Tuesday, April 6, 2010
I'll bracket Ken Stahl's excellent post below, on local development politics in the context of the real estate bust, with another interesting article by Nestor Davidson (Colorado): Values and Value Creation in Public-Private Transactions, Iowa Law Review, Vol. 95, No. 937 (2009). The abstract:
Scholars have developed a significant body of literature exploring the work of deal lawyers with the essential insight that attorneys acting as transaction-cost engineers have unique potential to add to the overall value of deals. This value-creation literature has traditionally made two foundational assumptions about the role of the state in transactional law. First, scholars have assumed that regulation is essentially irrelevant to transacting - that from the deal lawyer’s perspective, the government is a factor only to the extent that the state will enforce private agreements. Second, scholars have assumed that private parties uniformly view public policy as a constraint in the realm of compliance - that from the deal lawyer’s perspective, clients are indifferent, if not hostile, to regulatory goals. The first assumption is the subject of recent scholarship convincingly arguing that regulatory arbitrage should be added to the picture of deal lawyers as transaction-cost engineers. The second assumption, however, has gone unchallenged and is the focus of this Article.
Although the value-creation literature envisions a monolithic orientation toward the state, in practice, partnerships that engage the private sector in advancing a variety of public goals represent both a significant sector of the economy and one of the central contemporary approaches to policy by federal, state, and local governments. Deal lawyers are thus increasingly called upon not only to reduce transaction costs and leverage regulatory constraints, but also to manage a complex alignment of interests between private means and public ends. In short, lawyers in public-private transactions perform what this Article calls regulatory translation - transmogrifying the often abstract goals of public policy into the concrete mechanisms of private ordering.
This Article makes two primary contributions to the literature. First, it identifies an increasingly important transactional context largely ignored by scholars investigating the work of deal lawyers. Second, the Article gives a normative, theoretical grounding for that work, providing a framework that has the potential to enhance the advantages and mute the problems associated with public-private partnerships. Ultimately, lawyers in this context can create value in the broadest sense of the word, and there are lessons in this for deal lawyers in all transactions.