Why is transactional law important and/or meaningful to society and the economy? Forum

[sonyvaio18]

Would love to hear more thoughts on these two questions. The below is a summary of things I've garnered from associates.



(1) Why is transactional law valuable and meaningful to society and the economy, especially vis-a-vis what bankers and corporate executives do? I'm particularly interested in corporate/M&A and industry-specific practices (like Real Estate, Banking, and Technology)

(2) How are the specific skills you get in drafting and reading documents transferable to entrepreneurship or social welfare?



For Corporate/M&A, we help these deals get done, which helps the economy become more efficient as these transactions, presumably, lead to more social utility on the whole. Corporate/M&A lawyers, furthermore, help unravel various details that financial modelers may not analyze. By discovering this information, as well as thinking about important contingencies, we help companies manage risk and ensure a good deal. All associates I've talked to laugh when I ask if "lawyers just paper the deals."

For industry specific practices, there seems to be a lot more counseling involved regarding day-to-day business issues, with requisite knowledge of specific industries. There are, of course, M&A and private equity deals, but the skills developed seem more diverse.

[BigZuck]

Cool

[juzam_djinn]

(1) Why is transactional law valuable and meaningful to society and the economy, especially vis-a-vis what bankers and corporate executives do? I'm particularly interested in corporate/M&A and industry-specific practices (like Real Estate, Banking, and Technology)

(2) How are the specific skills you get in drafting and reading documents transferable to entrepreneurship or social welfare?



For Corporate/M&A, we help these deals get done, which helps the economy become more efficient as these transactions, presumably, lead to more social utility on the whole. Corporate/M&A lawyers, furthermore, help unravel various details that financial modelers may not analyze. By discovering this information, as well as thinking about important contingencies, we help companies manage risk and ensure a good deal. All associates I've talked to laugh when I ask if "lawyers just paper the deals."

For industry specific practices, there seems to be a lot more counseling involved regarding day-to-day business issues, with requisite knowledge of specific industries. There are, of course, M&A and private equity deals, but the skills developed seem more diverse.

FYI, you shouldn't ask that question in the first place

[Hutz_and_Goodman]

It's not particularly helpful to the economy
No it doesn't benefit social welfare
Yes they are mostly just papering the deals
No never ask a transactional associate if they are just papering the deals

[Anonymous User]

If anything I would think it goes the other way around: corp/transactional help deals go down and thus help their clients make/save money.

Lit people are cost centers from day one - they exist to stem a loss either through being wronged by another party or by being sued themselves.

Si both are valuable at the crudest level of generalization. If I had to compare I'd say one helps business function directly and the other does so indirectly by 'clarifying the law' at great time and cost and adversarial bickering.

[Big Dog]

It's not particularly helpful to the economy
No it doesn't benefit social welfare
Yes they are mostly just papering the deals
No never ask a transactional associate if they are just papering the deals

This.

btw: how many "deals" actually pan out? (Hint: fewer than you would expect.) Thus, if

By discovering this information, as well as thinking about important contingencies, we help companies manage risk and ensure a good deal.

...is true, attorneys suck.

[nothingtosee]

Sometimes there are inefficient jobs in Ohio that would be more efficient if located in Malaysia. Lawyers can help humanity reach maximum utility by moving them where they will maximize capital and returns for those who own capital.

[RedGiant]

Let's see. First, I would not tell people who work very hard and have dedicated their careers to an area that "they're just papering the deals."

I have been a banker and worked in biglaw and in Silicon Valley, doing tech deals. The big picture answer to why transactional law (or really, business in general) is important, is that we are helping grease the wheels of capitalism. You heard it here first. People might think that bankers are evil, but...even commercial lenders help spread capital around. In terms of M&A or even just helping a tech company do a financing round, you are helping a company get the capital it needs to grow. It uses that capital to expand, hire people, enter into partnerships with other companies (suppliers, customers, etc.). So yeah...you're not doing legal aid work, but I would argue that you are helping things.

Have I gotten warm fuzzies from deals in the same way that I did when my pro bono client's asylum application went through? No. But there is a sense of camraderie and purpose and a true sense of team.

Re your second question...."entrepreneurship" is a pretty nebulous concept. If you have the mentality of an entrepreneur, you probably are not so risk averse as to want to be a corporate lawyer. But I digress. Entrepreneurs just build stuff. Transactional law involves reading fine print, negotiating, being concise, project management, identifying good partners (co-counsel, bankers, lenders, etc.). A lot of skills are transferable to business.

I am not sure what you mean in your second question about social welfare. If you mean social e-ship, the difference is just a client.

[xiao_long]

(2) How are the specific skills you get in drafting and reading documents transferable to entrepreneurship or social welfare?

I recently read a book titled Smart People Should Build Things written by a CLS and DPW alumnus, and he argued a corporate lawyer adds little real value to a startup business. By the time a successful business needs a big lawyer, much of its foundation for value creation is already cemented. Big law attorneys handle legal matters for large institutional clients and ultra-high net worth individuals, not a startup company with 10 employees. Think about the difference between being Google employee No. 16 and Google employee No. 55,419.

[DJ JD]

Don't people normally shut up and take the six figure salary instead of struggling to define the value of transactional attorneys? Look, as long as clients pay a hefty sum of money for them without really debating the philosophical ramifications of doing so, I'd rather not provoke an industry-spanning discourse that will probably end up with people questioning exactly why they charge so much.

[TTTooKewl]

Don't people normally shut up and take the six figure salary instead of struggling to define the value of transactional attorneys? Look, as long as clients pay a hefty sum of money for them without really debating the philosophical ramifications of doing so, I'd rather not provoke an industry-spanning discourse that will probably end up with people questioning exactly why they charge so much.

