LegalOps assignment: Trouble at New Fashion

Introduction
You have just joined a large clothing wholesaler in The Hague called New Fashion (NF). NF is the classic
“fast fashion” operation – a large and experienced fashion design/research team supported by a huge
operational/tech budget. They research and then quickly copy the latest fashion trends from around the
world; the designs are sent immediately to NF’s experienced, long-term suppliers in low cost
manufacturing jurisdictions; they produce with the cheapest materials and ship back to Europe almost
immediately (the whole cycle lasts around 2-3 weeks from the design team copying the original!??). NF
then sells the “copies” online at 40%+ discount to the high street fashion retailers. The quality is low but
for EUR 10 per dress, who’s complaining? Certainly not the management of NF – they currently have
sales of EUR 100,000,000 plus per year.

You have been hired as a legal operations consultant to advise on legal risk management and process
(re)design only. You will not score points for other topics. The assessment will require you to review the
workshops and related readings.

There is more background information below. But first the instructions for the assignment.

Instructions
Please prepare 3 deliverables for this assignment:

1. An advice memorandum addressed to the GC and senior managers at NF on:

Assume that at least some of your audience are NOT experts in these areas.

2. A completed legal risk register.

3. 2 process maps:
a. The current state of NF’s trademark infringement process; and
b. A proposed improved state for the same process.

The process maps may be drawn with software (e.g. MS Visio or Lucidhart) or by hand. However,
either way, they should be prepared to a standard comparable to the example in the process
improvement workshop.

Deadline is Friday 17 May by 23:59. Wordcount for memorandum is 1,500 to 2,000 words.

You may upload your deliverables as one or multiple files but they MUST BE in .doc or .pdf format (e.g.
so if you use MS Visio, then re-save it as a pdf). Unreadable files will be considered as non-submissions.

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Grading rubric
Item % grade
Explain (in the memorandum) the frameworks relevant to this scenario 15%
Apply the frameworks to the fact pattern split: 65% split:
 Memorandum  40%
 Risk register  10%
 Process map  15%
Deliverables are to a professional standard (including that memorandum is 20%
accessible and includes actionable advice for the audience)

Note: you are not assessed on your knowledge of the underlying law or related legal issues (e.g.
employment law or trademark infringements). All of the necessary facts are in this document.

Overview of NF risks
Now you need to get started with your assignment. Quite sensibly, you meet with the General Counsel
who identifies 3 main areas of risk that you need to explore further:

 Commercial contracting – NF has multiple agreements with its production facilities in China.
The suppliers are large, powerful counterparties and it will be hard to replace them in the short-
medium term. Unfortunately, some of the relationships are not going well;
 Trademarks – there are multiple problems with the big clothing brands (e.g. Gucci, Nike) who
argue that NF’s designs are clearly copies of their originals and so infringe their trademarks; and
 Employment – there are a normal range of employment matters

You then meet with the other main stakeholders. This is what they tell you.

CEO
(Relevant for risk) “As you know, NF has a “move fast and break things” culture. Things go wrong – we
lose money – that happens. If it’s less than 5% of sales in a year, then ok. Lose more than that, then we
have a problem.

What’s really hard to evaluate though is our reputation. If, say, there’s a trademark infringement claim
from a big clothing brand (e.g. Nike says we copied their shoes – which we kind of do!), that’s mostly

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good publicity for us. All the angry letters are fine. But if we lose in court, then our staff and suppliers
get uncomfortable. So we need to watch carefully for that.”

(Relevant for process (re)design) “Leaving the risk aside for a second, we also need to pay attention to
our whole process for managing these infringement claims. We have a lawyer working on that, which is
enough, but the procedure is too slow. It means that we are always rushed and unprepared when the
lawyers from the big brands threaten us. So we settle (negotiate to pay the brands some money) when
actually I don’t think that we always need to. We receive about 20 claims annually and settle half of
them for about EUR 50,000 per claim. The GC and I have calculated that only 2 or 3 of those claims are
probably valid, so we’re basically just throwing money away because of the process.”

