Visualizing Corporate Transactions: Mitigating Risks and Maximizing Opportunities Highlights

Part 1: The Problem Areas For Lawyers And The Evolution To Intuitive Diagramming Software

The Panel:

• Host: Fiona McClune, CRO at StructureFlow
• Panel: Tim Follett, Founder & CEO at StructureFlow, Walter Clark, Corporate/M&A Lawyer, Partner at Burness Paull LLP, and Tom Quoroll, Structured Finance Partner at Linklaters

The Challenge Of ‘Articulating’ Difficult Structures

• The nature of the type of work that lawyers do, especially with complex financing transactions, lends itself very neatly to trying to get something down on paper to visualize the wide range of different parties, contracts and assets.
• The easiest way to get your head around a difficult structure is to get it down in writing.
• Partners would simply start writing off the back of an envelope or paper and, for many people on the team, that would be the start of the transaction right there.

The Issue With Legacy Tools And Previous Softwares For Diagrams

Walter Clark discusses how:

• Previously, there was a challenge of trying to describe to clients what was happening, and attempts would be made at drawing out corporate structures.
• Basic processes, such as where money was flowing from or going to, were hard to draw out in software like Word or PowerPoint, even though showing somebody a process was much easier than describing it wholly in words.
• Those legacy tools were incredibly difficult to work with, and lawyers would avoid doing it almost at all costs. Not only was it difficult, but no amount of time or energy spent could make the finished reports look visually appealing.
• The results from these types of software were also exceedingly difficult to alter and change once produced, making collaboration and further edits near impossible.
• These are real pain points not felt by the average person on an average day, but certainly pain points commonly felt by lawyers.

Misaligned Understanding Comes From Misaligned Communication

• In the absence of being able to visualize [processes] properly, there can be scenarios where there is a proper mismatch in terms of what people are understanding is going to happen.
• Lawyers can say one thing and clients can take different understandings away from it, but unless you can see where, for example, money is flowing to, how shares are being transferred, etc., then you run the risk from an early stage of people having different ideas as to what’s being envisaged.

How Structure Diagramming And Visual Thinking Address Those Pain Points

• Solutions like StructureFlow means having a sole source of truth, the ‘truth of the deal’ in a visual diagram which is incredibly valuable.
• The medium moves from the back of an envelope (easily lost on a partner’s desk amongst other paperwork), to a format that everybody has access to.
• There is now a democratization of a shared understanding of what the deal is.
• While structures can indeed be complex and easily visualized using diagrams, structure diagramming is important in outlining even simple structures and processes for clients and lawyers alike to visualize.

“Diagrams Can Be More Transparent Than Words”

Tom Quoroll shares how:

• Sometimes the diagram can be more transparent than words, providing a more common language for people to understand than just through discussion.
• One example of this is when bankers and corporate finance clients talk about equity. They might be talking about shareholder loans or share equity – whatever the case may be, Quoroll points out that clients are not that interested in the clarification of the terminologies, but the legal form of it is vital for lawyers who need it in terms of documentation.
• All those different perspectives can be easily cut through with a visualized diagram, drastically reducing the risk of potential misunderstandings.

Tim Follett adds:

• Working visually and being able to visually represent the subject matter of a deal has this capability of simplifying, demystifying and explaining things in a way that opens concepts up and makes it easy to understand.
• It potentially creates the ability to be more precise than words can be, so on a diagram, workflows can be clearly demarcated as particular types of legal characteristics and entities.
• When you give people a 20-page memo describing something purely with words, each person may come across a slightly different interpretation of what is being described. Give them a single diagram, and it really narrows the scope for different interpretations, providing much more clarity and certainty as to what is being described.
• This naturally and instinctively creates a shared understanding of what something represents for exactly what it is.

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