Addressing Conflicts of Interest in a Transactional Practice

Addressing Conflicts of Interest in a Transactional Practic

download (6)Neil J Wertlieb and Nancy TAvedissian

Unlike litigators,those of us who are transactional lawyers work on friendly deals where the parties have common goals and interests.In litigation(as well as other practice areas,such as criminal law,bankruptcy,and family law), the battle lines are obvious and there’s usually a clear winner and clear loser in the battle.No such battle lines exist in business transactions and, after a successful closing, everyone’s a winner.In fact,we sometimes celebrate a successful engagement with closing dinners attended by people from both sides of the transaction.The notion of winners and losers celebrating together after a verdict,conviction or divorce is absurd.So,because our clients have goals and interests in common with their business counterparts,there can be no ethical conflicts of interest that apply to transactional lawyers,right?The answer,of course, is a clear and resounding “NO!” One need not look any further than a simple M&A transaction,where Buyer is looking to buy a business and Seller is looking to sell that business.To see that conflicts of interest abound in a transactional practice as well.Even though buyers and sellers of businesses share the same fundamental goal—the transition of the business from Seller to Buyer—the interests of Buyer (e.g., paying the lowest possible price,with strong representations and indemnification coverage)are often diametrically opposed to those of Seller (e.g., selling at a premium with minimal representations and indemnity exposure).

Addressing Conflicts of Interest in a Transactional Practice

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