stead wins the race, Microsoft is right on track.

Does your law firm strategy match your corporate culture? Learn how to grow your business with C4CM’s audio course: Increasing Revenue Per Lawyer: Creating a Healthy Culture of Business Development.

This information-packed webinar will present best practices used by today’s most profitable firms for creating a vibrant culture of business development, including (but not limited to):

Steps to build client loyalty, manage expectations and generate client referrals

  • Identifying and maximize cross-selling opportunities
  • How to match your marketing strategy to seniority level
  • Making business development a sustainable, ongoing part of your culture


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Be As Savvy As An MBA With One Question A Day: How HBR Case Studies Can Help Law Firm Managers

As law firm professionals, you may or may not have heard of Harvard Business Review Case Studies. For MBA students and aspiring business professionals, however, solving HBR case studies is the key to success in business strategy.

HBR case studies draw from real-life examples of business dilemmas. Too soon to IPO? Challenge the boss or stand down? Are you losing all your good people? Can this brand be saved?

These questions and more are addressed in narratives written by real-world professionals. And, the attached teaching note includes the answer—at least, the action of the firm that experienced this debate at ground zero.

Case studies teach the fundamentals of business and aim to evoke out-of-the-box solutions to traditional business problems. Practice them over and over and pretty soon, you’ll surprise yourself with the ease at which you can tackle corporate obstacles.

So, imagine for a second that you are living a HBR case study. You are about to prepare a timeline for a case on PPT. Why PPT? Why not Prezi or Keynote or SlideRocket?

You are about to go to lunch when a client calls. He wants a discount on his billables for a case because he gave your firm a positive referral. What’s your firm policy for clients regarding referals? How much will a discount affect your firm’s bottom line? Will a discount today set a precedent for lower and lower fees in the future? What is the moral hazard for capitulating?

“By adopting the ‘Everything is a case study’ mindset and seeing the world through the Case Method third eye, you’ll learn to filter out the disinformation that life throws at you and uncover startling insights,” writes Robert Plant, associate professor of computer information systems at the University of Miami School of Business Administration, in the HBR Blog.

“You’ll also increase your effectiveness at questioning your company’s strategies, processes, procedures, and methods of data collection.”  For law firm managers, this means initiating the creative problem solving mindset necessary for advancing your firm.

Law firms—specifically old-school equity partners—can be stuck in their traditional ways. Sometimes it’s difficult to know where to begin with long-overdue changes. Purchase new technology? Hire younger lawyers? Retrain older lawyers?

Start with one HBR case study-style question a day. For example, when signing off on billable hours, ask yourself, what are the needs of this client? How did today’s casework directly contribute to those needs? By what methods are the associates assigned to the case fulfilling these needs, and can these methods be improved?

Read the timesheet descriptions line by line and look for one way to improve the process. Start with one case, one client, and one question.

“This will help you assist your company in finding innovative solutions. And it might be good for your career,” continues Mr. Plant.

“After all, CEOs hate canned, staid, boring, predictable answers to business problems (just as business professors hate canned, staid, boring, predictable responses to business cases). They crave creative, adaptive, innovative thinking.”

Law firm managers must be the best in the very specific business of law. Legal services may have idiosyncratic strategies and processes about them, but there are certain fundamental business principles that apply to every firm. That’s what case studies are all about.

Furthermore, case studies remind us to question and criticize in a productive fashion.

Finally, case studies remind us that success comes from paying attention to detail, challenging stale business practices, and continuing to practice the basics. Innovative thinking can grow from a simple 4-page academic exercise. And, you don’t need to get an MBA to give it a try.


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Handling Sensitive Conversations With Clients & Associates: Code Talkers, Navajo & The Language Of Law

“Code talkers” refers to persons who use an obscure language as a means to transmit secret messages.

The use of Navajo during World War II is perhaps the best known example of code talkers. Philip Johnston, a civil engineer for the city of Los Angeles, first proposed the use of Navajo to the United States Marine Corps. Johnston was a World War I veteran who was raised on the Navajo reservation as the son of a missionary.

