I received the following email from a new U.S.-trained lawyer working outside the U.S.
Hi there, I’m a new lawyer starting my first real legal job as in-house counsel for a new legal department in a foreign company. Much of the work I’m doing involves taking over and reviewing a broad range of contracts for projects or deals already underway. Some of these contracts were drafted by the other side of the deal, and some by my predecessor (or by law firms we retained for particular deals).
I have no prior transactional experience so I’m unsure of what would be a reasonable time frame for reviewing or blacklining these contracts, but I feel constant pressure from the company to be done with them yesterday. I don’t have access to resources like Westlaw/Lexis or a CLE budget, and there aren’t really any suitable mentors within the company for me to turn to since, as the only American lawyer in the legal department, I’m expected to be the expert on U.S. law as well as all English-language contracts.
While I understand that there’s no set amount of time (e.g., time per page) it takes to review a contract (which is highly context-dependent), I’m hoping the experienced lawyers out there might be able to offer their thoughts on managing one’s time spent on reviewing contracts. Specifically:
- Which kinds of contracts or issues do you find take the most time to review? Which ones are routine and should be dispensed with quickly?
- Do you have any tips for how to gauge whether a reviewing lawyer is spending too much time reviewing a particular contract?
- What advice would you give to someone whose first job as a lawyer is as in-house counsel about the best way to get up to speed?
- Is there anything you wish you had known when you first started as in-house counsel or first began drafting contracts?
I’d be grateful for any thoughts or advice that you might be willing to share. Thank you very much!
And here’s how I replied:
Wow. If I had hired you, I would have said the following: “I know that as a recent graduate, you know essentially nothing, but we’ll make sure that you have access to whatever you need to help you develop as a lawyer.” Instead, here’s what they seem to be saying: “We expect you to know everything. That’s why we’re not going to do anything to help you develop as a lawyer.” Given your lack of experience, lack of a mentor, and lack of access to any materials, you’re in a tough position.
Regarding your questions:
What takes time and what can be dispensed with quickly? It all depends on the deal. In the right circumstances, what might seem simple (for example, a confidentiality agreement) can in fact be relatively complex.
How long does it take to review contracts? It depends on how complex the deal is and how familiar you are with the issues.
What’s the best way to get up to speed? Through targeted reading of reliable secondary sources, but that would be difficult for you without some sort of budget. By way of a specific suggestion, completing the questionnaire for Koncision’s confidentiality-agreement template, consulting the annotations, and going over the resulting draft would provide great training in confidentiality agreements and some boilerplate. And it’s free! (Obviously I’m hardly disinterested.) Currently it’s geared to the U.S. market, but that affects only a few provisions.
What do I wish I had known? Well, I would certainly have benefited from having a copy of my book! More generally, don’t assume that something works or is innocuous just because it appears in contracts regularly. (For example, go here to find out about that mysterious “successors and assigns” stuff.) And try not to wing it.
More generally, try to plan your career; always keep looking ahead.
Do you have any advice for this lawyer?
Updated 8:20 a.m., August 8, 2012: In this post on theContractsGuy blog, Brian Rogers chimed up with some great advice of his own.
Updated 4:00 p.m., August 7, 2012: I received the following message from the lawyer in question:
Wow! Many, many thanks to everyone who replied. I’m amazed at all of this extremely helpful advice… Special thanks to Chris, Mark, and Jeffrey for their extra-detailed responses (and of course Ken for bringing us all together!). I’ll definitely also be taking Brian and Geoff’s advice about checking out Solosez and joining the ACC and ABA practice areas.
I’ve been feeling for the past few weeks like I was groping around aimlessly in the dark without knowing where I was trying to go, but now I feel like I have a much better sense of my destination. Which is immensely reassuring—even if I do still feel utterly unequipped for the task. :) I wonder how much time it will take me to reach what Mark called “steady state”? Because I sure need to get there fast…
In response to Jeffrey’s comment: For some reason, I thought blacklining meant the same thing as redlining? And yes, just like you said, I’m having to review a mixture of deals-in-flight and already-executed deals. In the case of already-executed deals, an example I’ve encountered was having to review a contract to determine whether it had been breached and whether we needed to renegotiate the terms.
Again, to everyone: thank you very much for all of your words of wisdom. I’m extremely grateful for all of your helpful advice, and I promise to do my best to put it to good use!
