What is Transactional Law and How Can it Help Me?
What do Texas transactional lawyers do for their clients?
Most people, going off what they have seen in TV shows and movies, immediately envision a lawyer as someone that makes impassioned speeches in courtrooms and that has dramatic twists and turns during a regular workday. While some high-profile litigators might have careers somewhat resembling this portrayal, many lawyers rarely the inside of a courtroom.
Instead, more lawyers are actually transactional lawyers who help business owners and other clients with the legal aspects of complex transactions. Transactional law spans various practice areas including:
- Mergers and acquisitions
- Buying and selling a business
- Intellectual property
- Estate planning
- General business
- Real estate acquisitions and sales
Basically, transactional attorneys will specialize in one or more of these areas and work with their clients to help them achieve their business goals, such as drafting documents to complete transactions, negotiation deals, conducting due diligence, and obtaining regulatory approval or licenses.
Our transactional lawyers here at Jackson, Landrith and Kulesz have decades of experience helping our clients with all of their transactional needs. If you have any questions about how we can help you, contact us today for a consultation.
When would I need a transactional lawyer in Texas (M+A) (PPM)?
While there are several things a transactional lawyer does that an ordinary person can do on their own, some matters are too complex to handle by yourself especially considering the time demands that would be required of someone who does not have a background in researching and solving legal issues.
Here are several instances when hiring a transactional attorney is a smart investment that will make your life easier:
Forming a business, such as a Corporation or LLC
The members of your entity might not think of certain issues that a lawyer would, and it could be difficult to negotiate certain contentious provisions amongst yourselves. Having a transactional lawyer as a thoughtful intermediary will help you work through disputes and set up the business for long-term success. Also, a transactional attorney will file all the necessary documents with the state, execute the entity’s management agreement, and draft template documents for future use, like unanimous member consents for LLCs.
Contract Review and Negotiation
While there are people who are competent enough to negotiate their own contracts, negotiating by yourself against someone with decades of experience usually results in the experienced attorney taking advantage of someone. Remember that in contract negotiations both sides are trying to secure the best deal possible.
Real Estate Purchases and Sales
Real estate transactions can be severely complicated deals involving several different documents. These transactions also involve working with several third parties such as appraisers, contractors for repairs, title companies, and the buyer/seller. There are also many key dates, usually called removing contingencies, that must be strictly adhered to for the transaction to be completed. At the very least, you will need a lawyer or title company to conduct a title search to make sure you own the property clear of any liens or unknown ownership interests.
How can a transactional lawyer help you?
A transactional lawyer usually provides the most value in working closely with a business to accomplish the following things:
Transactional attorneys’ daily lives usually primarily consist of drafting various contractual agreements for their clients. For instance, a Service Contract is used when a company provides certain services instead of selling goods. A transactional lawyer will draft a standard form contract that will minimize undue liability, give the entity flexibility in completing the services, and clearly define the businesses’ responsibilities under the contract.
Other examples of agreements transactional attorneys typically draft include:
- Stock Purchase Agreements: These are agreements used by start-up companies to raise capital to fund their business, which often end up around 50 pages long, an endeavor that is almost impossible without the help of experienced counsel. These agreements are federally required to detail several things, including: the type of the stock sold, the price and number of shares, the representations and warranties of the investors, the representations and warranties of the company, the conditions to closing, the rights of the investors, and potentially much more.
- Commercial Leases: These are contracts where an aggressive landlord can take advantage of an inadequately represented tenant. The negotiations for these leases usually start with the landlords ‘standard’ lease, which tends to be incredibly one-sided in the landlord’s favor. A transactional attorney will ensure that the final contract reflects the tenant’s desires as well.
- Independent Contractor Agreements: Agreements any business will need in order to hire independent contractors and ensure any work created by the independent contractor is under the ownership of the company.
- Employment Agreements: In order to hire any employee, companies must have strong employment agreements in place.
- Data Privacy Agreements: With the passage of data privacy laws, all companies that have websites or access to any kind of data must have data privacy policies.
