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Litigation vs. Transactional Law

Throughout recent human history, lawyers have occupied a unique and important role in society as the rule of law has developed and evolved in countries around the world. They’re sometimes lionized as individuals, while also being often vilified and lampooned as a group, while their work and lives have been dramatized in books and movies and on television for decades, undoubtedly holding and occupying a special and arguably outsized place in mass popular culture.

But the fictional tropes surrounding lawyers don’t tell the full and real story of the work those with law degrees are called upon to do. From Matlock to Perry Mason to Atticus Finch, lawyers are more often than not portrayed as brash and animated characters gesturing wildly while delivering impassioned speeches in courtrooms.

While those fictional characters have surely left a lasting impact on our culture, real-life lawyers like Johnny Cochrane, who famously was part of the team that got O.J. Simpson acquitted of murder, also looms large in the minds of many even nearly 30 years on.

Litigation vs. Transactional Law

Transactional attorneys and lawyers

The lore about the work of lawyers, in other words, casts them essentially as the personification of justice in action, placing them in the middle of the seemingly eternal fight between that which is right and that which is wrong, the very foundational essence of justice itself. But the black and white struggle between good and evil that plays out on television and movie screens, of course, lacks the nuances of the realities of how the law truly works. 

It all may make for good entertainment, of course, but it’s arguably left everyday members of the general public with a somewhat distorted view of how the law actually works and what lawyers actually do. Indeed, courtrooms are often places of great conflict, whether the battle is over a large sum of money or the prospect of sending someone to jail or to death, but in reality, much of the work done by lawyers is far more mundane and behind the scenes than many people may realize. Many lawyers don’t even step foot in courtrooms on a regular basis, they’re tasks relegated to boardrooms and law firm offices in tall office towers in major cities’ downtown cores or in small town strip malls and low rises. 

Working for big law doing intellectual property

For law students about to graduate from law school and still unclear about their ultimate career goals, or people contemplating a career in law, the differences between lawyers may still be unclear and many questions abound. What is litigation versus transactional law? What is the difference between an attorney, a barrister, or a solicitor? Who makes better money, the litigator or the transactional law practitioner? 

From its very title, practising transactional law involves facilitating transactions between parties. A transactional lawyer at a big law firm may be heavily involved in drafting legal agreements ahead of a multi-billion merger deal, while smaller firms with transactional law practices may draw up contracts for the sale of your home or small business. It’s the work of a transactional lawyer to carefully craft legal documentation, avoiding ambiguous language and unlawful contractual provisions, to keep their clients out of courtrooms in the aftermath of a deal, big or small. 

Doing transactional work

Doing transactional work

An experienced transactional lawyer, their job is to foresee potential legal issues that could crop up through research and analysis of contractual documents and other technical materials. They could be advising real estate development firms about compliance with local and regional regulations or drafting pre-sale contracts for potential buyers as a company gears up to finance a project. 

Having specialties and skill sets for contract drafting, lawyers engaged in transactional work can mean the difference between a deal closing or a deal falling through. Research and due diligence investigation, in addition to drafting documents and terms and conditions of deals, makes them a crucial cornerstone in many sectors that require collaboration and agreements, rather than the conflicts and disputes that end up in courtrooms. They leave that work to litigation lawyers (or attorneys as they’re sometimes called in the United States). 

Being a transactional lawyer, like most jobs, comes with pros and cons. The workload for a transactional lawyer at a big or medium-sized firm might be steadier and more predictable than that of a litigation attorney, but the hours involved obviously vary depending on the type of deal you’re working on at any given time.

For, say, a multi-billion-dollar merger or acquisition deal and the mountainous amounts of paperwork they generate, a transactional lawyer could find themselves buried in documents, endlessly “crossing T’s and dotting I’s,” as it’s often said. However, the number of billable hours involved in being a deal lawyer practising transactional law might not be as high as those of a litigation lawyer, since court cases can drag on for years and years. 

Being good at investment banking law

But most big law firms will have both types of lawyers on staff in separate departments, one for litigators and the other for transactional lawyers. As well, many companies may have in-house counsel to take care of their transactional work, drafting the deal documents and contracts for deals with customers and vendors and suppliers. In that respect, a prospective lawyer or law student might discover they have a knack for negotiation and memorizing rules and regulations and drafting iron-clad contracts with minimal loopholes, while others might find such work mundane and unattractive compared to trials and civil litigation. 