13 thoughts on “A New In-House Lawyer Dealing with Contracts Seeks Advice”
Join your local Association of Corporate Counsel chapter and the American Bar Association for your practice areas – even if this would come out of your own pocket. Use these to build your network of practitioners in your area and take advantage of their other resources and programs.
1. Learn to triage. Come up with a set of categories that identify the most important deals. If you are working on sell-side commercial deals, that probably means that revenues is the critereon, unless the products being sold have markedly different profit margins. Learn to be disciplined about putting the important before the urgent. Sales people really can’t complain to their bosses when you ask if you should put aside the $1m deal that just came in, so that you can work on the $10k deal that has been in your inbox for a week.
2. Learn the business first. To know what risks are really important, you have to know what matters. To learn that, you have to learn the business side of the business. For example, if you are supporting sales people, learn all about the products that they are selling. Don’t start a redesign of your form contract structures until you have learned the business.
3. Confidentiality agreements in the context of an RFP are something you can probably just skim to ensure that they are mutual. You get a second chance to make them work during the negotiation of your main deal.
4. The people you support don’t care about how much time it takes you. They just want to know when they will get a turn on the draft. That means a combination of managing your to-do list and the quantity of work spent on each item. Over time, you should be able to mentally assign an estimated turn-around time for each category in your triage. You just need to warn the sales person (or whoever) that you are giving them an estimate, not a commitment.
5. It may be useful to start taking a quick peek at deals before you give an estimate. How many pages is the document? Are there exhibits that will be someone else’s responsibility? (If so, do they know that? And do you have to review their work?) Are there pages that you can otherwise exclude from needing your attention (tables of contents, cover pages, forms of something or other)? From this, you should eventually be able to develop a sense or at least a rule of thumb on how long it will take you. Remember that, over time, you will get much better at modifying your own forms than other people’s forms. Make sure that your sales people know that, over time, you will have shorter turn-around times when they use your forms. My sense is that the number of minutes per page would be highest for very short contracts (because they are inadequate and you have to add a lot) and for the very long ones (because the other side adds in a bunch of stuff you don’t need). The ones in the middle are the ones where you should be able to develop the most confidence in your estimates. If you want to be statistical about it, keep track of your estimates and learn how you do compared to them.
6. I don’t know that you really want to use this as a touchpoint, but some data is better than no data. I’ve been in-house, doing contracts for 17 years. I’ve been at the current job for 5 years. I pulled three large sales deals that I remember taking a long time. All of them were for products that I knew well, but the context was not the norm. The time spent editing per page was 5.7, 6.5, and 7.1 minutes per page.
7. Finally, I think that the depth of regulation imposed on your industry will affect the complexity of your deals and the time to turn drafts. More significantly, if your deals are ones where you have a great deal of compliance burden, but the other side is generally ignorant of it, then you will spend more time explaining than you will drafting. Once you figure out what the common issues are, think about putting together a memo to the other side that explains the issue and why you take your standard approach.
8. When you have huge deals with lots of changes, think about footnoting your changes with an explanation of each. This will (a) impose discipline on the number of changes you propose and (b) short-cut the negotiation, since you will need to educate the other side less.
Email Ken if you would like my contact information to correspond further.
Chris: On behalf of the person posing the question, thank you. I feel like I should withdraw my own puny thoughts! Ken
I agreed with your comments, but that is so routine, I didn’t think about saying so.
Chris is correct. I’m a non-lawyer who has worked with many in-house counsel over the years to finalize contracts. Nothing can be as frustrating or as time-consuming from the perspective of an in-house client as a lawyer who does not know the basics of the business he or she is working in.
I think all the other comments here are spot on. I would just add that it’s difficult to learn transactional law without a mentor because, without feedback from someone on your side, it will be hard to know which issues you’re missing (and which issues you might be focused on that are not that important). One suggestion I have in addition to the others here is to join the free ABA listserv called Solosez. Yes, it’s primarily for solo practitioners but it is populated by hundreds of knowledgable outside lawyers who are all willing to help each other. And let’s face it, in your role as a new in-house lawyer without senior mentors or paid resources, your situation is similar to that of a solo practitioner just out of school — the primary difference being that you only serve one client. On Solosez, you will be able to bounce questions off of other lawyers, locate forms and templates and cultivate relationships with other lawyers. As I recall, there is no requirement that you be a solo practitioner to join the listserv; you need only be a lawyer. Just google ABA Solosez to find instructions on how to join. Best of luck!