Huh. This thread might provoke an industry-spanning discourse?

[Big Dog]

I have been a banker and worked in biglaw and in Silicon Valley, doing tech deals. The big picture answer to why transactional law (or really, business in general) is important, is that we are helping grease the wheels of capitalism. You heard it here first. People might think that bankers are evil, but...even commercial lenders help spread capital around. In terms of M&A or even just helping a tech company do a financing round, you are helping a company get the capital it needs to grow. It uses that capital to expand, hire people, enter into partnerships with other companies (suppliers, customers, etc.). So yeah...you're not doing legal aid work, but I would argue that you are helping things.

The problem is that bankers only get paid if a deal gets done -- any deal. They have a vested interest to ensure something closes, whether or not it's good for the company or society. The lawyers just make it happen, whether a good deal or bad deal. And in most cases, no lawyer has enough (tech) business knowledge to know whether a deal is a good deal for long-term new-business growth.

[bballbrett5]

Regular people could by and large do what they are hiring their transactional attorneys to do but just don't know it/are afraid to try.

[Danger Zone]

If you need to feel validated that what you're doing is "meaningful" then gtfo of transactional work

What a stupid thread

[AreJay711]

(2) How are the specific skills you get in drafting and reading documents transferable to entrepreneurship or social welfare?

I recently read a book titled Smart People Should Build Things written by a CLS and DPW alumnus, and he argued a corporate lawyer adds little real value to a startup business. By the time a successful business needs a big lawyer, much of its foundation for value creation is already cemented. Big law attorneys handle legal matters for large institutional clients and ultra-high net worth individuals, not a startup company with 10 employees. Think about the difference between being Google employee No. 16 and Google employee No. 55,419.

The transactional biglaw attorney helps the dudes get paid by navigating shit through the legal processes by which the innovation may be monetized. Helping people get paid creates entrants into the innovation market (maybe) and the innovation financing market (definitely).

Lit people definitely create value. A lot of what they do is advising people about how not to fuck up and spreading risk for fuck ups (through settlements when there is a dispute).

[DJ JD]

Don't people normally shut up and take the six figure salary instead of struggling to define the value of transactional attorneys? Look, as long as clients pay a hefty sum of money for them without really debating the philosophical ramifications of doing so, I'd rather not provoke an industry-spanning discourse that will probably end up with people questioning exactly why they charge so much.

Huh. This thread might provoke an industry-spanning discourse?

You can never be too safe breh.

[shock259]

Who cares?

[mirage1287]

All attorneys are "cost centers." While transactional attorneys may help do the paperwork for deals, there are only two line roles in business - the people who make the product(s) and the people who sell them. Every other function (including the transactional attorney) is overhead cost, even if they do generate "value."

[sundance95]

All attorneys are "cost centers." While transactional attorneys may help do the paperwork for deals, there are only two line roles in business - the people who make the product(s) and the people who sell them. Every other function (including the transactional attorney) is overhead cost, even if they do generate "value."

ignoratio elenchi/non sequitur. so what?

[juzam_djinn]

All attorneys are "cost centers." While transactional attorneys may help do the paperwork for deals, there are only two line roles in business - the people who make the product(s) and the people who sell them. Every other function (including the transactional attorney) is overhead cost, even if they do generate "value."

by your own logic, the people who sell the products are also cost centers. only one group truly matters, and that is the group making the product. everyone else, INCLUDING SALES, is a transaction cost

[mirage1287]

All attorneys are "cost centers." While transactional attorneys may help do the paperwork for deals, there are only two line roles in business - the people who make the product(s) and the people who sell them. Every other function (including the transactional attorney) is overhead cost, even if they do generate "value."

by your own logic, the people who sell the products are also cost centers. only one group truly matters, and that is the group making the product. everyone else, INCLUDING SALES, is a transaction cost

No, it's not a "cost center." Sales/product is typically a "profit center."

http://www.investopedia.com/terms/c/cost-center.asp

http://en.wikipedia.org/wiki/Profit_center

[Emma.]

What is this I don't even

[AreJay711]

No, it's not a "cost center." Sales/product is typically a "profit center."

http://www.investopedia.com/terms/c/cost-center.asp

http://en.wikipedia.org/wiki/Profit_center

Sales is also a "crusty anal bead" according to my definition. If your description of what makes something a "cost center" as opposed to a "profit center" is accurate, we obviously can't trust business people to accurately delineate "cost centers" and "profit centers."

I bet a more nuanced definition that made lawyers a "cost center" and sales a "profit center" could be found by studying the relationship between expenditures in an outfit and its expected or actual return. But that point we're just looking for a definition to fit a preconceived class.

[sonyvaio18]

also doesn't seem like the distinction is that reputable academically.

From the man himself:

Peter Drucker originally coined the term profit center around 1945. He later recanted, calling it "One of the biggest mistakes I have made." He later asserted that there are only cost centers within a business, and “The only profit center is a customer whose cheque hasn’t bounced.”[1]

[juzam_djinn]

All attorneys are "cost centers." While transactional attorneys may help do the paperwork for deals, there are only two line roles in business - the people who make the product(s) and the people who sell them. Every other function (including the transactional attorney) is overhead cost, even if they do generate "value."

by your own logic, the people who sell the products are also cost centers. only one group truly matters, and that is the group making the product. everyone else, INCLUDING SALES, is a transaction cost

No, it's not a "cost center." Sales/product is typically a "profit center."

http://www.investopedia.com/terms/c/cost-center.asp

http://en.wikipedia.org/wiki/Profit_center

sorry, I don't think anyone cares about the definitions you dug up; the fact is that at the end of the day, the only truly indispensable unit in any business is the unit that creates the product. nobody builds a company from "sales" up. HTH