King’s Counsel
Senior, brainy, court lawyers. The JC is lucky enough to know a few, largely because he shares with them a fondness for cricket. They are excellent men and women, to a one, but they engage in a part of the legal process of which the JC is committed to steering as clear as he can: litigation.
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Office anthropology™
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Not just because suing and being sued is hard, gives you a tension headache and is beset with fiddly, procedural bear traps — all true — but because the road is strewn with absurd conventions, unarticulated rules of etiquette and modes of behaviour that you have to get formally; right, hang whether you were right in substance. That’s not just how the JC rolls.
Litigators are from Mars, commercial lawyers from Venus
In legal practice, court lawyering is golf you see, and the JC is a cricket kind of fellow, not just in pastime, but by disposition. Litigation is combative: its etiquette masks fundamental ugliness and pointlessness. None of the ostensible participants benefits. Commerce, on the other hand, is co-operative. “Being a good sport” is a point of substance and not form.
There is also the small matter that, for a self-respecting contracts lawyer, even talking to a Queen’s Counsel — to any litigator, really — except one you are standing next to in the slips — is a confession of professional failure. We commercial solicitors cannot notch our belt with conquests; there are no kill emblems pasted on our fuselage. We must take our pleasures another way. We play an infinite, and not a finite game.
We do this by our affability; our lack of rancour; we succeed when we see our clients going peaceably about their business, promenading down the high street in their finery, waving cheerily at us from the wheel of the fancy motorcar our careful stewardship of their affairs has helped them acquire.
We are like dogs in the nighttime: you know us because we do not bark. We mark our performance by the lack of cuts, scrapes, bruises and abrasions on our pretty faces. Our measure of success is contracts so clear that no one would dream of disputing what they mean.
Sources of contract expertise
For the most part, financial services professionals know enough of what they are about that their contracts — the “verbiage”, so to speak — don’t fall to be considered by the courts. When they do, it usually follows some cataclysmic failure, where institutions that were conventionally understood to be immortal, impervious and managed by enlightened auteurs turn out to have been run by morons.
Such revelations tend to be cyclical; over-lionised morons may go years or even decades without being exposed. But, suddenly, Lehman, you know. Enron. Our world is all at once awash with litigation — much of it conducted by, on behalf of and in front of people with barely the first idea about the complexities of financial services contracts; things subject matter experts take entirely as read.
Now, just the same thing goes for litigators. Just as commercial lawyers hate litigation, litigators hate financial markets transactions. They’re hard, they give you a tension headache, they are beset with fiddly, procedural bear traps, and the road to their comprehension is strewn with absurd conventions, unspoken rules of etiquette and modes of behaviour that you have to get formally; right, hang whether you were right in substance.
Everyone knows it is much more fun cross-examining Mrs. Pinterman about her alibi, establishing a mens rea and objecting to things. I mean security waterfalls? COME ON.
So every now and then, a litigator might see an ISDA Master Agreement or two — like Clapham omnibuses, often a few come along at once — whenever a systemically important financial institution reveals itself to have been in the hands of morons. But, and for just that reason, ISDA Master Agreements, which we in-house legal eagles find tedious, quotidian and everyday, they regard as exotic butterflies to be pinned, labeled and enclosed in glass cages. We live with them, animate them, give them life every day of our working careers. We know them, deeply, in a way no litigator, let alone a Queen’s Counsel ever could, or would want to.
Who should answer curly questions on ISDAs?
But every now and then, a thorny question might arise, as to the metaphysical chassis on which an ISDA Master Agreement, or a Template:Gmsa, or a Global Master Repurchase Agreement is engineered. It doesn’t happen often, but it is amazing when half a billion dollars is at stake how sharply one can focus on what might once have seen a dusty academic conceptualisation. Philosophical questions like this seem to perplex modern magic circle partners — people whose predecessors, let it be said, wrote the damn things, back in the day.
So, if a practical person wanted a sensible answer on such a curly question, whom would she ask?
Do you see where I am going with this?
My friends, I would ask an expert. Someone who lives, breathes, and makes an honest livelihood out of manipulating these contracts. For example, someone who has spent twenty years in the doc unit. To be sure, end-users are falling over themselves to rid themselves of these people and replace them with school-leavers in Bucharest, but they are a tenacious bunch. Many are still around. If anyone will know how an ISDA is meant to work, these people surely will.
Yet, by immovable convention it is not this cohort to whom magic circle law firms turn. Instead, they ask the one group in the world who charge more than they do, and who are less likely to have a practical clue what the right answer should be: Queen’s Counsel.