Gamesmanship in Contract Drafting

As I was packing up after a recent in-house seminar, one of the participants—I’ll call him Sam—came up to me to discuss a point I had made.

I had said that the phrase indemnify and hold harmless is pernicious, in that it invites litigators and judges to find nuances of meaning where most likely none had been intended. (For more on this, see these three posts.) Sam disagreed—he thought it important to retain the phrase, so that in any litigation his company would be free to argue, if it suited its purposes, that hold harmless has a broader meaning than indemnify.

I responded that you could draft a contract so as to make it clear that indemnify conveys the broadest meaning possible. And I suggested that it’s never a great idea to enter into a contract knowing that you and the other party attribute different meanings to a given provision, or at least are contemplating doing so. But Sam wasn’t to be persuaded.

I end up feeling that the difference between Sam and me goes beyond our understanding of a single phrase. That’s because I encounter quite often people who, like Sam, feel that the potential for advantage offered by gamesmanship is more important than having a meeting of the minds.

Gamesmanship in drafting comes in various forms, but the kind I have in mind is geared to creating a discrepancy between what the other side thinks the deal is and what you think the deal is. This can be accomplished in a number of ways:

  • You could introduce ambiguity—whereas the other side thinks a given provision means X, you know that if it suits your purposes, you could always argue that it means Y. (This is what Sam had in mind.)
  • You could bury important provisions in unexpected places—in the boilerplate, or in a schedule.
  • You could knowingly introduce provisions that are unenforceable in the applicable jurisdiction, in the hope that the other party isn’t aware that they’re unenforceable.

I’m not sure that such conduct violates any rules of professional responsibility. For example, it wouldn’t seem to involve making “a false statement of material fact or law” that would fall foul of ABA Model Rule of Professional Condut 4.1. Arguably, burying important provisions could be considered as having, in the words of Rule 4.4(a), “no substantial purpose other than to … burden a third person,” but I doubt that this sort of conduct was what the rule was intended to discourage.

My problem with gamesmanship is that it’s deceitful. If that doesn’t pose any ethical problem for you, consider the practical implications: If the other side catches you playing any of these games, it could sour your client’s relationship with the other side, resulting in your client missing out on future deals and your losing your client’s business. It could also inflict more general harm on your professional reputation. And playing games with ambiguity can result in your being hoisted by your own petard.

Considered more broadly, gamesmanship is indicative of a narrow adversarial view of negotiation. I prefer negotiation based on mutual problem-solving.

My expertise in this area is, however, limited, so I thought it would be interesting to hear what others had to say.

I contacted Charles B. Craver, Fred H. Alverson Professor of Law at George Washington University Law School. Among his many publications, he’s co-author of this book on legal negotiation. And he has given many seminars on negotiation, including through ALI-ABA. Here’s what he had to say:

I agree with your perspective. When parties enter into contractual relationships, they should strive to achieve mutually acceptable terms that satisfy the underlying interests of both sides.

Since contractual parties usually have on-going relationships, if one side uses gamesmanship to take advantage of the other, this factor may adversely affect this relationship. It may even allow the other party to challenge the entire contract based upon the claim there was never a true meeting of the minds. Once an attorney develops a reputation for such gamesmanship, other lawyers will not trust that person. Future negotiations become more difficult. Some deals that might otherwise have been achieved will be lost due to this lack of trust. I occasionally see this among my own Negotiation class students. If a student uses gamesmanship to take advantage of trusting opponents, by the end of the semester, that manipulative student usually has one or two nonsettlements due to his or her poor reputation.

I also consulted Victoria Pynchon, mediator, author of the Settle It Now Negotiation Blog, and founder of the IP ADR Blog. Here’s what she had to say:

I agree with Ken. It’s feasible to obtain through gamesmanship a greater advantage than you could have negotiated in good faith. But for all the reasons given by Professor Carver, it’s not a good practice.

But let’s put such deceit in context. First, Sam’s defense of creative ambiguity was likely just talk. Negotiation “war stories” are often characterized by much preening and strutting.

Second, expressing a willingness to engineer ambiguity is one thing; it’s quite another to follow through and actually take advantage of one’s bargaining partner. When push comes to shove, we tend to be less brazen than we might have originally intended to be. The potentially unethical act is not in the drafting but in taking advantage of the drafting.

My experience as a mediator suggests that gamesmanship on the part of Sam and his ilk is driven by uncertainty and that they’re unlikely to capitalize on whatever gamesmanship they build into a contract. When I’m helping commercial parties resolve a dispute, I often invoke their better natures, particularly if they’re inclined to take unfair advantage of the “opposition.” Ninety percent respond favorably.

(By the way, my discussions with Vickie on this subject prompted her to post this item about what might have amounted to a high-stakes bit of contract gamesmanship.)

The third person I consulted was Eric Goldman. He’s assistant professor and academic director of the High Tech Law Institute, Santa Clara University School of Law, but I know him better as the man behind the Technology & Marketing Law Blog. He teaches contract drafting, among other subjects, and he’s certainly thought about ethics issues more than I have. Here’s what he had to say:

I think your guidance to Sam was 100% correct. If Sam wants “hold harmless” to mean something more than “indemnify,” he should (as you recommended) either define the term in the contract or expressly enumerate his desired covenants. Otherwise, as you have amply and repeatedly pointed out, his sandbagging will probably fail if tested in court.

However, labeling the decision to deliberately introduce ambiguity into a contract “gamemanship” assumes your conclusion. I think it’s unwise to deliberately introduce ambiguity when it’s unnecessary; contracts are ambiguous enough when no such efforts are made. On the other hand, lawyers are problem-solvers first and foremost, and if the deliberate introduction of ambiguity helps solve “the” problem, it might be a good choice, not a condemnable one. For example, assume a buyer of services insists on using its form agreement containing ridiculous provisions ( i.e., “Vendor agrees to cause the sun to rise in the west”) that aren’t easily negotiable (i.e., only the CEO can agree to remove the provision, but he will be preoccupied for the next 4 months trying to circumnavigate Antarctica in his kayak). If some ambiguous modification of the ridiculous obligation can get the parties to make a match they really want to make, introducing ambiguity may produce a win for all involved. In fact, lawyers who find a way to bridge the gap between parties are often celebrated because they may facilitate a long-term profitable relationship that would have been foreclosed by rigidly avoiding ambiguity.

So, like many other inquiries into lawyer ethics, we have to evaluate a lawyer’s decisions contextually. I wouldn’t make the same choices made by Sam, but I wouldn’t categorically label them as gamemanship either.

At the same time, there are some lawyers who systematically make choices that I think are sleazy. I’d like to think these “sleazy” tactics aren’t rewarded and that these lawyers develop career-limiting reputations–although in fact the opposite is probably true. As a result, when I teach these issues in my classes, I encourage my students to focus only on the things they can unilaterally control: they remain true to their internal beliefs, they should not to model their behavior after lawyers who appear to have different value systems than theirs, and they should vow not to personally reward lawyers who make poor choices.

Thus endeth this exploration of gamesmanship in contract drafting. I suspect that somewhere, Sam’s ears are ringing …

About the author

Ken Adams is the leading authority on how to say clearly whatever you want to say in a contract. He’s author of A Manual of Style for Contract Drafting, and he offers online and in-person training around the world. He’s also chief content officer of LegalSifter, Inc., a company that combines artificial intelligence and expertise to assist with review of contracts.