Transactional law, at its heart, is very deal-centric and aims to avoid disputes that inevitably arise in the everyday workings of the stream of commerce. In their practice, they may be called upon to structure all manners of agreements, dealing with private equity firms or big banks on financing deals or joint ventures. In heavily regulated industries, it’s also up to them to advise clients on their compliance obligations.

With this in mind, a transactional lawyer can be thought of more as a businessperson guiding clients through the complex process of, for example, a bankruptcy or major restructuring involving expansion, or even mass layoffs or scaling back of operations. They may even be there from the very beginning of a company’s formation, getting tasked with drafting incorporation documents and filing them with state, provincial, or federal authorities. 

investment banking law

Real estate transactions

The daily duties and responsibilities of a transactional lawyer can also differ widely from those of litigation lawyers since they’re not burdened by the often crushingly long hours of preparing for trials. According to Harvard Law School, transactional lawyers typically find themselves advising clients that including individuals, businesses, non-profit organizations, and governments about the legal pitfalls and issues that occur in the course of doing business.

The draw of this type of legal work, according to Harvard, is that it’s “less adversarial than litigation.” Rather than potentially making enemies with opposing attorneys and their clients, transactional lawyers are more focused on helping corporate and institutional clients by forming companies, drawing up contracts, advising on corporate governance and compliance issues, as well as filling out paperwork such as tax documents, patent or trademark applications, regulatory exemption applications, and other forms. 

Meanwhile, for individual clients, a transactional attorney will be tasked with writing up wills and estate planning materials such as powers of attorney authorizations. They also advise and consult or negotiate terms of lease agreements, employment contracts, or loan refinancing deals, in addition to tax-related documentation for tax credits or other benefits doled out by governments.

The best transactional lawyers, according to the prestigious American law school, possess a number of important skills to do such work effectively, including legal analysis and research skills, as well as good writing skills to draft solid legal documents. It also helps to be personable when dealing with clients, while also being a skilled negotiator. 

Litigation law vs. transactional law

Litigation law vs. transactional law

For transactional lawyers, the appeal of their work over that of a litigation lawyer might not be completely obvious. Some people in the legal profession, may thrive off of conflict and argument and relish the opportunity to score a big victory in court over a formidable adversary. Transactional lawyers don’t have to deal with the time-consuming and stressful work of preparing for lengthy jury trials, instead staying out of courtrooms in favour of more comfortable and less high-stakes offices where they can read, write, and research free of the scrutiny of judges and juries. 

Litigation lawyers, on the other hand, can be thrust into the public eye depending on who they take on as a client. Trial lawyers who specialize in litigation are much more likely to find themselves in the media spotlight on the evening news, unlike their more behind-the-scenes transactional lawyer colleagues.

This may appeal to the vanity of some aspiring lawyers, and the prospect of potential fame, but litigators who develop a public profile often do so by taking on high-profile cases and clients. For litigation lawyers, they can end up in court for any and all legal matters under the sun. As advocates, they advance their clients’ interests by crafting legal arguments to persuade judges and juries to take their side. It doesn’t matter if they’re practising family law, immigration law, patent law, or maritime law. 

Young lawyers should type different types of law

A transactional lawyer deals with, well, deals. They’re the ones liaising and communicating with company executives and accountants and bankers, ideally structuring transactions in a way that eliminates the need to ever hire a litigator. If a transactional lawyer does their job right, litigators become unnecessary in the course of doing business, but that’s of course rarely the case. Especially when big money is involved, the potential for disputes is high like pouring blood in shark-infested waters. 

A recent example, for instance, is Tesla CEO Elon Musk’s ill-fated foray into trying to acquire Twitter for more than $40 billion. Generating a flurry of media coverage, Musk’s public musings about the company and the deal became a high-profile spectacle, culminating in a lawsuit filed in Delaware. While many may think corporate lawyers, both transactional and litigation attorneys, are concentrated in New York, the state of Delaware’s Court of Chancery is a common forum for some of the corporate world’s biggest legal battles.  

The original complaint in Twitter’s lawsuit against Musk exemplifies the type of work a litigation lawyer is called upon to do, namely making their client’s case plainly and aggressively. Twitter, in its lawsuit, claims Musk signed onto a merger deal with the company, “promising to use his best efforts to get the deal done.” 

But only three months later Twitter claims Musk backed out and left the company and its shareholders in the lurch. The complaint accuses Musk of believing he’s above the law “unlike every other party subject to Delaware contract law.”

