Agency problem: Difference between revisions

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 So, to take our three examples:
-====Advisory [[M&A]], [[DCM]], [[ECM]] etc.====
+====Advisory M&A, DCM, ECM etc.====
-The business of mergers and acquisitions is generally handled on behalf of target and acquiror by appointed banks. Each bank will appoint law firms to advise it — principally on the underwriting, regulatory and reputational risks posed by being involved in the proposed transaction. The banks legal advisors will conduct due diligence, negotiate contracts, shareholders agreements, draft prospectuses, advise on all kinds of competition issues that may arise, and will issue batteries of [[legal opinion]]s — enforceability opinions, fairness opinions, security opinions, 10b5 opinions — you name it — all of which are designed to give the arrangers and syndicates — the ''banks'' comfort that their risk of shareholder action or regulatory censor is minimal. Who pays for all this legal advice? The bank’s client, of course. This will be in the first blushing exchanges of the [[engagement letter]].
+The business of advising on [[mergers and acquisitions]] and primary transactions in the [[debt capital markets|debt]] and [[equity capital markets]] is generally handled on behalf of target and acquiror by appointed [[investment banks]].
-One the client has agreed to this, the bank’s internal lawyers have little incentive beyond basic compassion for defenceless multinationals to constrain their legal spend. They are exempt from the usual rubber glove inspection — competitive tenders, law firm panels, that accompanies requests from other parts of the legal department to incur “own legal spend”.
+Each bank will appoint it's own law firm to advise ''it'' — the target will have its own independent counsel too — principally on the underwriting, regulatory and reputational risks posed by being involved in the proposed transaction. The bank’s legal advisors will conduct due diligence, negotiate contracts, shareholders agreements, draft prospectuses, advise on all kinds of competition issues that may arise, and will issue batteries of [[legal opinion]]s — enforceability opinions, [[true sale opinion]]s, fairness opinions, security opinions, [[10b5 opinion]]s — you name it — all of which are designed to give the [[arranger]] and syndicates — the ''banks'' — comfort that ''their'' risk of shareholder action or regulatory censor is minimal. Who pays for all this legal advice? The bank’s ''client'', of course. This, on top of the underwriting fee, will be in the first blushing exchanges of the [[engagement letter]].
+Once the client has agreed to this — and, for the most part, clients have no choice — the bank’s internal lawyers have little incentive, beyond basic compassion for defenceless multinationals, to constrain their legal spend, and will allow themselves to be led down every open manhole cover that any deal lawyer can contrive to fall into.
+Inhouse teams are likely exempt from the usual rubber glove inspection — competitive tenders, law firm panels, methodological justifications —that follow requests from other parts of the legal department to incur “own legal spend”, even in nugatory amounts.
 ====[[Litigation]]====