Head of procurement
“I’m responsible for our suppliers in China. It is extremely important that our relationship functions well
with them 24/7. If one of them stops supplying for any reason, it will kill our business. So it’s a full time
job for me to manage those relationships.

Unfortunately, we have problems with one of our suppliers – Supplier A, who is a subsidiary of a global
multi-billion dollar corporation. However, despite that, Supplier A says that they have cashflow problems
and cannot keep supplying us unless we prepay for orders 6 months in advance. We can’t agree to this
unless we are sure that, if Supplier A does get into financial difficulties, we will get any prepayments
refunded.

Asking us to prepay is clearly an attempt to unilaterally amend or is just a plain breach of contract. I
asked legal team to deal with it, but they have advised to litigate which will just make the relationship
with Supplier A worse.”

HR Director
“We face the normal highs and lows of an HR team. The main risk that we come across relates to
employment contracts for new joiners.

Our team processes countless contracts every year. For speed, we base each new employment
agreement on the last one that we signed. However, we need to incorporate different terms each time
depending on new employee’s function and seniority. The legal team has told us that HR is not
strategically core, so they don’t support us and we draft those changes ourselves. Unfortunately, whilst
my HR team finds drafting an interesting part of the job, we make quite a lot of mistakes. So we receive
multiple queries & meetings to clarify/amend the contracts, often lasting months after the new
employee starts. Normally nothing happens once we sign the corrected agreement.”

Trademarks lawyer
(Relevant for risk) “I agree completely with what our CEO says about the trademarks claims from the big
clothing brands. We have 1 very worrying claim right now from Gucci – apparently our proposed
summer dress design is a 100% copy of their best-selling 2024 design (we haven’t shipped our version
yet). We have received a cease and desist letter [a letter demanding that we don’t produce or sell our
copy dress]. By my calculation, Gucci has a 60%+ chance of winning around EUR 5m to 6m damages in
court. Gucci doesn’t want to negotiate with us, so I expect to receive the papers for court proceedings
any day now.”

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(Relevant for process (re)design) “But for me, those types of claims are rare, so I focus mostly on
processing the day-to-day cease and desist letters. Our CEO says that I’m too slow but there’s a lot of
work and there is no one else to help. So maybe we can improve the process? This is an outline of our
current process.

1. Normally a cease and desist letter will be emailed by the relevant clothing brand to the CEO, whose
secretary will forward it within 48 hours to our commercial team and the GC. A commercial
colleague or the GC will then send it to me within another day or 2. The cease and desist letter will
normally say that we must comply with their demands within 14 days or else the clothing brand’s
lawyers will commence legal proceedings against NF.
2. I will ask the commercial team to provide background on our proposed clothing design plus the
original design. This is in order for me to evaluate whether us producing the copy is likely to be a
trademark infringement. Mostly my contact is a junior business colleague so that they don’t
always have the information that I ask for. So they mostly need to speak with their manager to get
that missing information and then we will have another call/meeting. That can take 3-4 days.
3. I then need to work out if the claim is (a) likely to be upheld if the issue went to court; and (b) if yes,
then whether the impact (e.g. damages claim) would be serious for our business.
4. Phase (a) involves a trademark search and then one meeting with a litigation specialist or (if we need
to do more research/brainstorming) two meetings. Altogether that lasts about 5 days. If I conclude
that the claim is NOT valid, then I draft a standard letter (to be approved by the GC and signed by the
CEO) back to the brand denying the claim. If the claim IS valid, then I need to work out if the impact
would be serious for the business.
5. Phase (b) is an impact assessment which is very important. If the impact is NOT serious, then I
follow the same standard letter process as in step 4 above. If the impact IS serious, then I must raise
this immediately with the GC and CEO who will meet to discuss and give me instructions.
6. The problem with all of this is that the original 14 day deadline from the cease and desist letter
received under step 1 normally runs out around step 3 or 4 above. We then normally receive a pre-
action letter from the clothing brand, our GC panics, we agree to stop producing the copied clothing
and pay money to the brand to settle the claim.

Result – angry CEO! Please help if you can.”

Example of the Process Map

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