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Should We Kill All the Lawyers? Only Those Who Don't Add Value

Usually, it's the trial lawyers who bear the brunt of criticism when it comes to lawyers. But, showing that he's an equal opportunity kind of guy, Professor Stephen Bainbridge ponders whether we should First Kill All the Transactional Lawyers? (TCS Daily, 1/9/07). Bainbridge frames the question this way:

Much of the work of transactional lawyers entails giving advice that could be given by other professionals. Accordingly, it seems fair to ask: why does anybody hire transactional lawyers?

Bainbridge posits that good transactional lawyers bring value to clients' transactions by finding ways to expand the proverbial "pie." For example, a good transaction lawyer can add value by reducing transaction costs, such as through selection of the lowest-cost option for acquiring a company or by structuring a transaction to reduce the risks of nondisclosure of information. 

Bainbridge suggests two related reasons for why there aren't many good transaction lawyers. First:

Part of the problem is that law schools mainly train their graduates to be litigators. While good litigators typically have good negotiating skills (most lawsuits being settled, after all), there is a fundamental difference between the largely zero sum context of litigation and transactional lawyering.

Second, many transactional lawyers aren't properly trained in economics and business. They may know the law, but they don't always grasp the "business, financial, and economic aspects of deals so as to draft workable contracts and disclosure documents, conduct due diligence."

Bainbridge's argument seems sensible, and in fact, his position is reinforced to some extent by this blog post by Matt Asay at Info World: Why you need a lawyer on staff (1/9/07). Asay writes that if you hire a business lawyer (as opposed to a "deal killer" lawyer), you'll get:

The ability to use licensing as a tool/competitive weapon, rather than merely as the ugly stepchild to the "real business" of software. (Savvy open source vendors can quasi-control their competitors by the code they release if they use the right license.)

In other words, Asay's ideal "in house counsel" also expands the pie, by converting the software-licensing process itself into a corporate asset. 

David Lat, however, at Above the Law is cynical about all of this, offering his hilarious version of how Bainbridge's pie-expanding lawyers would operate in reality. You need to read Lat's post to fully appreciate the wit, but essentially, Lat shows that if two lawyers are tasked with negotiating division of a pizza on behalf of their clients, it's not likely that they'll do much to expand the pie. But they may wind up convincing their clients that they didn't want that pizza to begin with.

Posted by Carolyn Elefant on January 10, 2007 at 04:50 PM | Permalink | Comments (0)

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