Lawyers who help to structure, negotiate and document commercial transactions or deals are often referred to as transactional lawyers. Over the past two decades, law schools and law firms have increasingly focused on educating and training law students and lawyers so that they develop the knowledge and skills necessary to perform effectively as transactional lawyers.
At law schools in jurisdictions such as the US, the UK and Australia, the curriculum has been expanded to include transactional law subjects, where substantive law is taught in a transactional context. To put it differently, students learn about law through transactions instead of learning about transactions through law. Chinese law schools have also started to develop a transactional law focus. For example, Renmin University Law School offers an intensive one-week programme called the Cross-Border Transactional Lawyering Boot Camp, which trains students in practical lawyering skills in English.
At law firms, the professional training programme has been expanded to include professional skills, such as advisory, drafting and negotiation skills, and also commercial awareness. In addition, training in the use of technology has become increasingly important, particularly as lawyers begin to use artificial intelligence in areas such as due diligence and smart contracts (for a discussion about smart contracts, see China Business Law Journal volume 7 issue 8: FinTech and smart contracts).
Teaching law students and training lawyers from a transactional perspective requires students and lawyers to gain an understanding of what transactional lawyers do and how they operate. This is part of the process of converting lawyers from problem-spotters to problem-solvers; from advisers who merely take instructions and execute the deal to business partners and trusted advisers who can help to create a better deal for their clients.
However, one of the missing ingredients in the recipe to produce effective transactional lawyers is an understanding of the architecture of deals and deal-making. We have been clear about the “what” in terms of what lawyers need to know in a technical legal sense and what lawyers need to do in a practical sense. We have also been clear about the “how” in terms of how they should apply their technical knowledge and professional skills. What we have not been clear about is the “why” in terms of why clients do deals and why deals are designed in certain ways.
Of course, there is nothing better than on-the-job training to hone the skills of transactional lawyers and to give them the necessary experience to perform effectively. However, without a conceptual framework for deal-making, the response of lawyers will often be instinctive and based more on an intuitive feel for what works than a holistic understanding of how all of the pieces fit together.
During my previous life as a practitioner and transactional lawyer, I was always reasonably confident that my on-the-job experience, together with the technical expertise that I had developed through law school and beyond, would provide me with a solid foundation for advising clients on transactions. I was also reasonably confident that my experience and technical expertise would help strengthen the mental jigsaw puzzle that I had formed in relation to doing deals. Whenever a similar legal issue or fact pattern arose, the relevant piece of the puzzle would subconsciously appear before my eyes and I would proceed accordingly. However, it often felt as though I was putting the jigsaw puzzle together in a room with the lights out and the curtains closed. Looking back now, I realize that what I lacked was a conceptual framework for deal-making.
Such a framework is the missing ingredient that binds everything together – the technical knowledge, the practical skills and the commercial awareness – and equips lawyers with the insights that they need not just to execute deals but also to execute deals successfully in a way that adds value to the clients and to the deals themselves. It is also increasingly important in the current practice environment, where routine legal work is being automated by technology and artificial intelligence is augmenting or replacing human intelligence.
In the technology-enabled future, the traditional distinctions between professional disciplines such as accounting and law will break down. One consequence, in my view, is that professional advisers will end up being identified with what they do – and how they do it – rather than who they are. In other words, the traditional distinctions between lawyers, accountants and other advisers will become less relevant.
For lawyers, this means that we will no longer be able to confine ourselves to our traditional professional or doctrinal territory – we will need to be multi-disciplinary and inter-disciplinary. Importantly, we will need to look for different ways to add value to our clients and their deals.
Here is a book I would recommend:
Duc V. Trang – Architecture of Deals: Strategies for Transactional Lawyering (2019, Singapore Academy of Law, Academy Publishing)
In his book, which was launched earlier this year, Duc Trang notes that law schools and law firms have traditionally trained lawyers to have a detailed look at a few (legal) trees, but no view of the forest. Duc describes the conceptual framework for deal-making as being similar to an algorithm that guides a lawyer to form a “global” view of the various issues or constraints to getting the deal done. Its impact, he suggests, is potentially transformative in helping lawyers develop “macro” problem-solving skills and expand their role from a “builder” of transactions to a “designer” or architect of transactions.
As I noted in the foreword, which Duc kindly asked me to write, one of the greatest strengths of this book is the inspiration that it provides in equal measure to the practitioner and the academic, both of whom will benefit from the insights and innovations that the book offers. Of particular value is the way in which the teaching and training perspectives are integrated throughout the book and supported by critical, evidence-based analysis and reference to the relevant literature and thinking. The book deals with both the “why” – with Part I outlining the context and rationale for the Framework – and also the “how”, with Part II illustrating how the Framework elements provide a foundation for lawyers to develop “macro” problem-solving skills and design transactions that reflect the contractual parties’ often conflicting commercial and economic interests. Part III closes by outlining design-based pedagogy from the perspective of law schools and law firms and examining how the Framework can affect the transformation of the legal profession.
As Duc notes in the closing chapter, the transformative and disruptive effect of technology on the legal profession (and, I might add, legal education) means that it is impossible to predict what the legal profession will look like in the future. This gives rise to justifiable concerns on the part of both law firms and law schools. Like Duc, however, I am optimistic about the future of the legal profession and its ability to stay at least one step ahead of developments in the market for legal services and to continue to add value to clients and transactions. I believe that this book will play a significant role in helping to ensure that this remains the case.
A former partner of Linklaters Shanghai, Andrew Godwin teaches law at Melbourne Law School in Australia, where he is an associate director of its Asian Law Centre. Andrew’s new book is a compilation of China Business Law Journal’s popular Lexicon series, entitled China Lexicon: Defining and translating legal terms. The book is published by Vantage Asia and available at www.vantageasia.com.