The Art of the Deal - A Dealmaker Lawyer Can Add Business Value

20 Jan 2017

In his book, The Art of the Deal, Donald Trump tells a story about a particular real estate transaction he negotiated, and one reference highlights a dilemma regarding a lawyer’s role in real estate and business contract negotiation and drafting.  Trump writes “I wasn’t sure who was more eager to break up the deal, my lawyers or theirs?” This begs the question: “Whose deal is it, anyway?”

Indeed, lawyers can be the reason why a good transaction isn’t completed, inserting their personalities, confusing themselves with the real decision maker (you!), identifying problems without offering solutions, and generally getting in the way of the transaction. However, without legal insights applied to the contract, a buyer or seller may go into the deal without understanding what they have committed themselves to.

Lawyers should be facilitators, representatives, evaluators, counselors and advisors, but never deal breakers.

Too often, either lawyers get in the way of the deal that is there to be made, or worse, the client chooses not to involve his or her lawyer because the client has been burned in the past. Instead of skipping critical analysis of a contract, a party to a business contract should choose a lawyer who understands the assignment to be in support of his client’s business objectives.  A lawyer should offer insights gained from other deals, with legal analysis of key provisions, and identify solutions to identified pitfalls, moving them out of the way.

With the right lawyer at your side, you won’t have to worry that “the lawyers” will be working at cross-purposes from your best interests and goals. Ultimately, if you understand the deal you are making, if I have had an opportunity to listen and understand your goals and can see that you understand and approve of the deal to be made, it is not my place to insert my business judgment ahead of yours.  That should never happen.

In addition, you should not have to worry that your lawyer will say or write something that will end negotiations and “blow up” the deal on the spot. A lawyer should not take hardline positions unless fully authorized by you.  Rather than presume to know what you want to do to deal with an issue, the lawyer should focus on identifying the issues, probing the other side’s resolve, consider solutions, and preserve the opportunity to regroup and give you options.  Without that patience and loyalty to you as the ultimate decision maker, your lawyer can be the cause of the other side choosing to break up negotiations before you are ready.  In my view, it is only appropriate to take a strong position if my client has made clear that the issue is a deal breaker.  Your job is to decide what is and what isn’t a deal breaker.

As business lawyers, we must stay focused on our client’s objectives. That said, relying upon our experience and judgment but also our ability to be diplomatic, we must point out potential problems, express concerns, consider worst case scenarios, while we explore solutions and creative approaches to address difficult issues.  We need to assess how a sentence will be read in a future dispute, and point out ambiguities that could allow your viewpoint to be lost and replaced with a completely different understanding implied by a future judge or arbitrator.  We know your objectives do not include entering into a one-sided contract that imposes big risks unknown to you!

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