The Three and a Half Minute Transaction

“Mitu Gulati and Robert E. Scott have assembled extraordinarily tantalizing evidence that even the most sophisticated contracting parties—in this case, the top investment banks and law firms responsible for issuing the bonds at the center of the European debt crisis—use contractual provisions that neither side understands, and they continue to use these clauses even when they stand to be interpreted in a mutually disadvantageous way. Modern law firms have become so obsessed with profitability that they simply maximize the number of deals they conclude, whether the documents make sense to anyone or not. The book draws the reader in as the authors explore what could possibly be going on in the law firms and investment banks of Wall Street. Like a good detective story, it is an absolute delight to read.”

"Drawing on over two hundred interviews, Mitu Gulati and Robert E. Scott provide an eye-opening account of the institutional pressures on attorneys who prepare contracts that undergird huge financial deals. A contract of this sort consists mostly of boilerplate terms, that is, clauses copied from prior deals. The authors insightfully explore why most lawyers engage in this sort of herd behavior, but also why they respect the few who stray from the herd. A landmark study of the folkways of high-powered transactional lawyers."

"With The Three and a Half Minute Transaction, leading legal scholars Mitu Gulati and Robert E. Scott offer the first work to fully untangle the complicated history of the pari passu clause, whose continued appearance in sovereign debt contracts constitutes a major puzzle in international finance. Gulati and Scott have interviewed the key players and assembled a unique database of sovereign bonds dating back to the nineteenth century in order to explain this anomaly. The standard explanations, they show, are simply not borne out by the evidence. Rather, the best answer lies in the large law firms that dominate sovereign finance. This is a very important book that provides a wonderfully textured account of the world of sovereign debt."