We Imagine The Worst Of Other People All Day

Transmogriflaw doesn't know what transactional lawyers do. We're hired to write contracts that protect our clients when things go wrong. (Those of us who do bankruptcy have the wonderful perspective of seeing all the mistakes the transactional lawyers made once things really have gone wrong). Which means we get paid to think about how things can or could go wrong. A significant subset of these possibilities are the bad things other people can do -- what happens to my client if the other guy (the employer/employee/joint venturer, whatever) turns out to be smoking crack and none of the projected milestones are met? What happens if this guy turns out to be a liar? A thief? What happens if nobody can make a decision? What happens if they're incompetent? Malicious? Crazy? Etc.

I was just on the phone with a client, explaining why the other side wanted a particular buyout provision in an operating agreement following a certain trigger. "The horrible hypothetical they're afraid of is this," I said, and set it forth. "But why does it have to be horrible?" he said, frustrated. "There are a million reasons we could do this without it being hostile or bad for the company. Why do you jump right to the worst possibility?" I paused. "Um, Client, I'm your lawyer. This is what I do, and what the lawyers advising the other side are doing." Right, right, right. Don't stop, he said. We pay you guys to do this.

What I like about transactional law is also what I don't like about it. Your imagination gets to leap around as you read or draft something. What does this clause mean happens if X happens? If Y happens? Is that the right result? Is that good or bad for my client? Is there a different way to say it that's better for my client, but still meets the other side's needs? That part is fun -- you're imagining different outcomes, and so there's something alive in even the most apparently boring document. The story lines that might come into play if the clause gets invoked are interesting to think about, and you have to be able to imagine what the different incentives are of the different players when things have gone bad. The part that's not fun is the chronic suspicion you have of everyone else, and what turns into a constant tug-of-war between trying to draft the contract so your own client has free rein to be as big of a son-of-a-bitch as he/she/it wants while the other side gets hamstrung if they stop being sweetness and light. I can see why businesspeople don't want to cultivate that particular sharp imaginative ability, and outsource it instead to us.

Comments

[Dave]

I prefer the phrase "professional pessimist."

I agree wholeheartedly with your comments. Negotiations become very frustrating when you are negotiating directly with an unrepresented party. For example, I marked up a construction contract and then walked through the changes with the general contractor. It was an extremely difficult process--mostly because it was impossible for him to comprehend that he could screw up. He kept saying, "we don't need that in there, I have a great reputation and I never perform shoddy work, etc etc etc."

[Chris]

Excellent post. To me transactional law has always seemed a kind of bland impersonal part of the law (an outsider's perspective of course) but the way you describe it gives it a whole new aspect in my mind. This is the type of post I love to find in the various blawg's I read because it gives me the prospective student insight into what it really means to practice the law.

Cheers,
Chris

[transmogriflaw]

Thank you!! I realized when I wrote my post that I'd always heard the phrase, but when it came down to it, I didn't really know what it meant.

I think, based on both your description and your blog in general, I would like it. I really appreciate the insight.

[Chuck]

I am thoroughly confused by your post, as a litigator (who is in love with his job). I always thought transaction attorneys practiced transactional law because (a) they derive no joy from being in a courtroom; and (b) they enjoy the peace and quiet of their desks. But you say you like it because your imagination leaps around as you draft documents. But that's exactly what LITIGATORS do all day long, except at 1,000 miles an hour instead of the 4 mph pace at which transactional work is done! Finding solutions to problems? We litigators do it. Imagining worst-case scenarios and steering clients away from them? We do it. Developing story lines shaped by you actions? We do it.

I guess my question is: what do you love about transactional law that is truly distinct from litigation? Certainly not anything stated in your post!

[Ernie the Attorney]

Chuck, I think she DID describe what is different. I practice litigation and I have partners who do the transactional deal. Litigators don't deal with 'what-if's' of the same sort as Transactional Lawyers. The bad stuff has already happened when a litigator gets involved. We play 'what if' with the case strategy, but that's not the same thing as the scenario that Sherry so wonderfully describes. In the litigation world, the case is shaped by the facts as they are. There are no hypotheticals. It's just not the same thing. I completely understand what Sherry is talking about.

Chuck--

I'll say this. I've practiced both litigation and corporate law, and if you think corporate law moves at 4 mph compared to litigation's 1000 mph, you're nuts. If anything, corporate law is much quicker, with clients looking for thick agreements, arcane advice, etc. within the day (if you're lucky) that you first get a call. Usually, it's because they're trying to run a business and need an anwser or agreement asap.

And as for why corporate, for me it's not because I loathe or fear the courtroom and seek the peace of my desk. I love the courtroom, but unless I'm going to practice specific types of law, I'm rarely gonna go. And again, I've found my office much "louder" (phone constantly ringing,etc.) as a corporate attorney than I ever did as a litigator.

Just one guy's opinion.

[Beldar]

I'm not one, but nevertheless have worked with and around transactional attorneys — sometimes also known as "deal lawyers" — enough to have to enormous respect for what they do.

Sherry's post captures an important aspect of transactional practice and effectively illustrates that although not carried out in a courtroom, it is indeed an "adversary practice" that calls for zeal and loyalty on behalf of one's client to ensure that he isn't bested by the other side outright in the negotiation and documentation of a transaction, nor caught unprepared by an adverse and unexpected contingency.

