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The legal market is being subjected to unprecedented levels of market disorientation.
In the UK, by way of example, it is now possible to have a listed law firm with the possibility that non-lawyer shareholders may dictate terms of business to lawyer-employees albeit indirectly. Firms with considerable history are merging with, or being absorbed into, one another such as the Allen & Overy / Shearman & Sterling merger.
Alternative service providers have entered the market with aggressive and transparent pricing as their chief selling proposition. Teams of lawyers are moving between firms as if they were an independent entity in their own right.
Clients cannot agree on what drives their decision to choose a particular law firm. For some it is price and accessibility; for some it is perceived prestige; for some it is the spirit of compromise as opposed to zealous representation; for some it is finding a lawyer who echoes their own views, whether right or wrong; for some it is neatness and organisation in the delivery of legal services; for some it is the quality of legal judgement and advice; for some it is aversion to change and preference for continuity of legal representation.
The picture that emerges is one other than a cohesive whole. This perhaps explains the sheer number of law firms to be found in each major legal market today – upon inspection, there is no one legal market and all these firms are not really competing with each other. Not that this is obvious from looking at law firm marketing literature or the legal press.
It has been some 25 years since the release of The Matrix. A film that had raised tantalising questions about our understanding of reality. Fate of mankind rested on effecting change in the real world as opposed to an imaginary one. A close parallel to the Matrix exists in the form of the Metaverse. The difference being that the latter was created voluntarily and for a more benign and mercantile purpose – that of popular entertainment.
Integration of machines in nearly all spheres of life continues unabated. Hollywood screenwriters have had to wage protests against the use of A.I. in the very city that is supposed to be a cradle for human creativity and passion. ChatGPT is substituting for the exercise of critical faculties and people are finding it increasingly difficult to tell apart truths from untruths, to make life decisions, or to vote in their enlightened self-interest. Virtual platforms with a dopamine-centric design (aliases, character limits, short form content) are changing the nature of public discourse into mutual hauling of fanciful assertions and insults between anonymous individuals not well acquainted with the subject matter. Virtual girlfriends as SaaS are courting customers who are in need of human interaction more than an affectation of human interaction.
Do these inventions advance human welfare such as reverse large scale environmental degradation, reconcile differences between groups of people, uphold the underlying architecture for the rule of law? Suggesting that a virtual world will do even as the real world disintegrates, or suggesting nonchalantly that humans will “live on” in the form of robot consciousness to the exclusion of human consciousness, represent the height of abstraction and irresponsibility.
From 2025, the UK government has decided to charge VAT (20%) on tuition fees for private schools causing pushback from interested parties. Not enough participants in this market are discussing whether education qualifies as a public good (for example, German or Scandinavian governments support this notion by guaranteeing secondary as well as tertiary education to their citizens at public expense). The more practical dimension of not leaving one’s children to their own devices in publicly funded schools predominates. This naturally leads to the next question – is private education in its current form worth its price tag?
Dissatisfaction with the education system (whether privately or publicly funded; whether secondary or tertiary) almost knows no bounds. Elon Musk has decided to set up his own school named Ad Astra (later re-named Astra Nova) for his children and those of SpaceX employees; offering an entirely personalised curriculum centred on creative problem solving as opposed to gaming of standardised tests and free from an age-based seniority system that mistakenly assumes all children develop at the same rate. Former Snapfish CEO Ben Nelson established Minerva University in America where undergraduates are assessed by means of group discussions and project work as opposed to formal examinations at the year end and where they experience communal living across major metropolises of the world – including San Francisco, Seoul, Berlin, and Buenos Aires. Mr. Cho Chang-Gul, founder of the Korean furniture manufacturer Hanssem, has established Taejae University which requires its students to study a multi-faceted educational curriculum (including having to learn foreign languages and programming languages as well as critical thinking, character building and “global harmony”) and to live in economic and political centres around the world. In the UK, AC Grayling has set up the New College of the Humanities (now acquired by Northeastern University) to rekindle an interest in the humanities and to simulate a one-on-one tutoring model which has hitherto been the trademark of Oxford and Cambridge universities.
Innovation in private education is probably a plus factor, all things considered. If for no other reason then for the fact it provides a welcome stimulus for governments and publicly funded schools to do better. Lack of innovation also affects private schools that do not deliver value as advertised. In the new age marked by globalisation, technological advancements and geopolitical tensions, appearance of competence by association with certain strata of society will no longer work as well as actual competence and, as such, private schools will need to pay more attention to the latter. What follows is a possible blueprint for an ideal private school (which may also be taken up by publicly funded schools):
- Transformation. The value of a good education lies in its transformative effect on the individual. A private school may justifiably take credit for turning a student lacking in several important areas into a student excelling in all those areas. However, this cannot be said for most schools whose modus operandi is to admit those who are almost "ready-made" and who will develop further on their own without significant intervention by the school.
- Burden Sharing. If a student underperforms, the fault may lie with the student himself as well as with the teaching staff. There may be issues with a teacher’s level of knowledge, style of delivery, or due fulfillment of his role as a caretaker. However, it would not be in the school’s interest to admit their teachers could be in the wrong so they do not.
