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Thirteenth law of worker entropy: Difference between revisions
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Hence, ''pace'' Blaise Pascal, [[charge-out rate]]<nowiki/>s tends to rise, not fall, with prolixity. | Hence, ''pace'' Blaise Pascal, [[charge-out rate]]<nowiki/>s tends to rise, not fall, with prolixity. | ||
Similarly, ''v'' is actual, real-world value, and not “notional fright-value imbued by the neurotic expostulations of paranoid lawyers”. ''v<sub>f</sub>'' | Similarly, ''v'' is actual, real-world value, and not “notional fright-value imbued by the neurotic expostulations of paranoid lawyers”. ''v<sub>f</sub>'' is a kind of bounded cosmological constant. | ||
Thus, a [[Medium term note|secured medium term note]] — typically in the tens or hundreds of millions of dollars | Thus, a [[Medium term note|secured medium term note]] — typically in the tens or hundreds of millions of dollars in principal amount — has high intrinsic value even though the basic premise of a transaction — “I lend you money, you give me a an [[IOU]], I can sell it, you repay whoever holds it at maturity, with interest, depending on certain externalities” — is simple. | ||
Thus, you can expect the documentation for a bond deal 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 bond deal 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, | [[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 of an {{Isdama}}, let alone successfully done so. Yet, so ghastly are the dread phantoms that might alight upon the head of anyone foolish enough to ask that plainly stupid question — ''what if?'' — and so comfortable are the incomes of those brave toilers engaged in the annual harvest of prophylactic [[Netting opinion|opinions]] giving supplying the sober, long-winded answer that such a question barely deserves — that the industry tolerates a multi-million dollar annual expenditure without a second 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 this; NDAs are meant to ''look'' fierce, but no-one is ever seriously ''hurt'' by them, and nor does anyone achieve much of lasting value out of them either. They’re a comfy part of the cosmic pantomime that is a career in financial services. | 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 this; NDAs are meant to ''look'' fierce, but no-one is ever seriously ''hurt'' by them, and nor does anyone achieve much of lasting value out of them either. They’re a comfy part of the cosmic pantomime that is a career in financial services. but no-one wants to ''pay'' for them. | ||
Even so, the abstract ''legal'' points of an NDA can be intricate — the world is awash with NDA templates riddled with schoolboy errors — though, since nothing of any commercial moment has ever depended on an NDA, the howlers persist: the people — and machines — engaged to process them need no great acumen, so we should not expect anything else. | Even so, the abstract ''legal'' points of an NDA can be intricate — the world is awash with NDA templates riddled with schoolboy errors — though, since nothing of any commercial moment has ever depended on an NDA, the howlers persist: the people — and [[Machines are fungible|machines]] — engaged to process them need, and usually have, no great acumen, so we should not expect anything else. | ||
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 a few thousand pounds in billings, but even that is pushing beyond rational expectation. With a syndicated bond issue, on the other hand, you can write a ticket to the moon. | |||
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 a few thousand pounds in billings, but even that is pushing beyond rational 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 “confidentiality departments” as such — everyone muddles along as best they can — but devote entire floors to [[Debt securities|debt capital markets]]. | 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]]. | ||
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Take a USD500m loan. Even 0.05% of the deal value — as mere 5 [[basis point]]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]]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. | 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 somehow we need to make this seem a bit more complicated. | ||
Still: is it ''really'' possible to charge six figures for an [[IOU]]? 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.<ref>We have NO idea how much the legal fees on this were, and it may be wildly defamatory to imply it was that much. Of course it could have been more.</ref> | |||
{{sa}} | {{sa}} | ||