Tuesday, February 4, 2020

The Value Proposition for Transactional Business Lawyers and Lawyering

When do transactional business lawyers add value to projects?  The literature tells us that transactional business lawyers can help correct information asymmetries and facilitate regulatory arbitrage through their knowledge and skills.  That all seems right.  But how can that message and other conceptions of value be conveyed to first-year law students in less than two hours in a mandatory, S/NC course (i.e., a course in which some--maybe many--of the students do not really want to be there and believe they have better uses for their time)?  Welcome to my world, for today . . . .

Steve Bainbridge has a nice blog post relating to transactional business lawyers that our students are required to read before class.  (Thanks, Steve!)  We will discuss the absence of transactional business lawyers in popular culture, elucidate the value propositions they represent in real life, and work through some business transactional scenarios that illustrate the value (or lack thereof) of involving lawyers in the matter.  I have worked out the class plan with my co-instructor (who cannot be there for this class meeting).  But I am looking for more.

What, in your view, must I ensure that I cover--and how?  Are there videos or charts that you recommend I "check out" for potential presentation to the class?  I teach the main session on this topic tomorrow afternoon (and I had hoped to post this yesterday . . .), but I can always come back to this topic in a future class meeting, if I play my cards right.  Let me know if you have ideas or views.


Joan Heminway, Lawyering, Teaching | Permalink


Law practice is rarely “Perry Mason (for us older), Matlock, LA Law, etc. In my case, it is about recognizing my expertise and its limitations and being able to associate or refer clients to the proper subject matter experts. When joining the legal community, the first thing I came to appreciate was collegiality. Second, by joining the community, it was finally being able to determine where expertise lay in the Tennessee legal community.

From the perspective of a (primarily) small business transactional attorney, I would point out that a transactional attorney is the first vanguard of the entrepreneur’s business. The entrepreneur is usually well versed in his product (or service), how to make that product, and how to sell that product and how the industry functions. A great impediment is that there is either sufficient respect or fear for the IRS that immediately a CPA is looped in. Oft times, legal counsel is sought when “the boat is about to be beached.” So, it is in rare cases that the attorney is “point man” putting the team together – attorney, CPA, insurance agent, etc. But, the transactional small business lawyer – depending on whether they further specialize their practice – must remain sufficiently informed and conversant in broad areas of the law.

The litigator does not “lays the path” to success for the business. The small business transactional attorney may not only assist in structuring the entity and aiding in raising capital. Then, hopefully, the entrepreneur involves the attorney in establishing the purchasing/sales architecture. The small business transactional lawyer needs to be conversant in the various regulatory environments. Making sure provisions (e.g., attorney fees and costs) are included in insurance policies, making sure worker’s compensation is in place, making sure that advertising complies with copyright and local code, signage is compliant, aids in establishing employment policies, etc. Then, in concert with other professionals, makes sure that the entrepreneur has sufficient tax and license metrics in place.

There are reasons that major corporations have in-house counsel throughout the organization and most oft, leave litigation to outside counsel. I have quite a few classmates who had very busy litigation practices (and for whom I provided the transactional services for their practices for their clients) who are now in-house managing a great deal of issues through outside counsel.

I would love to be able to point to a single resource that illuminates the role of the transactional lawyer. As a “late life” lawyer whose first career was as an entrepreneur, I am afraid many of the lessons I learned are the result of paying “stupid (ignorance) tax.” So, for any ambitious young attorney prospect, they should also understand that a lawyer that does estate or asset protection planning most likely developed that client as a business client first. That in the realm of a business client, you will acquire both knowledge and resource regarding ownership, tax, and transfer of real property. That as a small business transactional lawyer, you will most likely be dealing with issues associated with the Americans with Disabilities Act , etc.

Posted by: Tom N. | Feb 5, 2020 8:04:31 AM

This is pure gold, Tom N. Many thanks. I will use some of this in class; it jives well with part of my lesson plan. I will let you know how it goes.

Posted by: joanheminway | Feb 5, 2020 8:29:05 AM