Legal operations: Difference between revisions

[[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 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. It wasn’t deserted for very long! The history of [[Inhouse counsel|inhouse legal]] — how it went from “sleepy backwater for awkward, work-shy, typo nuts” to “military-forensic complex in need of taming by management consultancy” in twenty short years is interesting, by the way.

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 pots and pots of ''[[money]]'': not merely millions, but ''tens'' or even ''hundreds'' of millions. Every so often, ''billions''.   

*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. 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 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.   

So was born the [[Magic circle law firm|magic circle]], which has been with us since at least the time of the [[First Men]], and even before them to the primordial pagan era where the [[Children of the Forest]] roamed the [[Bretton Woods|Woods of Bretton]]. The business model was simple: it was a form of intellectual rope-a-dope. The game was this: we will turn heaven and earth to document whatever you require us to document, whenever you want it, with two considerations: firstly, our [[legal opinion]] will disavow any responsibility for any of the stupid things you made us put in the document, and secondly you will pay us handsomely, by the hour, without question, for doing so. Our end of the bargain is our blood, sweat, toil and tears  expended in the pursuit of whatever hare-brained intellectual contrivances catch your fancy. Yours is to pay us, through the nose, for the privilege. Since, in the context of a two-hundred million dollar deal, ''whatever'' we ask you to pay us will be a pittance, everyone wins.