Why You Need A Transactional Attorney

A transactional attorney adds value to his client’s transaction in many ways.

By minimizing the potential for future litigation:
A transactional attorney can anticipate and minimize the likelihood that failure of the transaction will result in litigation.

By reducing transaction costs and, therefore, increasing the size of the pie for all parties:
transactional attorney reduces transaction costs in many ways. How? For example, by developing and drafting documents that provide for inventive solutions to the problems and risks clients face, the attorney can reduce the possibility of adverse actions by a counter party due to changes in incentives between the parties. providing independent, experienced advice, the attorney can persuade clients to forego negotiating positions that can delay or even destroy business opportunities. By giving legal opinions, the attorney can remove impediments to transactions resulting from asymmetric information.

By reducing regulatory costs:
A transactional attorney knows the importance of understanding the transaction’s regulatory requirements and the client’s concerns about these issues. The attorney can assist clients in negotiating and structuring transactions in compliance with regulatory requirements. For example, the lawyer can help clients in negotiating mergers and acquisitions without compromising regulatory compliance. Transactional attorneys reduce “regulatory costs” when they issue legal opinions on enforceability of agreements, but they also reduce these costs when they negotiate transactions on behalf of their client because they are able to understand significant possible issues of non-compliance with the law.

By acting as a reputational intermediary:
A transactional attorney adds value to the client’s transaction because the lawyer is bound by rules of professional conduct. Indeed, lawyers are gatekeepers for many transactions; their involvement provides reasonable assurance to the other party that there will be no misrepresentation or illegality in the negotiation. In this way, the client, even if unknown in the industry, “rents” the lawyer’s good reputation. In addition, the lawyer is obligated to the client to perform the transaction competently, and the other party, in this way, also receives assurances about the quality of performance of the transaction.

By providing attorney-client privilege and confidentiality:
Clients can discuss all aspects of a transaction with their transactional lawyer with a high degree of confidence that their communications, both oral and written, will be confidential. In the event litigation arises, the attorney-client privilege will generally protect all confidential communications between lawyers and their clients for the purpose of legal advice from disclosure in subsequent litigation. Client communications with other professionals and advisors are not subject to such protection.

By creating economies of scope:
The involvement of a transactional attorney in negotiation and drafting of documents can reduce costs to clients because the lawyer’s knowledge of the transaction can be efficiently applied to other aspects of the matter. Since transactional attorneys already play a legal role in transactions (i.e., a lawyer would still be needed to review the documentations from a legal standpoint), committing to them responsibility or a role in non strictly legal aspects of the matter, such as evaluation of alternative structures for the transaction, negotiation with the counter party of the terms of the deal, assistance in identification of differences in valuation, review of corporate records, due diligence reports, etc., creates economy of scope for clients (i.e. clients save money).

By creating economies of scale:
A transactional attorney can reduce costs because of the greater efficiency resulting from involvement in multiple transactions of a similar type, in which he gained experience and expertise.

… and in many other ways:
For example, transactional lawyers can import their cautiousness and independence to the transaction and, therefore, can be a sounding board to evaluate risk-prone ideas.