- Post-Graduation Outcomes. It is worth recalling that a private school is not an end in itself. Eventually, the student will leave the place and make his own way in the world. If a school cannot stand behind the post-graduation outcomes of its graduates, this logically casts doubt on the quality of education it has provided. There is virtually no private school that satisfies this test. The closest are German hochschules which guarantee employment for its graduates by way of refunds but these are vocational schools rather than conventional schools.
- Well-Roundedness and Social Network. It will be argued by some that the real value of a private school lies in the development of a balanced individual and of a reliable social circle. To assert that developing oneself into a mature human being, or making friends of a good quality stock, can only occur within the four walls of a private school and at that point in one's life just beyond puberty is quite a statement to make. This is also hard to square with the utilitarian motivations of most parents who believe they are paying for advanced test preparation programmes.
Legal agreements are populated with terms one would rather not know. These terms have little to no literary quality to them and lawyers are paid to endure them on behalf of their clients. Some of these terms which frequently make an appearance in loan agreements are surveyed below for the reader’s pleasure.
A facility (or a commitment in such facility) is not a loan and a loan (or a participation in such loan) is not a facility. The first is an option and the second is the result of exercising that option. The lender holds on to funds for a period of time (availability period) until the borrower requests such funds in the form of a loan. The borrower pays to the lender a commitment fee for the length of time the lender is asked to hold on to its funds that are earmarked to be lent to the borrower.
A representation and an undertaking are neither tested on the same dates nor breached in the same manner. A representation is a factual statement (about the borrower’s capacity, authority, financial condition, compliance with laws or about the validity and enforceability of loan documents (among others)) made by the borrower as of specific pre-determined dates – these dates are described in detail in the loan agreement. An undertaking is an obligation on the borrower which applies for the entire period of time during which debts under the loan agreement (and any related finance documents) remain. Making of a representation whose content is untrue as a matter of fact is a misrepresentation. An undertaking is breached by the borrower not performing what it undertook to perform (or performing what it undertook not to perform). Some people like to call undertakings by the name of covenants but this does not change their nature or substance.
A certain funds period and a clean up period pre-date and post-date the same event. Their effect is to excuse the borrower from complying with a particular set of representations, undertakings and loan acceleration/security enforcement events for a limited period of time only before and after the date on which the borrower acquires the target company respectively.
Conditions precedent and conditions subsequent pre-date and post-date the same event – namely, the movement of funds from the lender to the borrower in the form of a loan or a borrowing. Some people like to call the act of borrowing (or the principal amount borrowed) by the name of utilisation or drawdown (one feels there is a need for uniformity of reference). A condition precedent can be a requirement that a particular circumstance obtains on a date prior to the date of borrowing, or a requirement that certain documentation (such as executed loan documents, due diligence reports and financial models), whose forms have been approved by the lenders in advance, are delivered to the lenders on a date prior to the date of borrowing. A condition subsequent is the same except that the time period for compliance with such obligation post-dates the date of borrowing and they are usually limited to security perfection matters or delivery of documentation whose delivery has been deferred due to special circumstances affecting the borrower.
A grace period and a cure period are different. The effect of both is to grant the borrower additional time during which the borrower can comply with the relevant obligation and, for that reason, the original due date of the relevant sum is not the date on which the lenders can accelerate the due date of the outstanding loan obligations or enforce their security interests against the relevant security grantors. However, a cure period will be accompanied by a positive obligation on the borrower to engage in a particular conduct such as raising of additional funds (by issuing shares in itself or borrowing a loan from its immediate parent) and applying such funds towards satisfaction of outstanding loan obligations.
A mandatory prepayment event and an event of default are not the same. The occurrence of a mandatory prepayment event means the due date of the relevant sum is deemed to occur immediately even though the originally scheduled due date has yet to arrive. The occurrence of an event of default means that the lenders are now entitled to take a vote on bringing forward the due date of the relevant sum. Absent such vote and (depending on the relevant terms of the subject agreement) absent a payment demand on the borrower following an affirmative vote, the due date of the relevant sum remains unaltered. An event of default may give rise to an acceleration event or a termination event under another agreement to which the borrower is a party which defines such circumstance as a cross-default event.
Damages and liquidated damages have different consequences. Damages are payable to the extent the claimant actually suffers a loss as a result of the defendant’s breach of contract and it may be reduced by the court to the extent the claimant has failed to mitigate its loss. Liquidated damages are payable in the amount stated in the agreement no matter what (although it may be struck down as a whole if, on its proper construction, it is a penalty disproportionate to the breach of contract committed by the obligor).
Pro rata settlement with respect to a particular sum means apportionment of that sum between multiple payees based on an agreed ratio. If two lenders hold the loan in a ratio of 60:40 then any repayments on such loan should be remitted to them according to that ratio.
Privity and third parties' rights concern voluntarily entered contractual relations. A person who is not a party to a contract has no entitlement to enforce that contract against someone who is a party to that contract. For the second person has not agreed to undertake any obligations towards the first person. This stands in contrast to legal obligations arising by operation of law which are imposed on individuals irrespective of their consent.
If you have before you a vacuous piece of contractual language from a source uncertain, please ask for relief here.
The below is merely a tool I used to use during my law degree.
Please see here.