- General Services Agreements: Any company that provides services should have a services agreement in place to protect themselves.
- Purchase and Sale Agreement: If you are selling any goods or purchasing any goods, you’ll need a strong Purchase and Sale Agreement in place to dictate the terms of the sale.
- Nondisclosure Agreements: Many clients use this to protect their confidential information, when dealing with a potential supplier or evaluating a possible transaction.
These are just a few examples of agreements that transactional attorneys draft. Depending on your type of business, work, or matter, your transactional lawyer will help guide you to ensure you have all of the necessary contracts in place.
Reviewing Various Agreements
Transactional attorneys will also review and negotiate several standard agreements entities enter into with various persons. For instance, a properly drafted NDA ensures recipients of proprietary information hold the that information in strict confidence and will only use it for evaluating a potential business relationship with an entity.
Without a transactional attorney, this pivotal information might be misused or stolen and cause irreparable harm to the entity. A transactional attorney will also assist with employment agreements and offer letters. These agreements clearly state the terms of employment, impose various restrictions on the employee to protect the business, like confidentiality, non-competes, and non-solicitations, and detail how disputes will be handled. A transactional attorney works with a business to change and tailor an employment contract to certain employees and key personnel.
Benefits of Hiring a Transactional Lawyer
There are several key benefits and value that a transactional lawyer delivers to a business:
- Minimizing Risk. A transactional lawyer, armed with years of experience, predicts certain problems that could arise and advises their clients on how to best avoid liability. Also, the threat of future litigation should go down with added protections in place.
- Reducing Transaction Costs. The problem of one-sided information can make it difficult for a party without a lawyer to execute a deal with a party represented by one. Adding a transactional attorney into the mix evens the playing field and can convince the other party to concede certain negotiation positions. A transactional attorney will also make template forms of the various contracts the business needs, and thus, cut down on future time costs that would be spent on drafting those agreements in the future.
- Intermediary Role. In certain situations, a transactional attorney is a necessary intermediary through which parties to a deal can achieve an amicable solution. For instance, members of an LLC might reach an impasse over certain provisions in the Operating Agreement. A transactional lawyer can broker a deal amongst the various members to ensure the LLC doesn’t fall apart over a minimal dispute.
- Providing Attorney-Client Privilege. An overlooked aspect of the special relationship between an attorney and client is that all their discussions, whether oral or written, are entirely confidential. Clients can rest assured that their communications with their lawyer will never be disclosed, even in litigation. Client communications with other professionals, like consultants, are not subject to the same high level of protection.
Questions to Ask a Transactional Lawyer
Before meeting with a transactional lawyer, here are some questions you should research beforehand and be prepared to ask throughout the interview:
- What experience do you have in this particular field? An attorney’s practice area and certain notable accomplishments/experience are usually found in their profile on their firm’s website. Make sure that the attorney has experience in your particular field and with resolving your matters at hand. For instance, do not hire an attorney who only does estates and trust to file a trademark application for your business.
- What is your hourly rate? Definitely ask this question to know how much money to budget for attorneys’ fees. If you’re a natural skeptic about whether attorneys are bulking their hours, there are several solo attorneys and smaller firms that offer flat flee rates.
- Why are your services valuable? Instead of taken all the information in this article at face value, simply ask your prospective transactional attorney what value their services will present to your business. It should serve as a red flag if a lawyer cannot adequately justify the hefty amounts of money you will be paying them.
What to look for in a Transactional Lawyer
Practically speaking, you should look someone with demonstrated experience in your particular business field and maybe one that has some sort of accolades or is involved with organizations that are in the realm of your business. Above all else, attention to detail is completely necessary for any transactional attorney.
Ideally, pick a transactional attorney that you enjoy working with because, unlike litigation where you hope to not be calling that attorney again for another car accident, you want to create a long-term relationship with a transactional attorney. This relationship will flourish when a transactional attorney cares about delivering results and value for you and your business, rather than just being another way to rack up the hours.
If you need a transactional lawyer, contact us today for a consultation. We can help you with all of your transactional needs and answer any questions you might have.