As one of the few non-Navajos to speak the language fluently, Johnston knew that the complex grammar, the fact that the language was unwritten, and mutually intelligible pronunciation with the even the language’s closest relatives within the Na-Dene family meant Navajo could provide meaningful information across enemy lines, as well as an undecipherable code.The use of Navajo code talkers in World War II was invaluable in winning the war, but the practice of using code talkers in wartime dates back to World War I.

In fact, the first known use of Native Americans in the American military to transmit messages under fire was a group of Cherokee troops in the U.S. 30th Infantry Division during the Second Battle of the Somme in 1918. The unit was under British command at the time.

Cherokee is the only Southern Iroquoian language that remains spoken today. And yet, on March 25, 2011, Google announced the option to perform searches in Cherokee. As of November 2012, Gmail is supported in Cherokee, and on December 18, 2012, Microsoft announced Windows 8 will be released in Cherokee, containing “nearly 180,000 words and phrases” in this Native American language.

“Why do organizations like Microsoft and Google care about languages with so few speakers?” asks Nataly Kelly for the Harvard Business Review Blog.

“Without a doubt, providing members of linguistic minority groups with access to technology in their native tongues is very important. It empowers these communities, enabling their languages to survive and thrive in the digital age,” Kelly answers.

But that’s not all. In an analysis of gross domestic product by language use, Mark Davies discovered in 2003 that English and Chinese held the highest purchasing power, followed by Japanese, Spanish, and Russian, i.e., $87.50 of every $100 spend corresponds to a person who speaks a world language (via HBR).

Kelly goes on to argue that the remaining percept of micro-language speakers, like Cherokee or Navajo speakers, still possess a powerful and influential market share.

However, there’s another reason why businesses should care about language. Communication today, whether via code, programming, tweets, or traditional press releases, is an important and powerful tool.

For law firms, the extent to which you can effectively communicate your services and practice philosophy to clients affects your profitability. In his article “From Biglaw to Boutique: Networking Contraditions,” Tom Wallerstein stresses the need for partners to ask clients for work.

He points out that lawyers asking their acquaintances for work doesn’t have to be laced with a clandestine agenda. Nevertheless, “beating around the bush” won’t boost your firm’s bottom line.

Furthermore, attract clients by speaking in their language. If you want to represent a young, upcoming start-up in technology, the first step would be increasing your Klout score (or, at least, knowing what one is).

Clear language is important for selling your firm to clients. It’s also important for keeping them.

Your clients are no longer restricted to a single national, cultural, or language border. Especially in a melting pot like America, clients come from a variety of countries and cultures around the world, and their businesses serve a variety of different interests and needs.

Law firms are in the business of servicing micro-language clients—put in a single room, your engineering clients, corporate clients, and criminally prosecuted individuals will stress words, phrases, and their general demands differently.

This means your use of language should be meaningful and direct, but also universal. Unlike the intent of code talkers in military ventures, the language of law firms should aim to be understood by all. There should be no hidden messages, agendas, tricks, legal jargon, fine print or fees.

Retain your clients with a clearly written, custom retainer.

Finally, language is important in internal communication. Ethnic, cultural, and gender differences exist within, as well as outside the firm. It’s not just about preventing workplace discrimination suits with a one-size fits all policy, but it’s about making employees feel heard.

When associate competence and career goals are understood, management can them employ them in more productive ways. This is only possible with effective, adaptive internal dialogue.

So, not only is it important to know the language or your own law firm, but it is also equally important to know the language spoken by your clients and their customers. Cracking the code of sustainable business strategies is knowing when to speak up, what to say, and how exactly to say it.

For more information, listen to C4CM’s audio guide on Handling Difficult Conversations: Communication Strategies for the Workplace.


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The Hidden Costs Of Being Too Picky: Advice For Firms, Associates & Clients

Many Americans are out of work in the recession, but attorneys, specifically, are experiencing an overwhelming over-saturation of the job market.