Additionally, however, much transactional work is carried out in coordination with, or anticipation of the involvement of, folks whose interests to your client may be partly or largely aligned, and only potentially or hypothetically adverse. The transactional lawyer may, for example, be helping an employer draw up employment or benefit agreements for its employees; or drafting for an operator of an oilwell drilling project the agreement with its investors that creates the operator's privileges, responsibilities, and duties with respect to those investors; or drafting documents to be filed with the SEC or other regulatory agencies to ensure compliance with various laws and regulations. Negotiating with your mostly-allies (but potential adversaries) is a demanding art that calls for not only aggressiveness and imagination, but subtlety, good judgment, and compromise.

Imagination and creativity aren't only used to identify and ward off bad consequences, however. Good deal lawyers can have a remarkable ability to find synergies and opportunities that benefit not only their own clients, but everyone else involved. They're charged with knowing, choosing among, and refining the numberless structures within which deals are possible, and then negotiating and communicating and drafting precisely and clearly to confirm the particulars of their transactions as they evolve. But many times — especially as they gain, with experience, a deeper understanding of their clients' and the other parties' means and needs and goals — deal lawyers' imagination and ingenuity can keep a proposed deal from falling apart, or find a way to put it back together again, in ways that might well not have occurred to the principals had they not been so capably represented. Thus, it's far more common to see transactional lawyers than trial lawyers migrate to serve as "in-house counsel" for their clients, or to go the next further step to becoming business principals on their own behalves.

It's a serious mistake to assume that being a transactional lawyer necessarily means being a pencil-pushing, form-filling-out drone, or even just a well-trained scribe. Transactional work can be every bit as thrilling as arguing to a jury, and sometimes moreso. And as for the stakes involved: The verdicts and settlements that seem enormously significant to me in my regular trial practice are most often dwarfed — frequently by orders of magnitude — by the sums of money at issue in, and the probable economic impacts from, that which the deal lawyers regularly help create and shape.

During the go-go mergers & acquisitions days of the early 1980s, I frequently was part of a team of trial lawyers who worked as auxillaries to the deal lawyers who were running the show. They were the ones who were elbow to elbow with the clients and investment bankers; we were often camped off to the side waiting for something that might or might not ever happen. We "litigators" (ugh, I hate that term) were rarely more than a sideshow to the main events of those extremely exciting engagements: we sometimes could bring a deal to a halt, but we could almost never make one go. And while our part was itself exciting and challenging, those days certainly cured me of the excessive hubris that some trial lawyers hold.

That hubris is a misconception which, unfortunately, is sometimes promoted and aggravated by the fact that by the nature of our practices, we trial lawyers all too often are dealing with deals gone south, scenarios unplanned for, terms ambiguously drafted, or disputes unanticipated. But the happy fact for our common clients is that good transactional lawyering can make much of what I do for a living unnecessary. And while there are rivalries and occasional ignorant prejudices displayed by legal practitioners of both sorts, cooperation and respect among them can be as useful and beneficial to a client as his internist's and surgeon's cooperation and respect in maintaining his health.

[Peter Friedman]

This post is an excellent explanation for my students of transactional lawyering, but inasmuch as 98% of filed lawsuits settle before trial, and settlement itself is very much a transaction requiring exactly the "what if?" thinking described here, I think the whole litigator/transactional lawyer distinction is typically given way more emphasis than it merits.

peter

[Michael Fredric]

I think Peter's point about litigation and transactional work becoming harder to differentiate is well taken -- but still, to Sherry's point, the orders of magnitude of the 'what-ifs' are usually very different. A settlement discussion is still dealing with, for the most part, a concrete set of (alleged) facts, while a complex deal will have to account for multiple potential facts within a web of logical interactions. One of the harder parts of the deal practice is trying to figure out which of the logical arms or set of hypothetical facts you can safely ignore, since you don't succeed in this practice if you can't eventually close the deal!

[Courtney Gidts]

I've managed to save up roughly $37108 in my bank account, but I'm not sure if I should buy a house or not. Do you think the market is stable or do you think that home prices will decrease by a lot?

[JEFF KNIGHTON]

I acquired 50% ownership in a residential home. The owner refuse to sell or pay rent while living in te property.Please advise.

[David Staub]

I just came across this post and finally I have a good explanation to show my kids when they ask what I do all day as a transactional attorney. Thank you, Sherry.

[Karim]

I'm a second year full time law student and part time paralegal for a legal/med malpractice firm. i decided before law school that the transactional side of the law is what I would like to do. What I am looking for from the many of you who are already transactional lawyers is an insight as to how much time/resources/funds will it take to be able to stand on my own and manage an office and finally start to see profit. Is it at all possible to start building your own office right after passing the bar, or is it really necessary to work for a year or two as most people recommend? Doesn't matter what area of law you practice, and any insight/advice is appreciated!

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[Chris]

Chuck, I think she DID describe what is different. I practice litigation and I have partners who do the transactional deal.

[Laura, Adult Tricycle]

This is the reason why my daughter quit law firm. She hates negotiation!

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