How Markets Work: The Lawyer's Version

32 Pages Posted: 15 Jul 2011  

Mark C. Weidemaier

University of North Carolina (UNC) at Chapel Hill - School of Law

G. Mitu Gulati

Duke University School of Law

Abstract

In this article, we combine two sources of data to shed light on the nature of transactional legal work. The first consists of stories about contracts that circulate widely among elite transactional lawyers. Surprisingly, the stories portray lawyers as ineffective market actors who are uninterested in designing superior contracts, who follow rather than lead industry standards, and who depend on governments and other outside actors to spur innovation and correct mistakes. We juxtapose these stories against a dataset of sovereign bond contracts produced by these same lawyers. While the stories suggest that lawyers do not compete or design innovative contracts, their contracts suggest the contrary. The contracts, in fact, are entirely consistent with a market narrative in which lawyers engage in substantial innovation despite constraints inherent in sovereign debt legal work. This raises a puzzle: Why would lawyers favor stories that paint them in a negative light and deny them a potent role as market actors? We conclude with some conjectures as to why this might be so.

Suggested Citation

Weidemaier, Mark C. and Gulati, G. Mitu, How Markets Work: The Lawyer's Version. UNC Legal Studies Research Paper No. 1886435. Available at SSRN: https://ssrn.com/abstract=1886435 or http://dx.doi.org/10.2139/ssrn.1886435

Mark C. Weidemaier (Contact Author)

University of North Carolina (UNC) at Chapel Hill - School of Law ( email )

Van Hecke-Wettach Hall, 160 Ridge Road
CB #3380
Chapel Hill, NC 27599-3380
United States
919.843.4373 (Phone)

Gaurang Mitu Gulati

Duke University School of Law ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

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