In a stream of posts over the past couple of months, I’ve been nagging companies about their contracts. It boils down to something like this: It’s likely your contracts are a mess. That matters. Do you have the time and expertise to fix the problem? What are you going to do? The response has pretty much been silence.
I’ve been similarly assertive—abrasive?—in meetings with some big companies, other than those that are my clients. Me: Don’t you want me to point out all the problems I spotted in your templates? Them: No.
Look, I know that everyone is trying to do more with less. It might be that at many companies, or most companies, “good enough” is in fact good enough.
But at the biggest companies, economies of scale mean that “good enough” doesn’t apply. A saving grace of contract drafting is that you can devote resources to getting a contract template right, because you know you’ll use it a thousand times. Furthermore, the biggest companies like to think they have the best talent. So when big companies don’t want to look under the hood of their contract templates, to my mind that has to be due to plain old inertia, whether of the individual or institutional sort.
If you’re a contracts person at a company, I’d be pleased to hear what you think about all this. You’re welcome to comment anonymously. Or email me your comment and I’ll post it for you.
Here are my most relevant posts:
- my blog post Who Is Best Placed to Make Decisions About a Company’s Contracts?
- my blog post The Shortcomings in Traditional Contract Drafting Have Nothing to Do with Complexity
- my blog post More on the Value of Troubleshooting Your Templates
- my blog post Does GE Have Guidelines for Contract Language?
- my LinkedIn article What Level of Dysfunction in Your Contracts Is Acceptable?
- my blog post Where Are the Contract-Drafting Specialists?
- my LinkedIn article The Three Things You Need for Optimal Contract Creation
- my blog post Fixing Your Contract Templates Isn’t the Place to Economize
- my blog post The First Question to Ask About My Consulting Services
I love that you posted this! I work for a large corporation am in the process of revamping our contracts templates. Looking forward to the final product!
Does anything I say in my posts relate to what your company is doing?
A comment submitted by a reader:
I liked your article “What Say You, Contracts People at Companies?” One thought is that company personnel may be turned off by you and others like you offering to improve their contracts. This could be based in ego, unfamiliarity, annoyance, cost-prohibitions, etc. The other thought is the stock excuse of “if it ain’t broke, don’t fix it.”
I work at a major academic institution in a managerial capacity. When I try to strip a standard contract template of legalese and superfluous language, I get resistance from both the other party and our general counsel’s office that needs to approve these contracts. The main culprit? Laziness and an abundance of caution insofar as doing anything outside the box that may make life easier for everyone involved. Do we really need recitals with “Whereas” and flowery language? Yep. Can we simply make a direct reference to the other section rather than use “herein”? Nope.
The best I can hope to do is slowly initiate change by tweaking words here and there. I try to use bullet points, delete redundant words, use “will” for our obligations and “shall” for the other party, delete flowery language, etc. I can’t change the world with this approach, but at least I can slowly work for change on the sly in my own little corner of the office.
Much like the state of our country, inertia abounds in the world of contracts.
I think part of the reason you haven’t gotten any response–certainly the reason I haven’t responded–is that your offer to fix my company contracts isn’t the service I’ve come to you for.
Providing the MSCD (or, more generally, your thinking about how to improve contracts) is an invaluable service. Because of the thought you’ve put into the MSCD and your frequent blog posts, I can test my ideas and assumptions, find ways to improve, and challenge your ideas even when we don’t directly communicate. That interactive process has made marked improvements in my drafting over the last 5 years or so.
But you don’t know my company like I do and, quite frankly, you’re unlikely to come to know it until you’re invited to spend the time to know it. As I know you’re aware, there’s a great deal more to practical contract drafting than selecting the ideal clauses. For good or ill, the work of an in-house contract drafter is a collaborative process with executives and other stakeholders who have a wide range of interest in determining the content and form of the contracts. So, my job is not just to provide the best contract when considered in a vacuum, it’s to build consensus around the purpose and the form of any given contract. To the extent I can push contracts towards excellence in drafting while I do that, I’m succeeding in my job. And that’s not a job I can easily outsource.
