A while back, the CLS Blue Sky Blog  featured a post by Michael Peregrine on an article authored by Delaware Supreme Court Chief Justice Leo Strine (Documenting The Deal: How Quality Control and Candor Can Improve Boardroom Decision-making and Reduce the Litigation Target Zone, 70 Bus. Law. 679 (2015)) offering pragmatic advice to corporate directors in deal-oriented decision making.  Michael's post summarizes points made by Justice Strine in his article, including (of particular importance to legal counsel) those set forth below.

  • "Counsel can play an important role in assuring the engagement of the strongest possible independent financial advisor, and structuring the engagement to confirm the provision of the full breadth of deal-related financial advice to the board; not simply the delivery of a fairness opinion or similar document."
  • "[I]n the M&A process, it is critical to be clear in the minutes themselves about what method is being used, and why."
  • "Lawyers and governance support personnel should be particularly attentive to documenting in meeting minutes the advice provided by financial advisors about critical fairness considerations or other transaction terms, and the directors’ reaction to that advice."
  • "[P]laintiffs’ lawyers are showing an increasing interest in seeking discovery of electronic information that may evidence the attentiveness of individual directors to materials posted on the board portal."

Michael concludes by noting the thrust of Justice Strine's points–that "a more thoughtful approach to the fundamental elements of the M&A process will enhance exercise of business judgment by disinterested board members, and their ability to rely on the advice of impartial experts."  All of the points made reflect observations of the Chief Justice emanating from Delaware jurisprudence.  Michael also notes that the points made by Justice Strine have application to decision making in other forms of business association as well as the corporation.

I could not agree more with the thesis of the post and the article.  Maybe it's just my self-centered, egotistical, former-M&A-lawyer self talking, but good lawyering can make a difference in M&A deals and the (seemingly inevitable) litigation that accompanies them.  I wrote about this in my article, A More Critical Use of Fairness Opinions as a Practical Approach to the Behavioral Economics of Mergers and Acquisitions, commenting on Don Langevoort's article, The Behavioral Economics of Mergers and Acquisitions.  We should be teaching this in the classroom as we frame the lawyer's role in M&A transactions.  I use a quote from Steve Bainbridge to introduce this matter to my Business Associations, Corporate Finance, and Cross-Border M&A students:

Successful transactional lawyers build their practice by perceptibly adding value to their clients’ transactions. From this perspective, the education of a transactional lawyer is a matter of learning where the value in a given transaction comes from and how the lawyer might add even more value to the deal.

Stephen M. Bainbridge, Mergers and Acquisitions 4 (2003).  Great stuff, imv.  I am sure this quote or one like it is in the current version of this book somewhere, too.  But I do not have that with me as I write this.  Perhaps if Steve reads this he will add the current cite to the comments . . . ?

At any rate, I want to make a pitch for highlighting the role of the lawyer in guiding the client through the legal minefields–territory that only we can help clients navigate most efficaciously.  As business law educators, we have a podium that enables us to do this with law students who are lawyers-in-training about to emerge from the cocoon-like academic environment into the cold, cruel world in which fiduciary duty (derivative and direct) and securities class action litigation is around every transactional corner.  Let's give them some pointers on why and how to take on this task!