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Lawyers were “knowledge workers” before that cliché was first coined. Knowledge workers generally require three types of thinking: convergent (correctly answer factual questions); divergent (generate possible solutions from a given situation); and creative (come up with novel solutions to problems). Quite often, all three types of thinking are evident in a lawyer’s work product. Indeed, it was this ability to use the three types of thinking that set lawyers (and other knowledge workers) apart. A century ago, only the client or a court consumed the work product generated by lawyers. The information in a legal brief started in the lawyer’s head, was spoken to his secretary, transcribed to paper, presented to the client or court, filed away in a cabinet, moved to a box, and then finally moved to a landfill. Much of the knowledge distilled by the attorney went to waste. Clients often sought out lawyers who had tried similar cases in an attempt to leverage past work. Such was the state of the art in those days.

This paper, prepared for the UT Law CLE 10th Annual Mergers and Acquisitions Institute in Dallas on October 16, 2014, contains information to consider in structuring, negotiating, executing and exiting a joint venture. Guidance is provided regarding choosing the form of joint venture entity and drafting documents for its governance, operations and eventual termination. Critical provisions of preliminary and definitive documents for joint ventures are provided. Included is a discussion of the Energy Transfer Partners, L.P. vs. Enterprise Product Partners, L.P. case in which a $535 million judgment was entered against a partner which left a venture to enter into another before definitive documents were signed, and notwithstanding preliminary agreements which said that no party was bound until definitive documents were signed, because of the conduct of the parties led to a finding that a partnership had been formed. Attached is a brochure for this Mergers and Acquisitions Institute, which includes nationally recognized experts in M&A.

The conduct of corporate directors and officers is subject to particular scrutiny in the context of business combinations (whether friendly or hostile), executive compensation and other affiliated party transactions, allegations of illegal or improper corporate conduct, and corporate insolvency. The individuals who serve in leadership roles for corporations are fiduciaries in relation to the corporation and its owners. Increasingly the courts are applying principals articulated in cases involving mergers and acquisitions (“M&A”) to cases involving executive compensation, perhaps because both areas often involve conflicts of interest and self-dealing or because in Delaware, where many of the cases are tried, the same judges are writing significant opinions in both areas. Director and officer fiduciary duties are generally owed to the corporation and its shareholders, but when the corporation is insolvent, the constituencies claiming to be beneficiaries of those duties expand to include the entity’s creditors.