10 Things To Know About Commercial Transactions

What are the best and worst aspects of practicing in this field?

handshake shaking hands shake hands trustEd. note: Welcome to the latest installment of Better Know A Practice Area, a new series introducing readers to different practice areas. Each post is written by an editor at Practical Law who previously practiced in that area and currently writes about it. Prior columns have covered capital markets and corporate governance, securities litigation and enforcement, patent litigation, and executive compensation.

Today’s topic: life as a lawyer handling commercial transactions.

  1. What do you do in a typical day?

Attorneys in commercial transactions handle many types of transactions and support activities like advertising and promotion. There are several forms of transactions. For example, every business has agreements for sales of goods and services, and supply arrangements. Also, many businesses have a need for marketing agreements, resale or distribution agreements, or franchising deals.

While transactions differ in form and substance, there are common elements. Each transaction must define the scope of the deal (exclusivity, geography and term) and establish the parties’ respective responsibilities and conditions to performance. Attorneys craft the agreement to allocate risk among the parties and ensure that the form of the transaction meets regulatory requirements and does not trigger undesired obligations.

A commercial attorney can work on a few different transactions in a day. The initial work usually involves client meetings where you discuss objectives and expectations for the transaction. Complicated transactions often begin with a term sheet that sets the framework for the fully negotiated agreement. Associates often draft term sheets and deal documents and review drafts and comments from counsel to the counterparty. They can also expect to research regulations and consult with specialized attorneys in other practice areas to make sure that specific issues are addressed in the agreement.

  1. Who do you work with?

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At a firm, junior associates will mostly work with senior associates and partners in their practice area. They will also collaborate with specialists in other areas. For example, it is common to seek advice from antitrust counsel for distribution arrangements and to work with intellectual property lawyers when a transaction includes licensing of patents or trademarks. They will also deal with attorneys for the counterparty and participate in negotiations attended by both the parties and counsel.

In many cases, associate also deal with various functions within a client’s business, especially when the client does not have in-house counsel. Those functions include sales, marketing, finance, and purchasing. Those conversations require strong counseling skills and an ability to understand the factors that drive business decisions.

  1. What does a common career path look like?

Typically, new attorneys join large law firms to gain experience. Initially, they work on improving drafting skills, tracking the open issues, and making sure that all of the requirements for the deal have been met. During this time they learn about the different types of transactions, key issues, and market practice. Over time, junior associates get involved in negotiations and client counseling. Eventually, they may develop their own client base through career-development activities such as networking and public speaking. After several years of practice, it is common for associates to take an in-house position (often with a client) or move to a new firm that is smaller or more specialized.

  1. If variety is the spice of life, how spicy is this practice area?

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Commercial work involves many different forms of transactions and the ability to understand various business models. Commercial lawyers have to master the terminology and common solutions for each form of agreement. In many cases, they will need to be creative and revise a template to develop a solution that matches the client’s business model.

The subject matter of the deals can be very important, and commercial lawyers must understand the regulations that apply to the underlying business. For example, clients who work on government contracts may need to include specific labor requirements and government rights in deals with their vendors. Also, if commercial lawyers work on advertising or other promotional work (for example, sweepstakes), they need to understand what federal and state regulations apply and the requirements that must be met.

Junior commercial lawyers can improve their effectiveness and increase their value by asking to work on different types of deals across a few industries.

  1. How much wear and tear?

Clients often want to close a deal quickly in order to take advantage of an opportunity. That can be both exciting and challenging. Commercial attorneys need to manage their time effectively and adjust to the ebb and flow of work. There can be weeks when work is relatively slow and others when several transactions need to be completed in days. Despite the fast pace, the attorneys must be thorough and assess the risks of each transaction. For junior attorneys, there can be a lot of document review and preparation in a short time. Failure to identify an issue or a drafting mistake can lead to significant costs. For example, the clients could find themselves in breach, may have assumed a risk that they had not considered, or may not receive a benefit they thought they had bargained for.

  1. Of the people in this practice group who hate it, what exactly do they hate about it?

The most common complaint from those who hate it is burnout from a workflow that can be difficult to predict. Circumstances can demand that an attorney handle a large volume of complex work in a short time. That can be stressful and create scheduling challenges.

  1. Of the people in this practice group who love it, what exactly do they love about it?

Many commercial lawyers like working closely with the business and developing solutions. It can be very gratifying to contribute to a client’s success. Also, the deals are often very important to the business, and clients tend to view the lawyer as a trusted advisor who has seen many transactions and knows the pitfalls.

  1. Are there common avenues out of this practice area?

A common path out is an in-house counsel position. Many attorneys who go in-house continue to work on transactions but also become an integral part of the management team. For them, the day-to-day nature of the work changes from handling deal documents to counseling and strategizing. Some attorneys use the in-house role to move on to non-legal roles within the business. Companies often find that commercial attorneys understand the business and can use their analytical and organizational skills to take on another role, such as general manager. Other attorneys change their focus by developing specialized, industry-specific legal skills that involve compliance with regulations.

  1. What are some market trends that impact this practice area?

Commercial work is fairly steady but the volume of work tends to follow the business cycle.

The nature of commercial transactions has evolved in recent years, with many more transactions and promotions being handled online and across borders. As these business practices change, there are increases or changes in the regulation of commerce, such as measures for consumer protection. When those changes are implemented, the targeted industry can see a lot of activity in the form of changes to transaction terms and implementation of new processes to meet requirements.

  1. If you had to recommend one candidate from a room crowded with recent bar exam graduates, what specific qualities would he or she have that would ensure success in this practice area?

A good candidate would have the requisite legal skills and a genuine interest in developing solutions for businesses. A commercial attorney must have very good attention to detail, be a strong communicator, and be able to master a lot of facts quickly. The best candidates are those who will invest the time to learn their client’s business model so that they understand the opportunities and associated risks. The candidate should view himself or herself as someone who is skilled in helping team members achieve their business objectives while maintaining the long-term health of the business.


Tom Smolders Practical Law Company PLCTom Smolders is a senior legal editor with Practical Law, where he focuses on commercial transactions. Prior to joining Practical Law, he served as corporate counsel to several companies, including Stratasys, Ltd., Neuromodulation and Quallion LLC. He was also an associate at Liebler, Gonzalez & Portuondo, P.A. and Jones Day.