At the same time, myriad employers are complaining about not finding the right fit for their firm. Companies protest that there is a skills-mismatch between computer illiterate older candidates versus young inexperienced applicants in today’s technologically-evolving world.

Meanwhile, recent graduates are refusing jobs. There’s a desire to “love what you do” despite the fact that there’s not enough to do in our suffering economy.

Finally, clients complain about high fees and billing structure for their legal representation; and yet, there’s plenty of competition for legal services on the market.

So, we ask, who is being too picky here? The employee, the employer, or the client? And, who has the most to lose in this confusing situation?

“I think it’s important to remember that employers control everything about the process. They define the job, they create the requirements for the job, then they decide how the word gets out to people, recruiting-wise,” explains Peter Cappelli, director of Wharton’s Center for Human Resources, in an interview with Knowledge@Wharton in Forbes.

“They set the rate of pay, which helps determine how attractive the job is, and then they handle the selection part where they look at the applicants and sort them out.”

The power of employers is at the heart of this problem. Employers believe that in a recessed economy, they can afford to be picky. As a result, many job openings remain unfilled.

“That’s certainly part of the problem—that the internal accounting systems in most organizations are so poor that they can’t tell what it costs them to keep a position vacant,” says Cappelli.

“They easily know how much it costs to employ somebody, but they can’t measure that employee’s contributions. So, in most companies, given their accounting systems, it actually looks like they’re saving money by keeping positions vacant. If you think that’s the story, then you’re obviously in no rush to hire. I think it starts there, and that’s clearly not a good thing for society or for employers.”

What’s another problem? Being too stingy with salaries.

Price must meet demand. So, if more attorneys are looking for work, the salaries that greet them must be lowered. Fair enough.

But, according to survey by Manpower, eleven percent of polled employers said they can’t get people to accept the job at the wage offered. Cappelli says, it’s not a mismatch of skills, these firms are just being cheap.

Attorneys have expensive student loans, families, and other financial obligations. Plus, they have a set of unique and specialized skills to offer. With a 50-plus hour workweek in store, if your firm can’t meet the minimum wage requirement of the job, people will prefer to stay at home (or start their own business and compete for your clients).

Employers, forgetting to invest in your own staff is hurting your firm.

Employers these days have forgotten about paying their dues. That’s right, bosses and firms are obligated to train their employees. Although it may be ideal to hire somebody with previous experience, it’s likely cheaper to hire a recent graduate and train them, instead.

Employees, for your turn, you are too picky about finding the “right” job.

Employees shouldn’t accept positions where they simply “pay their dues.” Employees should hold out for that job whose training does, in fact, pay dividends in experience. Nevertheless, employees—like employers—should count training as a benefit. It costs the employer money and it gives the employee skills. Plus, despite the well-known difficulties of a recession, being unemployed for long doesn’t look good on a resume.

If a job offer provides a lower-than-average wage but a higher-than-average training opportunity, don’t discount the latter—it is equivalent to payment.

Being too picky about salary without considering the perks of training is to the detriment of employees. Mentorship and training by experienced, older employees is invaluable—and unattainable if you start your own company directly out of college. Self-employment or lengthy unemployment may leave an individual with little options in the future–the hidden cost of a picky grad.

Finally, clients, recently, have the feeling they’re being cheated by law firms. High billable hours and competition among firms should benefit the client, right?

Unfortunately, clients often want to have their cake and eat it too. Clients want law firms to produce innovative work and billing schemes, and also compete for their business. Businesses should become more proactive when looking for representation.

Not satisfied with your current firm? You risk being left without representation at all. In this environment, that’s something entrepreneurs can’t afford. No lawyer is always worse than keeping your current lawyer.

Law firms should adapt with the economic recession and remain strategic about their hiring practices. This includes being open to client suggestions—or, at least, making it clear that suggestions by both employees and clients are welcome.

In any job, there are opportunities and then there are challenges. The key is acknowledging both. The truth is, in the best or the worst of times, it never pays to be too picky. Firms, associates, and clients should each compromise and find a middle-ground. Mutual gain is the way to achieve long-term success.


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