Legal operations

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A tremendous new wheeze for rent-seeking from legal eagles. Legal operations is a second-order derivative military-parasitical complex that feeds off the direct first-order rent-seeking of those in inhouse legal profession. The history of inhouse legal is interesting, by the way.

It works like this:

Once upon a time there were deals, and banks who did them would engage law-firms to do the legals. These deals — mergers, acquisitions, equity offerings, bond issues, syndicated loans — involved the transfer of lots and lots of money. Not millions, but tens or even hundreds of millions of dollars. Every now and then, even billions of dollars. Now observe two rather self-evident things: firstly, if you are wiring hundreds of millions of dollars to some random, should things go wrong, they can go badly wrong. Just ask Citigroup. Secondly, a very very small percentage of a couple of hundred million dollars is still a hell of a lot of money, even at £400 per hour.

Bankers, who themselves might collect as much as seven percent of the value of a deal, would quite happily expend say one percent of the deal, on decent firm of lawyers. And so was born the magic circle, which has been with us since at least the era of the First Men, and even before them to the primordial pagan era where the Children of the Forest roamed the Woods of Bretton.

This was all fine, and capital,