Abstract

http://ssrn.com/abstract=1264063
 
 

Footnotes (243)



 


 



Business Lawyers as Enterprise Architects


George W. Dent Jr.


Case Western Reserve University School of Law

2009

64 The Business Lawyer 279 (2009)
Case Legal Studies Research Paper No. 08-25

Abstract:     
In 1984 Ronald Gilson published Value Creation by Business Lawyers: Legal Skills and Asset Pricing. It began: "What do business lawyers really do? Embarrassingly enough, at a time when lawyers are criticized with increasing frequency as nonproductive actors in the economy, there seems to be no coherent answer." He dismissed lawyers' own answer that "they 'protect' their clients, that they get their clients the 'best' deal." He also rejected the academic literature which offered a laundry list of roles the business lawyer plays: "a counselor, planner, drafter, negotiator, investigator, lobbyist, scapegoat, champion, and, most strikingly, even as a friend." Dissecting the corporate acquisition as his specimen, Gilson concluded that lawyers add value as "transaction cost engineers." In particular, lawyers bridge the parties' divergent expectations about returns on the asset to be transferred by drafting an earnout which makes the price contingent on its returns between the signing of the deal and the closing; and overcome lack of information (principally of the buyer) by arranging efficient production and verification of information. From these findings Gilson also recommended that legal education for business practice downgrade traditional subjects (like analysis of appellate cases and knowledge of relevant regulatory law) in favor of corporate finance and transaction cost economics.

In the succeeding 24 years Gilson and others refined his thesis, but no one fundamentally challenged it. This literature about what corporate lawyers do (the "received model") is too narrow. This article takes a wider and deeper perspective. Part I describes the received model. Part II exposes several problems with that model. Part III offers a fuller vision showing that business lawyers perform a greater range of activities using a larger set of skills than in the received model. Although these activities and skills are extremely varied, it is less accurate to say that business lawyers are transaction cost engineers than that they are enterprise architects. Part IV discusses the implications of this revised model for legal education. It argues that, although a knowledge of corporate finance and transaction cost economics is useful for some business lawyers, it is more important that they understand the obstacles to optimizing the performance of business entities and the contractual mechanisms available to overcome these obstacles. They also need specific behavioral skills, including how to negotiate when all parties are trying to build mutual trust and confidence.

Number of Pages in PDF File: 51

Keywords: Value Creation by Business Lawyers, Legal Skills and Asset Pricing by Ronald Gilson, Transaction cost engineers, Enterprise architects, Business lawyers, Profession, Job skills, Job knowledge, Business law practice

JEL Classification: K29, K49

Accepted Paper Series





Download This Paper

Date posted: September 10, 2008 ; Last revised: April 29, 2014

Suggested Citation

Dent, George W., Business Lawyers as Enterprise Architects (2009). 64 The Business Lawyer 279 (2009); Case Legal Studies Research Paper No. 08-25. Available at SSRN: http://ssrn.com/abstract=1264063 or http://dx.doi.org/10.2139/ssrn.1264063

Contact Information

George W. Dent Jr. (Contact Author)
Case Western Reserve University School of Law ( email )
11075 East Boulevard
Cleveland, OH 44106-7148
United States
216-368-3311 (Phone)
216-368-2086 (Fax)
Feedback to SSRN


Paper statistics
Abstract Views: 1,979
Downloads: 494
Download Rank: 31,377
Footnotes:  243
Paper comments
No comments have been made on this paper

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo2 in 0.328 seconds