Saturday, February 24, 2007

Lawyers and Clients

I have just written two new papers. The first on the tripartite relationship between bankers, lawyers and clients, which attempts to re-analyse how we should understand lawyer-client relationships. The second paper, with a partner from Olswangs, looks at how lawyers, specifically real estate finance lawyers, structure transactions. The argument is that structure, more than anything else, determines the outcome of the deal. Both papers can be downloaded from my website at

Academics struggle with the lawyer-client relationship. What is it like? What goes on? Is it merely an asymmetric power relationship? Probably similar questions to those about doctor-patient relationships.

Most studies involve lawyers and individual clients, in areas like divorce, crime, or welfare. There aren't too many on business relationships. The reason is not too difficult to discern: business lawyers and business clients are very conscious of of privacy and privilege and the consequences of breaching them.

I am one of the few that has studied these relationships. My original training as a lawyer then as an ethnographer enabled me to spend time sitting in meetings listening to discussions and hearing lawyers talk on speakerphones to their clients. My PhD in sociology was a study of a large law firm in Chicago and the way lawyers and clients interrelated. I tried to comprehend what lawyers and clients were doing by describing it as managing uncertainty, since what happens between them is quite contingent and always open to repeated interpretation.

There is one crucial feature of studies of lawyer-client relationships, which is that they assume the relationship is essentially a dyadic one--a two-party relationship without involvement from others. In modern day business relationships this is clearly unrealistic. There are far too many parties involved in deals for relationships to be characterized as simply two-way. They are now multi-polar and multivalent.

How does this work? Take a client who wants to borrow a large amount of money from a bank to finance a purchase of, say, a company. Although the primary relationship is between lawyer and client, there will also be in all probability a longstanding relationship between the lawyer and bank (or banker). And even though all parties are repeat players, the relationship between the banker and the lawyer will be stronger and more committed than that between the lawyer and the client. Banks provide a steady stream of work and therefore income. Moreover, the barriers to entry to this kind of work are high which reinforces these work patterns. I'm not saying there's anything wrong with this; I'm trying to capture what actually happens. For me it necessary that everyone understands what is happening. These are facts of commercial life.

Jonathan Knee in his great book An Accidental Investment Banker reinforces this point when he describes the sale of West Publishing to Thomson by Goldman Sachs, his bank. Although he's working for the seller, he's already started thinking about what services he can offer the buyer. The conflict of interest emerges in the transaction.

However, this is not primarily about conflicts of interest though they are important; it is about understanding the relationship of professionals to clients and how these relationships can be managed effectively. We need more studies of this.

1 comment:

Mike from Lytchett said...

John - ya need an hair-cut mate.

Ya look like an aging hippe