We’re not just monkey scribes

Bill Sjostrom —  12 May 2006

Recently posted on SSRN is an interesting article by Steven Schwarcz (Duke) entitled “Explaining the Value of Transactional Lawyering.�  Here’s the abstract:

This article attempts, empirically, to explain the value that lawyers add when acting as counsel to parties in business transactions. Contrary to existing scholarship, which is based mostly on theory, this article shows that transactional lawyers add value primarily by reducing regulatory costs, thereby challenging the reigning models of transactional lawyers as “transaction cost engineers� and “reputational intermediaries.� This new model not only helps inform contract theory but also reveals a profoundly different vision than existing models for the future of legal education and the profession.

The article uses data derived from surveys completed by transactional lawyers and their clients to test the hypotheses that transactional lawyer add value by:

1. minimizing the potential for ex post litigation [partly supported];
2. reducing transaction costs [weakly supported];
3. reducing regulatory costs [strongly supported];
4. acting as reputational intermediaries [weakly supported];
5. providing client privilege and confidentiality [mixed]; and
6. creating economies of scope [weakly supported].

The findings are in brackets.

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  1. TRUTH ON THE MARKET » No Monkey Scribes Here: The MasterCard IPO and the Role of the Lawyer - May 13, 2006

    […] Bill’s post concerning the role of lawyers in reducing regulatory costs reminded me that that I had forgotten to post after the recent Harvard Negotiation Law Review Symposium on Deal-Making and Strategic Negotiation (thanks for the invite Vic). I had blogged about the value of case studies for empirical scholarship here. The symposium included some very interesting discussions regarding what might be thought of as unconventional roles for the lawyer, i.e. managing regulatory costs and thinking about branding considerations. […]