The interviews I’ve done on this blog have been about technologies relevant to the contract process or have explored some narrow topic that I’m particularly interested in. What’s been missing is interviews in which people who work with contracts discuss issues relevant to them. Here’s the first such interview; I’ll be doing others every so often, all under the rubric “Perspectives.”
Recently I had the pleasure of giving a presentation at Vinson & Elkins, a prominent law firm that has expanded far beyond its Texas roots. I had initially been approached by Chris Rowley, a corporate finance and M&A partner in V&E’s Dallas office. Chris was kind enough to discuss with me his take on contract drafting. Of course, the following exchange reflects Chris’s views, not those of V&E.
Ken: How would you describe to a brand-new V&E associate what their role will be in drafting contracts?
Chris: I would tell them that their role is to become a drafting workhorse as quickly as they can. Drafting is the most fundamental lawyering skill. While other skills are important, and over time may become more important in terms of providing value to a client, a lawyer who cannot draft well is like an outfielder without a glove. Although lawyers who are more senior will be there to instruct, guide, and quality-check young lawyers’ work, the associate should still approach each drafting project with the objective of creating a comprehensive and high-quality document.
Ken: Do you do much contract drafting yourself?
Chris: I was a liberal arts major and if anything, my initial strength as a lawyer was drafting. It took while to get the hang of contract language and the particularities of drafting contracts, but eventually I was able to cut through the muck and, I think, get pretty good at it.
Nowadays, the problem is time. Unless you start with a great contract model, you won’t have the time to turn any given contract into a masterpiece, and generally the client won’t be willing to pay for you to do so. (If you’re interesting in creating masterpieces, write as a hobby!) So, when you’re working on a large transaction, you have a team that does the drafting, and you review the drafts and steer them to final form. I’m lucky in that we have a lot of talented associates who quickly get the hang of how to draft clearly and efficiently. My job as the lead lawyer on the deal is to understand, delegate, coordinate, and negotiate all the various aspects of a complicated business transaction—the legal, accounting, finance, operational, and other aspects. So over time I do less and less actual drafting, as opposed to giving conceptual input and polishing things up.
But I really appreciate excellent drafting. I try to train the associates that I work with to think about drafting from a fresh perspective and to learn to express deal points clearly, concisely, and without resorting to murky legalese. But when an issue is particularly problematic and I feel that it would be more efficient, or more instructive for the associate, for me to provide something that is written from scratch, then I’ll sit down and bang something out. Sometimes that takes associates by surprise, and I’ll get looks that I take to say, “Gee, I didn’t know you could draft—not bad!” But that may be wishful thinking, the result of my trying to feel like I still have some game compared to our smart young lawyers.
Ken: What satisfaction do you derive from contract drafting?
Chris: You know, we have a president of the United States who is a writer and who understands that good writing is important to good thinking and good communication. I think that can be appreciated by lawyers, whatever their politics.
I had a college professor—Professor Marshall Eakin at Vanderbilt, a professor of Latin American history—who constantly used to say before assigning papers and giving exams that you don’t really know something until you’re able to express it clearly in writing. He was dead on. Writing polishes our thinking and forces us to confront and address miscomprehension, misperception, miscommunication, and inconsistency. One of our primary roles as business lawyers is to synthesize in a contract all the disparate issues and expectations surrounding a transaction. The process of drafting, reviewing, and negotiating forges everything into a statement of what the parties intend. There’s a reason people don’t rely on oral contracts—the odds are that no one would know what, if anything, had been agreed with respect to a given issue.
Ken: What in mainstream contract drafting, in terms of language or process or both, would you like to see change?
Chris: You’ve taken on a Herculean task, Ken, because there’s a lot of room for improvement.
I’m a minimalist. I want everything to be done in the fewest steps possible. Polish the idea and express it as simply and clearly as possible. From that principle, a lot of good drafting will follow.
Despite my career choice, I’m fascinated by engineering, in part, because engineering truly lives and dies by that principle—engineers always strive to eliminate any unnecessary mechanical steps. I recall an automatic crossbow invented in China maybe a thousand years ago. Whoever invented it found a way to eliminate several mechanical steps used in a normal crossbow, with the result that the automatic version fired something like one arrow per second. Needless to say, striving for economy in contract language is hardly as exciting, but the results are equally significant.
For reasons that I bet you understand much better than me, in law we can get away with not striving for clarity and efficiency. But I’ve seen encouraging signs. I think the SEC’s plain-English initiative was important. Do you remember what prospectuses used to look like before plain English? They were awful. Every new securities lawyer should be given a copy of a pre-plain-English prospectus and be told, “Don’t ever let this happen again.” Drafting those prospectuses was probably the worst training you could have in terms of encouraging good writing habits.
