“First, Kill All the Transactional Lawyers?”
That’s the provocative question Professor Stephen Bainbridge poses in his TCS Daily Column. We say: Don’t give the clients any ideas.
(Of course, if the dying lawyer writhes on the floor in agony for six minutes before expiring, expect to get billed for that tenth of an hour.)
Professor Bainbridge asks this rhetorical question: “[W]hy does anybody hire transactional lawyers?” After all, frequently they “giv[e] advice that could be given by other professionals.” Plus, they’re annoying. And expensive.
He outlines two competing hypotheses for explaining the work of corporate lawyers: the “Pie Division Role” and the “Pie Expansion Role.” Under the former, which takes a zero-sum view of the world, lawyers try to maximize the gains of their own client. Under the latter, which does not take a zero-sum view, “the lawyer makes everybody better off by increasing the size of the pie.”
Bainbridge argues that training of transactional lawyers should focus more on the “Pie Expansion” model. To demonstrate the limitations of the “Pie Division” role, he gives this example:
You and a friend go out to eat. You decide to share a pizza, so you need to agree on its division. Would you hire somebody to negotiate a division of the pizza? Especially if they were going to take one of your slices as their fee?
But isn’t this exactly what corporate lawyers do — and how they earn their seven-figure paydays?
We offer our own, somewhat cynical take on Professor Bainbridge’s pizza example, after the jump.
This is how we envision the pizza consumption process, with transactional lawyers involved:
You and a friend go out to eat, and you decide to share a pizza. Each of you hires a corporate lawyer to negotiate its division.The piping hot pizza is brought out to your table. Before you can eat it, the corporate lawyers tell you and your friend that they must do their “due diligence.”
You sit at the table, watching the pizza cool, while the lawyers muck around in the kitchen. You hear the clanging of pots and pans.
After an eternity, the lawyers emerge. Your lawyer informs you that, based upon his comprehensive review, he has concluded that this pizza is made of dough, tomato sauce, and cheese.
Your lawyer then warns you about the pitfalls of pizza consumption. You might get heartburn or indigestion. If you’re lactose-intolerant, the cheese might upset your stomach. The pizza may contain trans fats.
Your lawyer adds that, if you eat the pizza too soon after it emerges from the oven, you could burn your tongue. Of course, there’s no danger of that now, since the pizza grew cold a long time ago.
Then your lawyer turns to the lawyer for your friend. It’s time to negotiate. They step outside the pizza parlor and argue, in animated fashion, for half an hour.
The oil on the surface of the pizza is starting to congeal. Your stomach is grumbling audibly.
Finally, the lawyers return. They have concluded that you and your friend should divide the eight-slice pie evenly, fifty-fifty. After each lawyer takes out his one-slice fee, that leaves you and your friend with three cold, soggy slices apiece.
At this point, you have no desire to eat the pizza, which is completely disgusting. So you go up to the counter and order a garden salad. It’s so much healthier than pizza.
Your transactional lawyer just increased your lifespan. Aren’t corporate lawyers great?
First, Kill All the Transactional Lawyers? [TCSDaily via ProfessorBainbridge]
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Comments
that is great
An allegory implying that lawyers don't add value and impede the application of common sense solutions? Very original. Maybe you could throw in some "yo momma" jokes too.
Well, suppose the pizza was worth millions of dollars, and there's a reasonable likelihood that your "friend" could decide somewhere down the road that you didn't equitably divide the pizza, or that the fact that he got food poisoning or obesity was evidence of fraud on your part.
Further suppose that there's a byzantine set of laws governing pizza-sharing, and if you don't split the pizza just right, your friend might be able to take your house.
Also suppose that, since the pizza is worth billions of dollars, there are huge tax consequences involved in splitting the pizza.
The point of course, is that the pizza analogy is inapposite. Bigger transactions have more legal angles, and the more legal angles there are, the more sense it makes to hire a transactional lawyer. The reason you don't hire a lawyer to split your pizza is the same reason you don't hire one to do your e-bay business, your shopping, or your car purchase.
Did Malcolm Gladwell help you write this spec? Someone is obvi looking to leverage a facile oversimplification of transactional law into a book deal.
The whole raison d'etre of transactional lawyers if that if your friend regrets anything about that pizza, he's going to hire some douche litigator to try to remake the deal - and transactional legal fees are usually nothing compared to litigation fees. Better to get it all in writing before it gets to that point.
jeez, corporate lawyers, you need to lighten up. no need to get all touchy and defensive.
5:28 PM: Yo momma is a transactional lawyer. She screws people and charges by the hour.
Is it time for the backlash to the backlash against Malcolm Gladwell yet?
And why do we have litigators? They are just transactional lawyers ("trannies" for short) with sticks up their asses.
Raffi Melkonian of Crescat weighs in on this:
http://www.crescatsententia.net/archives/2007/01/09/#006984
"[T]ransactional legal fees are usually nothing compared to litigation fees."
Really?
1. How many litigation matters allow you to engage in "premium billing" (i.e., pull a number out of your ass and claim that as your fee)?
2. Why do the most profitable firms tend to be those with top-ranked transactional practices (e.g., Wachtell)?
3. Sure, litigation fees can be huge when you're dealing with contingency fee matters (e.g., the Blackberry litigation). But how many big corporations hire their lawyers with contingency fee arrangements? Not many.
Wow. There are some uptight folks on here. I am a transactional attorney and thought it was hilarious.
I also thought it was hilarious, but lacking in substance. I'm not a transactional lawyer and think that they're lawyers who don't want to be lawyers, but the pizza analogy was just stupid. It's like arguing that the medical profession is superfluous by telling a story about someone going to the hospital to put a band-aid on a paper cut.
The analogy is excellent, save that the lawyers would not themselves go to the kitchen to muck about. They would deputise minions while sneakily plotting the creation of their very own, attractive new one-stop pizza. This pizza would be bigger, better and tastier than any other, but it would not come into being without both minions and clients who themselves liked pizza. Once created, however, the lawyers' pizza, safeguarded by an apposite contractual nexus, would go on to take centre stage in the restaurant, while what remained of the original pizza would be fed to the minions. The clients would wearily, and hungrily, share a cab home and say: "Why were our lawyers so prickly about pizza?"
This is funny exchange.
Well, truth be told. the fees paid to all of Wall Street - the investment bankers, the brokers, the lawyers, the mutual fund managers, the proxy adviser services - are a net subtract from shareholder returns, so they are ALL transaction fees. And all of them are considerable. So as a small investor stuck paying for it all, it's pretty ironic to see a "dealmaker" whining about another pig trying to squeeze in a slot at the trough.
This post was hilarious. I want to be a litigator... are there any good litigator jokes?
Associate,
"An allegory implying that lawyers don't add value and impede the application of common sense solutions? Very original. Maybe you could throw in some 'yo momma' jokes too."
Sorry, this comment didn't add any value to the discusison.