Lawyers Signing Contracts, Part 2

I love it when I write about something that doesn’t make sense, and caselaw comes along to show that not only does it not make sense, it can also lead to a messy, expensive fight.

Today’s topic is the practice of having lawyers sign settlement agreements under the notation APPROVED AS TO FORM AND CONTENT. I wrote about it in this 2008 post, and here’s what MSCD 5.70 says:

An unusual aspect of settlement agreements is that sometimes they contain, under the notation APPROVED AS TO FORM AND CONTENT, signature blocks for legal counsel to the parties. It seems odd to have attorneys formally approve a settlement agreement. It’s the parties who are agreeing to settle—they don’t need, and shouldn’t seek, attorney approval. If the aim is to show that the parties had the advice of attorneys, it would make more sense to have the parties state as much in the settlement agreement.

Now along comes this post by Stacey Lantagne on ContractsProf Blog. It’s about a recent opinion of the California Supreme Court, Monster Energy Co. v. Schechter. Here’s what Stacey says:

The parties signed the settlement agreement. Their lawyers also signed the settlement agreement, under the preprinted notation “APPROVED AS TO FORM AND CONTENT.” One of the lawyers then made public statements about the settlement and was sued for breach of contract. The lawyer argued that they were not personally bound by the confidentiality obligations and their signature meant only that they had approved that their client be bound.

The trial court disagreed with the lawyer’s argument. The court of appeals reversed, finding that the attorneys were not personally bound based on the presence of the notation. This California Supreme Court ruling reversed again, concluding that the notation did not preclude a finding that the attorneys were personally bound. The agreement itself included counsel in its confidentiality provisions, and a signature on a contract usually indicates consent to be bound by that contract.

What a mess! I recommend that if anyone suggests that you, a lawyer, sign a contract you in this manner, you tell them to go eff themselves. Instead, have the parties state that they were represented by counsel (as recommended in MSCD) and leave it at that. You want the lawyers to keep information confidential? Make that explicit.

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.

3 thoughts on “Lawyers Signing Contracts, Part 2”

  1. What’s the point of the parties’ making explicit that they *want* their nonparty lawyers to keep information confidential? To what category of contract language would such a statement belong?

    If the parties actually agree to cause specified nonparties (counsel) to keep certain secrets, and such a specified nonparty blabs, the injured party’s remedy is against the counterparty, not against the blabbing nonparty (unless the counterparty and the blabbing nonparty have a confidentiality agreement of which the injured party is a nonparty beneficiary).

    If the parties want counsel to agree (1) to keep certain data secret, and (2) to be liable to parties injured by breach, willing counsel can become parties for that limited purpose and sign the contract in that limited capacity.

    If the contract says that it does not take effect until approved as to form and substance by each party’s counsel, maybe some notation like the one in the Monster Energy v Schechter case makes sense as a certificate that the condition has been fulfilled, so a reader would know from the contract’s four corners that it has taken effect.

    But with the benefit of hindsight (ie the Monster Energy v Schechter case), the certificate should be carefully worded: ‘The undersigned counsel for Acme certify/certifies that he/she/they, without becoming parties to this agreement, has/have approved the agreement as to form and substance under section 99 (No Agreement Until Counsel Approves Form and Substance)’.

    Why the parties wouldn’t themselves state that (1) their respective counsel approved the text as to substance and form, or simply that (2) the parties were represented by counsel (as MSCD recommends) eludes me, but the drafter’s task is not to persuade the parties to agree different terms, but how to express the deal they’ve made without creating a Monster mess.

    In a role different from that of drafter, counsel might ask a client, ‘Is there any business reason for this approach instead of a simpler, less risky one? Is any party genuinely worried that a commercial counterparty will (1) resist enforcement of the contract due to inadequate or nonexistent presigning review by counsel or (2) falsely state that it has obtained its own counsel’s approval as to form and substance?’ Such a query might result in fresh word to the drafter to follow MSCD’s recommendation.

    • MSCD says dispense with certify. And I wouldn’t bother trying to rehabilitate the “form and substance” stuff. In particular, I have a more interventionist view of the drafter’s responsibilities.


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