Tuesday, July 1, 2008
Posted by Jeff Lipshaw
A reader who is interning in a NYC corporate law firm, and about to enter law school, saw my earlier post alluding to the creative possibilities in transactional work, and sought advice about choosing between transactional work and litigation work. I'm happy to share some thoughts.
1. Mostly I will be talking about big firm practice, but I should issue a disclaimer. There's big firm practice, and there's mega-firm practice. The reason it's important to make the distinction is because I'm looking backwards at a career in which many of the fulfilling aspects came later, after I did my time in the trenches (both in litigation and corporate). So there is a substantial period of learning how to chop the wood before a new lawyer gets to build, much less design, the house. My perception is that period is shorter in big firms outside of the financial centers. You will probably take on more responsibility more quickly at a big firm in Detroit than Chicago, in St. Louis than Los Angeles, in Salt Lake City than New York. [UPDATE: See comment below on how this differs between transactional and litigation.]
2. Law school, at least the way it's mostly taught, does not tell you much about the way the transactional practice works. That's because of the case method. Cases are always about litigation. (Interestingly, business schools teach transactions in the case method, but they are cases in doing business, rather than litigating about it.) Even contracts class, as usually taught, is something of a bait-and-switch. Don't blow it off, because you'll need it for the bar exam, but there's not a lot of contract law that comes to the fore in transactional practice. I often say, and am probably not far off, that the practice of contracts is 90% interpretation, and 10% all other (offer and acceptance, consideration, duress, mistake), and the teaching of contracts is 90% all other, and 10% interpretation. Litigation tends to involve the LAW a lot more. The number of occasions for going to the library and doing extensive research on a legal issue is far greater in litigation, and when you do research an issue on the transactional side, it rarely turns into work product in the way a brief springs out of the cases. You might do corporate research, for example, on whether a transaction involves substantially all of the assets of a corporation, and hence require shareholder approval, but that will tell you how to structure the deal, not be the basis for an argument.
3. Are you a win-lose kind of person or a win-win kind of person? Great trial lawyers are sublimated warriors. Winning a trial or decimating a witness in cross-examination is the thrill of conquest and vanquishing. If you are not that kind of person, it can wear on you. Personally, I realized ten years into a litigation career, (a) I wanted to be liked (if not loved) too much to be a conqueror, (b) dealing with the opponents' conception of the truth (opening up the other side's brief and reading it, for example) was frustrating and hard on my blood pressure, and (c) as I discuss below, once you get beyond the adrenaline rush that causes your eyeballs to pop out of your head (some people like that), the way trials work in cases that big firms do can be kind of . . . boring.
On the flip side, negotiating transactions is also "adversarial" in a way, and a lot of it is about winning points. Just like a litigator can't win without good facts and good witnesses, a transactional lawyer can't make points without exogenous business leverage. For example, even in a "friendly" business combination involving public companies, there are a series of points negotiated between the acquirer and the target that have to do with how tied up the deal is. The task for the sellers is to maintain some wiggle room for future leverage, and the task for buyers is to make it as difficult as possible for the target's board of directors, short of violating their fiduciary duties, to get out of the deal if a better one comes along. But that's all less a matter of the lawyer's skill than the leverage the client has or lacks. (See the Bear Stearns - J.P. Morgan deal for an example of this.)
The bane of a transactional lawyer's existence, though, is an adversary who seems more intent on winning "lawyer points" than getting the deal done. One aspect of creativity in deal lawyering, it seems to me, is knowing when to hold 'em and when to fold 'em - how to concede the points you don't need, or trade them for the ones you do. Negotiating with a lawyer who, like a litigator, needs to conquer or vanquish, is tiresome.
One of my late ex-colleagues and dear friends told me that he found the give-and-take of negotiated deals tiresome in just that way, and that's why he "stuck to raising money in the public capital markets."
4. The first part of a career, whether in litigation or corporate, is a combination of doing the grunt work and learning professional techniques. Doing the grunt work, well, sucks. Learning the professional techniques, whether it's second-chairing a deposition, or attending the negotiation of the acquisition agreement, is a lot of fun, as long as you like to learn. Being creative with those techniques is something that comes later. Two examples. Litigation. An old saw of cross-examination is that you never ask a question for which you don't know the answer. That pretty much guarantees that you won't make a mistake. But great cross-examiners violate that rule all the time, because they know what questions to ask in which they either don't care what the answer is, or have a plan for whatever comes out. Corporate. Things like the shareholders' rights plan (the poison pill) are invented by creative lawyers. But generally that's by lawyers with cycles of learning in the transactions.
Moreover, technique in itself can get old. It's the context then that supplies the interest. I'll give two non-legal professional examples. When my daughter was born 24 years ago, I was (obviously) blown away by the experience. I said something to the OB about how thrilling it must be to deliver new babies. He said the physical aspect of it lost its wonder after a while, and the thrill came from dealing with the parents. Or to take a counter example, dentistry. I don't know how much professional satisfaction comes from doing fillings and crowns once you've mastered the technique. I do understand dentists have high suicide rates, compared to other professions, for whatever reasons.
Similarly, mere technique in high-powered litigation or corporate work can get old. As I've said, I didn't like litigation. We had a ten week trial in Cheyenne, Wyoming in 1986, litigating a whole set of complex contractual issues between a coal supplier and a utility. In the midst of what ought to be the most exciting time for a corporate litigator, I realized I was bored. I knew what every already deposed witness was going to say, and what the cross-examination would be. In corporate work, it got to the point that I negotiated the key business points of the deal, but was bored stiff by the lawyers' wrangling over the environmental representation or the interstices of the definition of the "knowledge" standard for representations that hinged on it.
5. (UPDATED) Get good mentoring on this. I don't take anything away from law professors (I am one, after all), but note that the experience (as opposed to mere knowledge or analysis) of mature practice occurs well after most professors have left practice to go into the academy. Indeed, at the 2-4 year level, which is pretty common, you are still moving from grunt work to learning technique. Obviously, thoughtful professors will have observed what senior lawyers do, and can be intelligent and insightful, but they haven't necessarily experienced what it's like to be a senior lawyer in practice. Many of those senior lawyers - corporate and litigation - have real passion for their jobs, and it pays to listen to them talk about why. Or talk to adjunct professors. One of my most rewarding classes was a mock litigation course taught by Charles Marson, who had been the Executive Director of the northern California ACLU.
As with many decisions in life, there's no silver bullet, or algorithm, or pat answer. You just pays your money and takes your chances!