Musk, the complaint says, wrongfully changed his mind about the deal, trashing the company, disrupting its operations, and destroying shareholder value by backing out suddenly in a very public manner. Furthermore, Twitter’s lawyers accuse Musk of engaging in a laundry list of “material contractual breaches … that have cast a pall over Twitter and its business.”

Legal research and real estate transactions

Legal research and real estate transactions

The company argues that Musk pulled out due to a market downturn, something the merger agreement is said to have contemplated because his own company’s loss of market capitalization was so dramatic. The lawsuit against Musk accuses him of a hypocritical exit strategy following an underhanded entrance, where he’s alleged to have started quietly amassing a stake in Twitter before trying to take it private, purportedly to rid the platform of fake accounts and spam postings, while also musing on about free speech and other issues with Twitter’s platform.

In the end, the company wants the Delaware Court of Chancery to prohibit Musk from further breaching their merger agreement and compel its consummation. 

Obviously, a dispute between a high-profile billionaire and a social media juggernaut like Twitter is an extreme example of a business dispute that’s now in the hands of litigators. Perhaps it will be settled before going to trial, but nevertheless, the case highlights the differences and occasional overlaps between the work of litigation attorneys and transactional lawyers.

It’s likely safe to assume that Musk and his companies employ a veritable army of transactional lawyers to do deals on their behalf. The same could be said for Twitter, as a multi-billion-dollar company, and it’s likely their work that will come under the microscope in a courtroom if and when the case comes to trial. 

The Delaware Chancery Court will have to scrutinize the massive amount of documentation associated with the $44 billion deal and decide whether Musk had a right to pull out. Conversely, the court will also have to determine if Twitter is indeed within its rights to compel Musk to follow through with it, despite adverse market conditions that are alleged to have caused him to sink the deal. 

Know your career goals

With this in mind, litigators, and the courts they end up in, can perhaps be characterized as quality-control agents who test the work of their transactional lawyer counterparts. They find the weaknesses in contracts by pointing out vague or ambiguous language. Poor, low-quality work by a transactional lawyer simply won’t hold up in courts of law, which can determine whether a contract is unbreakable and iron-clad, or not worth the paper it’s printed on if the terms are unconscionable and unenforceable. 

But comparing the work of transactional lawyers to that of litigation lawyers, to use a cliché, is almost like comparing apples to oranges; they are both pieces of fruit, but they taste and feel very different. Both types of lawyers, though, play an important role in private business and public institutions. A transactional lawyer advising a government on policy formulation and implementation could be the first one to sound the alarm if a program or policy violates the constitution, for example.

Litigation lawyers, on the flip side, are the ones who go to court to argue such constitutional questions. In that respect, especially in countries like Canada and the United States with their litigation-driven policy environments, lawyers on both sides of the litigation-transactional coin arguably play an outsized and pivotal role in our democracy by shaping and refining public policy and commercial regulations.  

Want to run a transactional practice or do corporate law?

There are tons of practice areas for those that want to avoid having to go to court. Those that don’t find it boring, can look into practicing in the area of intellectual property. If you want to live a lower-stress life than a litigation lawyer, you might think about doing some of the following:

  • Running a small firm business law practice
  • Focusing on arbitration or being an arbitrator (dispute resolution)
  • Doing business transactions
  • Providing legal advice in investment banking (you can make lots of money)
  • Real estate transactions
  • Doing product liability (it’s litigation but often exciting)
  • Providing legal research for a litigation law firm

Litigation vs. transactional law conclusion

There are plenty of ways to avoid having to do litigation work. Young lawyers should experiment with different types of law, and see what works on them. They can worry about their specialization at a later date.

As the ones who attend open courtrooms and argue their clients’ positions for any and all who want to see, litigation lawyers are often the image people have in their minds about the work done by those in the legal profession. They’re the ones who put away criminals or defend them from dubious charges. They’re the lawyers that put public policies to the test in constitutional challenges, holding governments to account if their policies attempt to run afoul of the rule of law.

But litigation lawyers, who are often cast as the public face of the legal profession, arguably hide the more private side done by transactional lawyers whose work is largely done behind closed doors. Nonetheless, the type of work both litigators and transactional lawyers are called upon to do involves knowledge and skills that can undoubtedly take many years to build and refine. Good luck picking between litigation and transactional law!

4 replies on “Litigation vs. Transactional Law”

When I was an articling student in Edmonton, I personally found litigation way too stressful. The judges always hazed me because I wasn’t a lawyer yet.

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