Here's what it feels like to be a deal maker. Less well understood than their colleagues in litigation, transaction-oriented business lawyers get the satisfaction of putting a deal together rather than taking it apart. High-lighting the day-to-day aspects of the practice, author Feis debunks the myth that litigators have more fun.
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Most trial attorneys subscribe to the theory that in the world of law, litigators have more fun. Their courtroom tactics and antics are the stuff of popular legend. Transactional legal work (or "office practice," as litigators sometimes call it) does not have the same aura of glamour and romance in the public mind. After all, when was the last time you saw Perry Mason work for months on a multimillion-dollar initial public stock offering or Michael Kuzak of "L.A. Law" close an acquisition of a major corporation?
The truth is that the life of a transaction-oriented business lawyer is at least as exciting, challenging, fast paced, and diverse as that of a litigator-it just does not lend itself to dramatization on television and the silver screen. To fully appreciate this, it helps to understand the kinds of work typically performed by a transactional lawyer, the advantages and disadvantages of transactional practice, and the types of skills and qualities desirable in such an attorney.
Though this article focuses on life as a "deal maker," there is much more to the practice of business law than work on significant corporate and business transactions. An office practitioner will usually also spend a large amount of time counseling corporate clients on their day-to-day operations and long-term business plans, drafting and negotiating contracts, and occasionally assisting clients in an attempt to hold a failing deal or other business relationship together in order to avoid litigation. So keep in mind that just as all litigation is not courtroom work, all office practice is not deal making.
Life as a deal maker in most law firms involves practice in one or more of three different (but often related) areas of transactional work:
- mergers, acquisitions, and similar fundamental corporate transactions,
- finance work, including representing banks and borrowers in loan transactions, negotiating real estate mortgages and collateral security packages, and addressing bankruptcy issues, and
- securities law, including public offerings, private placements, and regulatory compliance.
This article focuses on mergers, acquisitions, and similar fundamental corporate transactions.
Mergers and Acquisitions Practice
A mergers and acquisitions practice (often called "M&A work") may cover a wide variety of deals, from friendly, negotiated acquisitions of one company by another to hostile takeovers. These deals may be structured as the purchase of a target company's assets or stock or as a merger or consolidation of the target company and its suitor.
In a "friendly," or negotiated, acquisition or merger, junior attorneys are called upon to exercise sophisticated organizational and analytical skills and to prepare, analyze, and keep track of the voluminous documents involved in the deal. This is not the sort of thing taught in law school, unfortunately. Usually all material contracts of the acquired company will have to be gathered and screened by counsel for that company and reviewed and analyzed for their importance by counsel for the acquiring company. In addition, assets and liabilities, licenses, permits, real estate title issues, insurance, financial statements, employment and shareholder agreements, and a host of other matters and issues must be reviewed by counsel on both sides of the deal.
Also, the acquisition or merger agreement is almost never the only contract between the parties. Additional documents may include agreements to assign assets and assume liabilities, bills of sale, new employment or non-competition agreements for the principals in the acquired company, promissory notes, security agreements, escrow agreements, articles of merger, and so forth. If the stock of the company to be acquired is publicly or widely held, it will also be necessary to prepare and distribute to the shareholders a proxy statement containing specific, detailed disclosures about the deal. This is required by law in preparation for a special meeting of shareholders to vote on the proposed transaction.
Lawyers in the first year or two of M&A practice will typically prepare some or all of the closing and disclosure documents referred to above. This type of work gives new attorneys excellent exposure to and involvement in the "big picture" of the transaction, while simultaneously allowing them to hone their skills on a small part of it.
As you gain experience in this area of practice, you will be called upon to prepare and negotiate the acquisition agreement and close the deal. The buyer will want the acquisition agreement to include extensive representations and indemnifications from the seller; conversely, the seller will want to limit these provisions-and thus its potential liability-as much as possible. The lawyers are closely involved in these negotiations, and indeed if and when the principals reach an impasse on certain issues they often look to their lawyers to keep the deal from falling apart. In this role, lawyers have a great deal of room to be as creative as possible and to exercise their business instincts. A good transactional lawyer must see both sides of the transaction and suggest, analyze, and evaluate creative solutions that both sides can accept.
In a hostile takeover environment (such as the tender offer and proxy fights that sometimes make headlines), a firm's corporate attorneys usually work alongside the litigators in that same firm, regardless of which side the firm is representing. This approach allows the firm to proceed with a business-oriented strategy while preparing for or initiating litigation intended either to move the hostile takeover attempt forward or to stall it, depending on the objective.
This type of hostile takeover work is extremely demanding and requires tremendous amounts of time and effort. Usually a large number of attorneys on both sides of the transaction work around the clock over a relatively short period-sometimes only a few days-since the life or death of a corporation or the careers of its managers can be decided overnight. In some cases, attorneys involved in this type of battle have come up with novel ideas that have not only made their client a winner in the fight but also created a place for the attorney in the history and lore of the profession. Esoteric strategies such as the "poison pill" and the "golden parachute" have been developed by counsel, working closely with investment bankers and other takeover specialists.
In short, the mergers and acquisitions area of legal practice can be quite exhilarating, and you can be sure that when working on this type of deal you will not be bored.
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