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Thirteenth law of worker entropy: Difference between revisions
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Thus, you can expect the documentation for a syndicated loan to span several hundred pages of wretched text, and so it does, notwithstanding that one can, and parties typically do, trade on a one-page [[Cocktail napkin|term-sheet]]. | Thus, you can expect the documentation for a syndicated loan to span several hundred pages of wretched text, and so it does, notwithstanding that one can, and parties typically do, trade on a one-page [[Cocktail napkin|term-sheet]]. | ||
[[Netting opinion|Netting opinions]] are the same: there has not been an insolvency practitioner on the planet in the last forty years who has for an instant considered challenging the “[[Single Agreement - ISDA Provision|single agreement]]” concept, which is not difficult to articulate — all our swaps net down to a single exposure, right? | [[Netting opinion|Netting opinions]] are the same: there has not been an insolvency practitioner on the planet in the last forty years who has for an instant considered challenging the “[[Single Agreement - ISDA Provision|single agreement]]” concept, which is not difficult to articulate — all our swaps net down to a single exposure, right? Yet, so ghastly are the dread phantoms that might alight should anyone ask that plainly stupid question — and so comfortable are the incomes of those brave thousands engaged in the annual harvest of prophylactic opinions giving a sensible answer— that the industry tolerates a multi-million dollar annual expenditure without a reflective thought. | ||
By contrast, a [[confidentiality agreement]] is part of the traditional pre-trade appendage-measuring ritual of the pea-cocks and pea-hens of finance. You ''have'' to do it, it is meant to ''look'' spectacular, but no-one is ever seriously ''hurt'' by the experience, and nor does anyone achieve anything of lasting value out of it. Even so, the abstract ''legal'' points of an NDA can be quite intricate — for that reason, the world is awash with NDA templates riddled with schoolboy errors — even though nothing of any commercial moment has ever depended on them. It’s just a [[Commitment|commitment signal]], after all. | By contrast, a [[confidentiality agreement]] is part of the traditional pre-trade appendage-measuring ritual of the pea-cocks and pea-hens of finance. You ''have'' to do it, it is meant to ''look'' spectacular, but no-one is ever seriously ''hurt'' by the experience, and nor does anyone achieve anything of lasting value out of it. Even so, the abstract ''legal'' points of an NDA can be quite intricate — for that reason, the world is awash with NDA templates riddled with schoolboy errors — even though nothing of any commercial moment has ever depended on them. It’s just a [[Commitment|commitment signal]], after all. | ||
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Thus, [[Confidentiality agreement|NDA]]<nowiki/>s — even for secret-squirrel event-driven [[family office]] types — rarely get past 5 or 6 pages, and are generally cleared in days. If you get stuck on one for more than a week, it will be some other problem the business guys don’t want to face that they are blaming on the NDA. | Thus, [[Confidentiality agreement|NDA]]<nowiki/>s — even for secret-squirrel event-driven [[family office]] types — rarely get past 5 or 6 pages, and are generally cleared in days. If you get stuck on one for more than a week, it will be some other problem the business guys don’t want to face that they are blaming on the NDA. | ||
So there are local maxima and minima at play. An [[NDA]], however important, complicated, and regardless of what fanciful things you bolt onto it ([[Exclusive licence|exclusivity]], [[non-solicitation]], restraint of trade, punitive damages and so on) may generate aa few thousand pounds in billings, but even that is pushing it beyond all expectation. With a syndicated bond issue, on the other hand, you can write a ticket to the moon. | |||
This is why most [[magic circle law firm]]s do not have | This is why most [[magic circle law firm]]s do not have “confidentiality departments” as such — everyone muddles along as best they can — but devote entire floors to [[Debt securities|debt capital markets]]. | ||
===Worked example=== | ===Worked example=== | ||
Take a USD500m loan. Even 0.05% of the deal value — as mere 5 [[basis point]]<nowiki/>s — is USD250,000. Is it any wonder the service economy is in such rude health? Who ''wouldn’t'' pay that to make sure nothing went wrong on half a yard of debt finance? | Take a USD500m loan. Even 0.05% of the deal value — as mere 5 [[basis point]]<nowiki/>s — is USD250,000. Is it any wonder the service economy is in such rude health? Who ''wouldn’t'' pay that to make sure nothing went wrong on half a yard of debt finance? | ||
But even at USD500 an hour, that is ''five full working weeks'' of a [[legal eagle]]’s time:<ref>At 40 hours per week. Yes, we know that nowadays a transatlantic lawyer can expect to recover more billable hours per week than there actually are in the week, but we are assuming traditional laws of spacetime apply.</ref> it really wouldn’t do if all that was required was to top-and-tail the term-sheet with [[boilerplate]] and bang out an enforceability [[Legal opinion|opinion]]. Nor would there be much prospect of stopping clients going to some other guy down the road who will do the job in a day and send a bill for a £500. So — well, have a butcher’s at this [https://www.ise.ie/debt_documents/ListingParticulars_cd8daa3f-24e8-419a-819a-cf3e23a03271.PDF this 370-page beauty] and allow me to rest my case on it, since it plainly wouldn’t fit ''in'' it. | But even at USD500 an hour, that is ''five full working weeks'' of a [[legal eagle]]’s time:<ref>At 40 hours per week. Yes, we know that nowadays a transatlantic lawyer can expect to recover more billable hours per week than there actually are in the week, but we are assuming traditional laws of spacetime apply.</ref> it really wouldn’t do if all that was required was to top-and-tail the term-sheet with [[boilerplate]] and bang out an enforceability [[Legal opinion|opinion]]. Nor would there be much prospect of stopping clients going to some other guy down the road who will do the job in a day and send a bill for a £500. | ||
So — well, have a butcher’s at this [https://www.ise.ie/debt_documents/ListingParticulars_cd8daa3f-24e8-419a-819a-cf3e23a03271.PDF this 370-page beauty] and allow me to rest my case on it, since it plainly wouldn’t fit ''in'' it. Quarter of a mill well spent. | |||
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