Template:M intro work domestication of law

All the world’s a stage,
And all the men and women merely players;
They have their exits and their entrances;
And one man in his time plays many parts,
His acts being seven ages.

— As You Like It, II vii

Just as one can make the case that humans did not domesticate wheat so much as wheat domesticated humans, so might one argue that investment banks did not domesticate big law firms as much as big law — okay, and big consultancy — cultivated the investment banks. Our IB GC genealogy refers.

For there are certain pillars of bank activity — the conduct of litigation being one, the execution corporate advisory business another and let us throw in the wheel-spinning “industry” of industry associations for a third — whose conduct so depends upon, and is in thrall to, the memetic interests and commercial imperatives of law firms, to the outright detriment of anyone else, that they are hard to see as anything other than a kind of extended phenotype for the private practice of commercial law.

The in-house legal department — a bank function all but unknown thirty years ago, but now so monstrous that it needs its own chief operating officer — really only exists to make life as easy as possible for the law firms to optimise the recording and recovery of chargeable time.

The neat evolutionary trick big here was to weaponise the agency problem by imposing structural intermediation between those who instruct the lawyers, and those who ultimately pay for them.

In an organisation big enough to have its own legal function, this is straightforward enough to describe. The decision to instruct a law firm (a corporate agent) — i.e., what it is required to do and how much it should be paid for doing it — is handled by the legal department (staffed by human agents), but paid for, ultimately, by shareholders (principals).

If the legal department is evaluated at all for the quality of its counsel management, it will be impressionistically, by people lacking technical chops to know whether wheels are being spun, and its performance is unlikely be reflected in the Christmas bonus.

But in bigger organisations this disintermediation becomes ever more baroque. Once a firm appoints a bank to advise it, all bets, and controls, are off. Here is the scenario:

Corporation, represented by its legal department (human agents) — appoints its own law firm (a corporate agent), but also an advisory bank (a corporate agent), itself represented by its legal department (human agents), who appoints its own law firm (another corporate agent) itself represented by its staff (human agents) — to advise on a transaction between the first corporation and another corporation, similarly represented.

There arises therefore a delicate chain of agencies — six would be standard in the simplest bilateral transaction — between those who instruct the firms and those who are, ultimately, expected to pay for the services rendered. By design, none of the intermediaries — agents — have personal skin in the infinite game and have only one uniting interest: to keep playing the game. But it is a powerful interest indeed.

On this view, then, investment bankers are the Zaphod Beeblebroxes and Vogons of the galaxy; not the masters of the universe they imagine, but lowly pawns in a chess game playing at an abstract level they cannot even see. These unseen hands, run the blasted furnace not for earthly gain or economic progress, but the oblique objectives of the hyper-intelligent pan-dimensional mice who actually control the universe. These uber-beings present in our dimension not as mice or dolphins but Sullivan and Cromwell partners.