Your book A Manual of Style for Contract Drafting is also very important. Every new transactional lawyer ought to read it cover to cover. New lawyers will likely run into senior lawyers who, out of habit, will balk at some of the changes you recommend or be prickly about how you handle topics like “reasonable efforts.” But over time we have accumulated so many drafting usages that are completely unnecessary and cloud clear meaning. And you would never know it without someone taking the time to examine an archaic usage carefully, figure out how it came to be, and then say, for all the world to hear, that it is in fact counterproductive. And that’s what you do in your book. The first chapter alone—the one dealing with the front of the contract—clears away a lot of muck that as an associate I used for years, and without fully understanding why, in the course of parroting contract precedent. When I got my copy of the first edition of MSCD, it really improved my drafting and helped gel my personal approach to contract drafting. Still, I’ve probably put into practice only a few areas of MSCD, so I have a long way to go. But the shift in mindset is the critical step. There is no excuse for new generations not to do so much better than we have.
Ken: Do you think the downturn will change how law firms draft contracts?
Chris: It’s hard to say, but I think two points are relevant. First, most business lawyers, or at least most M&A lawyers, have more time now than in the last several years. That gives them more time to pay attention to drafting and more time to generate high-quality model documents. But clients are also more cost sensitive. Some clients appreciate and will pay for good drafting, or for templates that they can use in their business, and others are not as interested or don’t have the resources. Ultimately, I don’t know how it will play out. I’m working on a model confidentiality agreement for a client right now. I’m enjoying it, as that particular client appreciates good drafting.
Ken: I’ve suggested that the contract process would be much more efficient if law firms were to make use of document-assembly software. And some firms are doing just that. For example, Wilson Sonsini’s venture-capital term-sheet generator has been in the news, in my blog and elsewhere, and they apparently use the same technology to draft the actual documents. What do you think of automating the contract process in that manner?
Chris: It’s an approach that can be very useful, particularly in a practice area like venture capital, where you have a standardized set of terms and an entrepreneurial, technology-savvy client base. I predict we’ll see document assembly expand into other practice areas with similar needs.
V&E is currently assessing how to apply document assembly and other knowledge-management approaches so as to create efficiencies for our clients and for our own internal needs. We want to make sure that automation doesn’t result in our associates falling behind when it comes to the skills and professional judgment you need to work on complex transactions. Suitable training will be important.
It’s clear that clients are looking for efficiencies. It’s also clear that deal lawyers derive most satisfaction from devising strategy and helping with negotiation, as opposed to churning out documents that closely resemble documents used in any number of previous deals. So automating the contract process has the potential to make everyone happier, but it will require breaking some long-standing habits.
Ken: Can you think of any memorable triumph or screw-up from your contract-drafting career?
Chris: Hmmm—how about a triumph? I recently worked with a client who is a real wordsmith to create a private-equity private-placement memo that came in at about 45 pages. He absolutely didn’t want any of the repetition and legalese that’s a feature of so many PPMs of 100-plus pages. We really worked that document over, with the result that it conveys clearly and concisely all of the information that an investor needs. We’re both very proud of it. Of course, a PPM uses regular narrative prose rather than the limited and stylized prose of contracts, but a willingness to cut through the clutter will stand you in good stead with both kinds of writing.
Now, as for screw-ups, I have one that I will share. My only one, ever—honest! As a junior associate working on a public merger, in the course of revising the merger agreement I deleted “prospects” from the definition of “Material Adverse Effect.” It turns out that I had misunderstood a conversation with the client and the senior partner and that I was supposed to have left it in. As I recall, “prospects” had appeared in about half the comparable deals, and the client had decided to concede the issue. But the opposing side accepted the deletion—to the benefit of our client, the seller. The transaction was Frontier Oil’s proposed merger with Holly Corporation. It ended up in litigation, and Frontier v. Holly was one of the early decisions of the Delaware Chancery Court parsing whether a Material Adverse Effect provision had been triggered. Because my mistake was to our benefit, it obviously wasn’t a big deal. But when that transaction went to litigation, it reinforced in my mind that a lot is at stake in transactional work. So associates, listen carefully!
Ken: Do you have any other contract-drafting tips for junior associates?
Chris: Study drafting and learn to do it well. Read Ken’s book. (Ken didn’t ask me to say that!) And whenever you’re asked to draft a contract, your job is to understand the deal terms and figure out the contract framework they fit in—what issues need to be addressed and how those issues have been handled in other deals. Then, using your independent judgment, you have to draft the contract to the best of your ability within the confines of any instructions that the partner and client give you. If you don’t understand anything or are afraid that you’re going “off the reservation,” frame one or more questions that efficiently address your uncertainly, then ask the partner or the client. But in the end, you must treat the document as yours. Don’t treat drafting as an exercise in “painting by numbers”—doing just what you’re told, and no more. Partners have enough on their plate—they couldn’t conceivably also spot for you all those issues of language and substance that are bound to arise when drafting any contract. Lawyers are always encountering, and responding to, unique facts. Practicing law at a high level requires everyone on the team to be fully engaged in that process.
Ken: Chris, thank you.