Yesterday someone suggested to me that the main problem with contracts is that they’re too complicated. That’s consistent with the message of an article that appeared in Legaltech News this week, entitled Are Law Firms Too Sophisticated for Their Own Good? (here). It’s also consistent with a recommendation I’ve heard over the years: lawyers should take pity on those who aren’t lawyers and make contracts more accessible to them.
This line of thinking misses the point. Contracts are as complicated as the transactions they express. Often, that’s plenty complicated. Depending on the transaction, contract complexity is a fact of life.
That’s entirely different from what makes traditional contract drafting such a chore to wade through. It’s a function not of complexity but of obliviousness. In traditional contract drafting, contracts are compiled by copy-and-paste monkeys who copy, on faith, from contracts that were themselves compiled by uncritical copying. Generally, those who do the drafting aren’t required to comply with guidelines for contract language. And generally they haven’t received rigorous training; instead, they rely on shaky conventional wisdom.
The result isn’t complexity, it’s a slurry of dysfunctional verbiage. It’s what results in—to cite one example at random—a recent General Electric contract containing ten difference efforts standards. (More about that here.)
As for the notion that it’s just nonlawyers who don’t understand contracts, it ignores that lawyers are trapped in the quicksand with everyone else. The lawyers shoveling traditional verbiage are among its principal victims.
Updated 15 July 2017: As Mark notes in his comment, contracts can be overly complex. That’s a different problem, but the obliviousness underlying traditional contract language can also result in contracts that are unduly complicated.
I think there are two issue here. One is poor drafting, the other is poor thinking about the substance. The core deal often isn’t that complicated. But over time, lawyers think of more risks, real or theoretical, and try to address them in their contracts. The copy and paste monkey bolts in clauses from earlier contracts without necessarily (a) fully understanding the purpose of the clause, and (b) properly assessing whether it is needed in the present transaction. Part of the dysfunction is in the (previous) drafting, which then feeds into the dysfunction about understanding the purpose of the clause and whether any such clause (even if better drafted) is needed.
Yes, contracts can be overly complicated, the result of not understanding how the deal works or being unduly risk-averse. I would have done well to says so. And yes, poor drafting and undue complexity can be perpetrated by the same people.
Mark wrote, “over time, lawyers think of more risks, real or theoretical, and try to address them in their contracts.” True, but it’s not only the lawyers who do that. When I was in-house counsel supporting the company’s procurement organization, I regularly received requests from my clients to add something to our contract templates to “make sure X never happens again.” (Right….as if a contract can do that in the first place.) Those requests would often come from people in the company responsible for some type of regulatory compliance…environmental, health and safety, whatever…and they would typically ask for some sort of provision to be added to “every” contract. It was a constant battle to keep unnecessary junk out of the contracts.
Agreed, and I have faced this junk when asked to update a university’s standard conditions of purchase. Does the client want me to delete the special conditions about purchase of bottled gas, because they are out of place in standard terms of purchase for a university? Will they blame me if a future contract for the purchase of bottled gas goes wrong? Or should I add product-specific terms for other products, to create consistency in the document? And if so, which products? Who do I ask, as I was instructed by a member of the finance department who doesn’t want questions, he just wants to tick a box to say that he has had the terms updated.
Einstein is alleged to have said, ‘Make things as simple as possible, but not simpler’. The drafting converse is apparently, ‘Make every contract as complicated as the deal requires, but not more so’.
So two drafting vices are insufficient complexity and excessive complexity. The former makes the contract inaccurate, and the latter makes it less clear and concise than it should be.