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A fly in the ointment of Incentives (and disincentives) for counsel on transactions

Easy to say: “set up fee bonuses or holdbacks for law firms helping on transactions, so they have some skin in the game.”

Hard to get around, however, is the likelihood that law firms lack leverage either way. In the words of the general counsel of Kewill Systems, “When a project goes wrong, it is rarely the lawyer’s fault, so I wouldn’t expect them to share the pain with us [a holdback on their fees]. So when a project goes right, why would I want to share the upside with them [a performance bonus]?” .