Many lawyers never argue a case before a judge or jury. Instead, they represent their client’s interests in proposed business ventures or commercial transactions, often referred to as “transactional” work. These lawyers develop both the structure and the details of the agreements that will be necessary to achieve their client’s purpose. These lawyers tend to think like business planners in that they strive to achieve both short and long-term goals for the client at the same time that they seek to avoid foreseeable risks and potential disputes that could end up in litigation.
Transactional lawyers often develop expertise with particular types of transactions, e.g., financing arrangements, the development and licensing of intellectual property, or merger, acquisition or joint venture agreements. They may also develop expertise in handling transactions for clients in a particular industry sector, such as biotechnology or real estate. The greater familiarity the lawyer has with a particular business sector, the better he or she is able to anticipate potential disputes and to negotiate and draft express provisions in the agreements that will fairly allocate foreseeable risks and avoid the kinds of ambiguities that lead to disputes among the parties.
Most transactional lawyers could also be called “business lawyers” or “corporate lawyers,” depending on the nature of the transactions they manage and the type of advice and counsel they provide. "Corporate work” and "business law" both typically refer to legal work in a nonadversarial (nonlitigation) setting. However, "corporate" work suggests work with institutional clients; it also suggests corporate governance requirements and transactions that involve compliance with financial reporting and disclosure obligations. “Business law" encompasses corporate work but more broadly refers to a wide range of commercial activities and the laws and regulations affecting those activities.
In addition to drafting agreements and handling transactions, business lawyers help clients communicate (and avoid disputes) with a number of constituencies related to the client's business, e.g., lenders, stockholders, regulators, competitors, employees, customers, and suppliers. Good transactional lawyers understand both their client’s business and the regulatory context in which it operates. Drafting agreements that fulfill the client’s desired business objectives, as well as legal requirements, requires deep consideration of what the parties are trying to accomplish and the context of the deal. Lawyers who provide advice and counsel add value in several ways: they manage risk, particularly litigation risk; they reduce transaction and regulatory costs; and, they provide expertise in both understanding and explaining the law and regulations governing the business and its transactions.
Corporate and commercial agreements typically require a number of stages in the process of implementing an exchange of value between the parties. The overall process of structuring and completing this exchange is often referred to as “transactional” work. The exchange of value can be any number of things. It may be a transfer of money or a promise to pay in exchange for property, stock certificates, goods or services. It may also be an exchange of promises about what each party will do in connection with a joint venture or technology development agreement. Particularly for corporate transactions that require substantial due diligence, regulatory approvals and the consent of significant constituents, completing a transaction may span weeks and even months.
They may assist clients in complying with regulations affecting their business, such as the requirements that apply to companies seeking access to the capital markets. Or they may develop expertise in other areas that are highly regulated, like health care, employment law or environmental regulation. Legal advisers in some sectors benefit from a deeper understanding of the technology and/or regulation specific to that sector: for example, the technologies and the regulatory framework for life sciences companies are quite different from those in the insurance and banking sectors.
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