I recently read “Essentialism” by Greg McKeown. In it he describes the experience of someone who was told he could succeed either by being the person who provided the ideas or by being the person who did the work, but that he simply didn’t have the time/capacity to do both. For me, you’re the ideas guy. That leaves me to be the guy who does the work; enjoying the little bit of time I get to interface with you in the world of ideas is just the icing on the cake.
Thanks, Ben. It’s clear I don’t know your company as well as you do, but what I can do is spot weaknesses in contract prose. And I see dysfunction everywhere I look, even in templates used by people who have MSCD and have attended one of my seminars. As I’ve written elsewhere, that’s not surprising: generally people don’t have the time or expertise to be contract-drafting specialists, even if they have the inclination.
When I create a template for a client, I work with the company’s personnel to make sure that what I prepare for them incorporates their deal expertise.
Yeah, I’m the ideas guy. But with the fourth edition of MSCD almost upon us, I’ll increasingly have time to be the guy who does the work. And based on what I’ve seen, when it comes to contracts of any complexity, no one is in my league when it comes to doing the work. As I’ve written elsewhere, it involves more than applying MSCD by rote.
I appreciate that it’s awkward, perhaps even unseemly, for me to combine the roles of commentator on contract dysfunction and consultant who remedies that dysfunction. Well, I’m not going to deprive the marketplace of the best expertise available (and jeopardize my livelihood) just because I’m in the position of being the only game in town.
As the business and I.T. contracts legal guy for a major U.S. retailer for 34 years, the main reason that we didn’t use plain language until near the end of my corporate career was that our jargon-filled contracts were good enough in the sense that they were hardly ever challenged or litigated (i.e., we usually had enough business clout to settle disputes in our favor before litigation). Also, our various general counsels felt that we had bigger fish to fry as far as devoting internal legal department time and money to hire and work with a capable consultant like you; a project like this wasn’t a high priority, especially given our general counsel’s focus on regulatory compliance. But at the end of my corporate legal career, I finally found the time to really fix some of our widely-used contract templates using MSCD as guiidance, which was great. And I was mostly successful in convincing our GC (and legal dept. colleagues) that cleansing our templates of legal mishmash made sense.
Just a thought (from a former in-house lawyer who supported the procurement organization that had responsibility for all manner of contracts for the acquisition of goods and services), maybe you’re selling the wrong product. As my former mentor liked to say, “The contract is irrelevant as long as everyone gets along.” As with a lot of his pithy sayings, that’s an overstatement but there’s also a large kernel of truth to it. Rather than looking at contracts and contract templates and telling people what’s wrong with them (especially when they see nothing wrong with them at all), have you considered offering postmortem reviews of deals gone bad to figure out if the bad deal could have avoided or turned into a good deal with a better contract?
Another thing that would make people interested in your services is if you can give them shorter contracts. Honestly, I don’t know if you can do that, but if you can, it will sell. I once had a procurement manager come to me with a copy of our template for some type of service and a copy of a contract from another company for buying the same type of service. She said, “Look. Their contract is six pages long. Ours is twelve. I want a six-page contract.” I knew her well enough that I could afford the luxury of being a smart aleck, and I told her that all I had to do was reduce the type size to six-point and eliminate all the white space. (By the way, that wasn’t entirely a smart aleck response because the other company’s contract had about 75% as many words as ours did, despite having only half the number of pages.) But then I asked her to tell me what parts of our contract were unnecessary, and she said, “Everything over six pages.” I think I may have found some ways to shorten the contract, but I didn’t satisfy her. Good luck with it, but if you can actually shorten contracts, your clients will love you.
Thanks, Michael. Your postmortem idea is interesting, but I suspect that unraveling the details would in most cases be time consuming and inconclusive. The basic idea is simpler than that: with shorter and clearer contracts, you get stuff done more quickly, less expensively, and with less risk. If that doesn’t resonate, there’s not much more I can say.
And yes, when I redo a company’s template, usually I reduce the word count by around 25%, without taking into account the possibility of restructuring it to eliminate entire provisions.
By the way, this isn’t a business-development point, it’s a let’s-make-contracts-better point. It just so happens that I’m not only the only person offering a diagnosis, I’m also the only person offering a cure. So be it.