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Legal operations: Difference between revisions
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[[File:Twiki.png|450px|thumb|center|Inhouse legal of the future, yesterday.]] | [[File:Twiki.png|450px|thumb|center|Inhouse legal of the future, yesterday.]] | ||
}}A tremendous new wheeze for rent-seeking from [[legal eagle]]s. Legal operations is a [[second-order derivative]] [[Rent-seeker|military-parasitical complex]] that feeds off the direct first-order rent-seeking of those already in the in-house legal | }}A tremendous new wheeze for rent-seeking from [[legal eagle]]s. Legal operations is a [[second-order derivative]] [[Rent-seeker|military-parasitical complex]] that feeds off the direct, ''first''-order [[rent-seeking]] of those already in the legal profession who, shipwrecked on their sacred voyage from trainee to partnership, found themselves washed up on the shores of a deserted in-house legal department. The history of [[Inhouse counsel|inhouse legal]] is interesting, by the way. | ||
==The history of the [[in-house legal eagle|inhouse legal eagle]]== | ==The history of the [[in-house legal eagle|inhouse legal eagle]]== | ||
Once upon a time there were deals, and banks who did them would engage law-firms to do the “legals”. | Once upon a time, there were big, clunking deals, and banks who did them would engage law-firms to do the “legals”. | ||
Each of these deals — [[Merger|mergers, acquisitions]], equity offerings, [[bond]] issues, syndicated [[Loan|loans]] — involved parties who weren’t well acquainted sending each other lots and lots of ''[[money]]'': not merely millions, but ''tens'' or even ''hundreds'' of millions. Every so often even ''billions''. | Each of these deals — [[Merger|mergers, acquisitions]], equity offerings, [[bond]] issues, syndicated [[Loan|loans]] — involved parties who weren’t well acquainted sending each other lots and lots of ''[[money]]'': not merely millions, but ''tens'' or even ''hundreds'' of millions. Every so often even ''billions''. | ||
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So two rather obvious observations: | So two rather obvious observations: | ||
*Firstly, if you are regularly funnelling hundreds of millions of dollars around the financial system, things quite easily can go wrong and, when they do, they go ''badly'' wrong. Just ask [[Citigroup v Brigade Capital Management|Citigroup]]. | *Firstly, if you are regularly funnelling hundreds of millions of dollars around the financial system, things quite easily can go wrong and, when they do, they go ''badly'' wrong. Just ask [[Citigroup v Brigade Capital Management|Citigroup]]. | ||
*Secondly, a ''very small portion'' of “a couple of hundred million dollars”, when you look at it next to, say, your house, ''is still a very large sum of money'', even if you do charge out at £400 per hour.<ref>In 1990 pounds. The going rate at the time of writing, displaying a sustained immunity to gravity and the general principles of mean reversion, is more like £1,000.</ref> | *Secondly, a ''very small portion'' of “a couple of hundred million dollars”, when you look at it next to, say, your house, ''is still a very large sum of money'', even if you do charge out at £400 per hour.<ref>In 1990 pounds. The going rate at the time of writing, displaying a sustained immunity to gravity and the general principles of mean reversion, is more like £1,000. To give you some idea of the scale here, when the [[JC]] first stepped onto Southampton dock, from the slow-boat from the South Seas, the biggest deal he had ever worked on was about seven million Australian dollars. Within a year, he had worked on at least one deal where the legal bill was bigger than that.</ref> | ||
Therefore bankers, who themselves might collect as much as ''seven'' percent of the value of one of those multi-million dollar deals, would quite happily expend say ''one'' percent of that value on a decent firm of lawyers to make sure nothing went wrong. | Therefore bankers, who themselves might collect as much as ''seven'' percent of the value of one of those big, clunking, multi-million dollar deals, would quite happily expend say ''one'' percent of that value on a decent firm of lawyers to make sure nothing went wrong. | ||
After all, the lawyers usually wind up doing the hard yards: they must churn out thousands of pages of [[verbiage]]; they must run down every quixotic idea; they must accommodate every spurious consideration that the issuer’s finance director can confect; they will regularly work through the night to meet an artificial deadline imposed by an junior analyst who, when it was met, would ignore the draft for a couple of days before advising, without remorse, that he’d forgotten to mention that the deal had changed and this draft hadn’t been needed in the first place. | After all, the lawyers usually wind up doing the hard yards: they must churn out thousands of pages of [[verbiage]]; they must run down every quixotic idea; they must accommodate every spurious consideration that the issuer’s finance director can confect; they will regularly work through the night to meet an artificial deadline imposed by an junior analyst who, when it was met, would ignore the draft for a couple of days before advising, without remorse, that he’d forgotten to mention that the deal had changed and this draft hadn’t been needed in the first place. | ||