As usual, Chris offers great advice and counsel. Here are a few other thoughts:
1. Understand Expectations First. Reading for knowledge versus reading to edit are two DRASTICALLY different exercises. I got the feeling by reading the original question that these were potentially a mixture of deals-in-flight and already-executed deals. If so, what’s the purpose of the review? The OP says he’s going to “blackline” (which, to me, means to take something from redline to finished-state), but is also sounded like these might be done deals.
2. Draw on Your Subject Matter Experts (SME). While I agree that you need a passing understanding of your product-line if you’re inhouse at a sales organization, buy-side deals invariably are for things you’ve never heard of and may never hear about again. Getting up to speed on the nuance of everything you transact for could be an incredible time sink. Instead, learn who your subject matter experts are and use them as resources to tell you, by deal, what is important.
3. Admit You Don’t Know. While probably the single most scary thing a new lawyer/doctor/anyone can do is admit a lack of knowledge, doing so will help you in at least 3 ways: a) You won’t have to fake it which means you can relax a little, which tends to increase performance quality; b) Your team won’t think of you as a know-it-all… always a good thing for a lawyer who might eventually actually know-it-all; c) Get you the right answer from the people who DO know the answer (which makes other people feel useful). Heck, you might not even be EXPECTED to know it all… which is all the better.
4. Understand the Basics. When reviewing a contract, I always look for the same basic things that a journalist looks for in a good story: Who, What, Where, When, Why and How. I add an additional piece: How Much.
Who: Who are the parties? Is the name of each party correctly listed and their correct address included if required?
What: What’s the subject matter of the deal? Is it properly described? Are quantities/activity durations accurate? What does the finished product look like? Is it a special kind of subject matter that has special rules (like Intellectual or Physical Property), statutes or regulations that must be addressed?
Where: Where is performance going to occur? Their site? Our site? If our site, are there controls we have to enforce (physical/info-security, etc)? Offshore/near-shore? Is data involved? Where’s it going to be housed?
When: What is the effective date of the deal? What’s the actual start date of the work/delivery? How long is it going to take to complete the work?
Why: Not always important, until it is. Ask your SME if the “why” involves this deal being a part of a larger project. What happens if the subject matter of this deal isn’t successfully completed on time?
How: Especially important for services work – make sure you know HOW the work will be done. You need to know that the rodent-removal service isn’t planning to use dynamite at your nuclear power facility (true story, btw).
How Much: The $64M question is always about money. What’s it going to cost? On what metric (piece-work, T&M, fixed price, etc)? When is payment due (at signature, at finish, milestones)? What are the payment terms?
5. Learn the Boilerplate. Everything else, IMHO, is boilerplate. Termination, Indemnification, Warranties, Notice, Governing Law, etcetera. These terms are fairly consistent, so you’ll eventually learn these sections almost by heart. Just remember that minor word changes can have a large downstream effect.
Like with Chris, I’m happy to be contacted for followup.
I’ve updated the post to include a message I received from the lawyer in question.
Reviewing contracts is an inexact science. There are some real issues you need to review in international contracts. For example, it is common for the sales persons or other wanting the deal to ignore taxes in the (several) jurisdictions. Also, who is liable for what – is one party responsible for an injuries on a site? (You didn’t say what kind of a contract this was). Who has the risk of loss. What happens if there is a currency exchange change? Who has the risk. What currency will the payment be made and where. If you are selling goods, where does the buyer assume risk of loss? (Reverse question if you are the buyer. It is sort of a “what if,” analysis. I usually concentrated on the liability provisions, the insurance provisions, and the obligations of my client. I rarely spent any time on the scope of work. Also, since these contracts are already in force, why are you reviewing them? These are just some quick thoughts.
This was a great questions and fantastic answers. As someone in the legal field who is new to contract writing and review this has been very helpful. Thank you for asking the question and thank you for providing such great answers.
I found this post and indeed this site while tumbling down the rabbit hole of defining material breach in a supplier contract.
I just wanted to say I’m in exactly the same position as the OP albeit in London – in-house, no mentor, no budget etc and your comments have been invaluable, so thanks.