When It Comes to Contracts, Don’t Believe the Innovative-General-Counsel Hype

I recently saw this article by Fred Krebs suggesting, very sensibly, that “general counsel have a significant opportunity to help lead corporate innovation.”

I used to think that although a company’s rank and file might be wedded to turgid traditional contract language and a ponderous copy-and-paste contract process, the odds of change would greatly improve if I were able to get the attention of the general counsel. After all, the general counsel is the one with the perspective, the one who is accountable—surely they would bring to bear the necessary cold-blooded scrutiny!

But after two attempts to engage with “innovative” general counsel from big companies, I’m not so sanguine.

Because the first general counsel I attempted to contact has a reputation for being innovative, and because I had occasion to speak with briefly with him, I went online and copied a PDF of his company’s standard terms of sale. I then spent a couple of hours of airplane time adding dozens of comments to the first page and a half. I didn’t go any further, because that was enough to show me that as a piece of contract drafting, it was embarrassingly bad. And this was the company’s terms of sale! Perhaps their most important contract!

I then sent the general counsel an unsolicited email explaining why I was contacting him and describing my analysis. But I didn’t hear back from him. (Because I never assume that my emails reach their intended destination, I also mailed him a printed copy.)

If I had been in his shoes, I would have asked to see my analysis, just for the sheer heck of it. Or I would have politely said thanks but no thanks. In any event, I can only conclude that his zeal for innovation apparently doesn’t extend to his company’s contracts.

My second attempt consisted of another unsolicited email to a general counsel with a reputation for innovation. Here’s part of my email:

I’ve always thought that compared with law firms, it should be a straightforward matter for company law departments to implement and maintain a rigorous contract process. (Using a limited number of templates many times permits economies of scale.) Nevertheless, I’ve been astonished at the inertia I’ve encountered. I’ve repeatedly shown major companies that their templates are deficient. They not only decline to do anything about it, they simply refuse to discuss the matter.

So why am I contacting you? Simply because I’d relish the opportunity to engage in a candid discussion with [company name redacted] about contract quality. I think my readers and students would find it instructive, and you might too.

I heard back from the general counsel, who thanked me for reaching out to them and asked me to contact someone whom he cc’ed on his response. I then emailed that person. No reply. I emailed the general counsel again to say that I hadn’t heard from that person. No reply. So their response ultimately exhibited the tendency I noted in my email.

I’m not delusional enough to assume that busy people have any obligation to give me the time of day. But when people appear to go a little out of their way to ignore me, that suggests to me that we’re dealing, yet again, with inertia and fear of change. If someone bears a message that’s inconsistent with an image of innovation, ignore the messenger.

What explains this? If a general counsel has a background in contracts, it’s likely that they’ll be wedded to the traditional way of doing things. If they don’t have a background in contracts, it’s likely that they’ll defer to people who do.

So I’ve learned to accept that just because a general counsel has a reputation for innovation, that doesn’t mean that they have any interest in bringing that innovation to bear on their company’s contract process.

Posted in Process | 7 Comments

  • Robby

    Possibly some self-preservation going on here, too. If the contracts have been deficient the whole time the GC has been in place, he or she may fear stirring the pot because a malpractice claim or three might rise to the top.

  • Uninterested Observer

    If a company has experienced significant problems with its terms of sale in the past, that problem will always be fixed by one-off updates to the TOS. Overhauling the TOS, though, is a significant undertaking that involves a surprisingly broad cross-section of SME’s in an organization. So while it might be a good idea, it’s one idea among many that a GC is juggling (and many of the ideas that he/she is already juggling are ones coming down from above or that are in the GC’s goals).

  • @williamtennant

    Ever hear of “killing the messenger?” I think you were “killed.”

  • Magnus Steen

    I have made a similar obeservation. Same background as law firm lawyers, life long training, back seat position and scared of ownership, lack of competence in process and project management, fear of change (especially regarding roles, responsibilities and tasks) – all this drive a behaviour of non-innovation. However, the GCs are in the position to actually spark innovation in the legal industry – under cost pressure, low efficiency, further engage the staff lawyers, but most – he is having the cost in his budget. But this requires turning cost into investments and counselling into leadership, so a lot of GCs will not take this challenge.

  • stephesq

    Having worked as in house counsel for a few companies, it might be the tone of your communication. GCs tend to be a bit conservative and “above the fray”.(which is my attempt to be kind). Your frank, breezy style of communication may have been a turn off. Just a thought.

  • Paco Trouble

    Like many change initiatives, you have to target young GC’s. I think you’re instinct that in-house lawyers will be more receptive to your advice is right. However, you likely won’t succeed with GC’s. You have to aim for in-house lawyers that have’t been practicing long; so entry-level lawyers in large organizations like me, or GCs in start-ups, whose business people are just as anxious to give the finger to the establishment.

    Like Robby says, contacting the top lawyer who has likely been in the chair a few years and essentially taking their work to task means you’re exposing their weaknesses to colleagues. I’ve tried to persuade my bosses about the merits of your and others’ style manuals and advice about drafting better agreements, but I’ve realized they’re resisting in part because I’m effectively attacking their work.

    I’ll only be able to prepare better templates once I get my own shop. And I’ll only get my own shop if I can keep from getting fired until that opportunity presents itself. Attacking a boss’ work often enough will get one fired, so…

  • Lorne O’Reilly

    I believe that it is important to always welcome the opportunity for constructive criticism. There are few things that cannot be improved upon, especially legal documents, and my organization has plenty of form contracts that have not been looked at in years and could use the “innovative” or clarifying touch…. oh to have the budget.
    Regarding whomever you contacted, it would be unfortunately to have their (lack of) response cause other GCs to become painted with the same “conservative” / “non-responsive” brush. It may be that their innovation lies in their management of litigation or the way they take lead with a business “let’s get business done” perspective. As someone with a background in contracts I find it refreshing when someone improves what we are working with – thank you Ken!
    Fortunately, I have the pleasure of working with some innovative GCs as well as senior counsel who do pride themselves on clear, plain language documents, and who welcome criticism of their contract language – especially when the language appears to have originated at the time of Shakespeare.
    While I agree with Fred’s article, what is often missing from the innovation discussion is initiative – the motivating factor to proactively take what has been untouched (and poorly drafted) and to make it a priority despite onerous obligations and goals (or restrictions) from his business leaders who may not care about such things.
    Often, it is an adverse outcome in a commercial dispute that leads to a reassessment of the contract language employed… although often by external counsel who continue to harbour the poor drafting styles that Ken and other like minds so despise.