Yes, I can see that you’re vehemently opposed to a recommendation I’ve made on a topic of interest to you. And yes, I know that you’ve been doing deals for twenty years.
The problem is, for twenty years you’ve been relying on conventional wisdom. For twenty years, you’ve been paying the price for the lack of anything resembling coherent commentary on the building blocks of contract language. You’ve been paying the price for the lack of rigorous training.
I don’t doubt that you’re highly knowledgeable in your particular field. But that doesn’t mean you’re capable of creating clear and effective contracts for your transactions, any more than knowing how to drive makes you a mechanic.
Me, I know next to nothing about your field. Instead, I explore the building blocks of contract language—it’s my livelihood and my mission. I’ve written copiously on the subject. I’m blessed with a semantic acuity that allows me to cut through the clutter and propose effective alternatives. And I’m possessed of sufficient determination to offer a thorough analysis of a particular issue, then revisit it repeatedly over the years.
And I’ve heard you out, but the notions you hold so dear are just variations on tired old conventional wisdom.
I’m in the business of trying to change minds, but ultimately I’m indifferent whether you in particular accept my recommendations. But for your own benefit, you might want to set aside your complacency or umbrage, whichever it is. Have you really considered my analysis? Are you just relying on that canard, the notion that you have to stick with “tested” contract language?
It might be that you’re simply too busy being successful at what you do to devote much time to what I do. That’s OK. In fact, I think you’d be wasting your time trying to reinvent my wheel. We can’t be expert at everything that touches on what we do. Instead, we rely on specialists.
Relying on specialists necessarily involves a leap of faith, given that the whole point of specialists is that they know more than you. In that regard, I hope my credentials inspire some confidence. I think I have my field essentially to myself.
So you have a choice: You and your organization can stick with dysfunction and chaos. You can continue wasting time and money and assuming unnecessary risk. Or you can take a deep breath and accept my guidelines. I’d be open to suggesting that you consider another set of guidelines, except that no other plausible set of guidelines exists.
If something really troubles you, ask me about it. Or discard it. But A Manual of Style for Contract Drafting is in its third edition. I’ve weeded out anything that didn’t make sense.
You could pick and choose from among recommendations. But that sounds like work. And you’d be trying to be what you’re not, when it comes to the building blocks of contract language—a specialist.
There is certainly a lot of chaos and dysfunction in-house, but it is almost all to do with bargaining leverage, the VP who wants to “get this done yesterday”, the difficult counterparty, you’re in Tokyo and I’m in Phoenix, and so on. The most perfectly drafted form agreement addresses maybe 1% of that chaos and dysfunction in an in-house legal group.
I would love to see clearer drafting, but no one has yet demonstrated the ROI to justify a consultant for that effort – at least not compared to other projects with greater ROI.
Until you know what changes I’d make and how much it would cost, you don’t know the ROI. I actually have a blog post ready to go on that topic.
Uninterested:
We rewrote our agreements to be highly consistent with MSCD. We didn’t keep exact statistics before and after, but the change increased the number of agreements that simply came back signed, as opposed to requiring negotiation. That’s the basis of an ROI.
Sure there are other sources of dysfunction, but they are harder to address than something over which in-house legal typically has exclusive control: what the form looks like. Are you going to pass up the return on fixing your forms simply because it is one improvement among many?
Chris
ROI isn’t something to be determined after the fact, though. We have to demonstrate up front where the ROI will be. And, frankly, we just do not have a lot of protracted negotiations over the words used – our negotiations are over the underlying concepts.
The SAAS provider does not care too much about whether it says “defend, indemnify, and hold harmless” or “defend” or “hold harmless” or any other permutation that obligates the SAAS provider to take care of a 3d party’s claim that I have infringed the 3d party’s IP when using the SAAS solution. Instead, the SAAS provider cares about obligation to take care of the claim.
I think it is a worthy goal to make contracts more concise, but that is very likely not an end unto itself. If you can package that with something else (e.g., revising contracts to be more concise and to reflect the likelier end result of a negotiation by starting somewhere closer to the middle instead of a service-provider-favorable form), then you are likelier to get the attention of in-house counsel.
To see the value of clearer, more concise contracts, you have to understand what’s at stake.
Regarding the indemnification language you cite, I’ve written at length about the confusion it causes. The benefits of clearer alternatives are as plain as the nose on my face.
We in-house attorneys understand what is at stake. But the clearest, most concisely drafted indemnification clause is not going to take away 3 weeks of negotiating over whether that clause should be there in the first place and what the clause should ultimately say.
What you are doing is good, but I think you might need more bait on the hook to get inside the company in a more significant way.
The C-suite in a SAAS provider may not care too much whether you say “defend, indemnify, and hold harmless” or simply “defend” in your form contract while they’re neck-deep in trying figure out how to become the next billion-dollar unicorn. But they’ll most surely care when you end up in expensive civil litigation arguing about whether that language means that they’re facing a million-dollar indemnification liability.
I don’t recall that Ken or the MSCD ever advocates making contracts more concise as an end unto itself. Chapter 1 persuasively covers the reasons for using the MSCD standards: clearer, more concise contract mean lower risk and a faster/simpler contracting process where both parties better understand their rights and obligations. The ROI there, as Chris points out, is unmistakable.
The point that sticks out from your comments most is that you don’t care about the mechanics of contract drafting. It’s not that hard to make the change, or to convince the uninterested C-Suite in a SAAS provider that there’s an ROI. I know, I’ve done it. Mostly, they just want to know you’re gonna have your crap done when it needs to be done, and they’ll trust you to do it right. Because they’re not specialists in contract drafting either.
Your response demonstrates that you’ve confused not caring about being a specialist with just plain not caring. And that’s disappointing.
You didn’t understand.
I think Ben is spot on.
Ben King, your comment reminds me of the mock arguments in the Miller Lite beer commercials from some years back: “Less filling!” vs. “Tastes great!”
I don’t think it’s accurate to assert that Uninterested Observer doesn’t care about the mechanics of contract drafting. His points, ISTM, are:
1) the old saw that “best” is the enemy of “good enough”; and
2) a brute fact that I learned in-house by getting repeatedly beat up by business people: In contract drafting, business people place great value on “good enough” language __that they can sign quickly__ so that they (the business people) can move on to the next of the many spinning plates they must manage. They _loathe_ delaying the deal (and thus possibly jeopardizing their personal KPIs, bonuses, etc.) to let the lawyers strive for some theoretical “best” in contract language. That’s reinforced by their sentiment, accurate or not, that (i) it’s unlikely that a dispute will ever arise where “best” contract language would be materially better than “good enough” language; and (ii) if such a dispute ever did arise, the dispute is extremely likely to be worked out “on a business basis.”
Certainly if things were to go south later, fingers would be pointed at the drafters: “Why didn’t you do a better job?” (I’ve seen that described as “corporate Alzheimers.”)
But __prospectively__ — which U.O. correctly notes (about ROI) is the default perspective — Attitude #2 above still dominates.
“Corporate Alzheimers” – I’ve always called that “the retroactive standard of perfection”. But your term is better.
And you are spot-on. The issues in your post are exactly the issues we struggle with.
Clearer, more concise contracts is one of my personal goals. But if you want the attention of in-house attorneys, you need to address the issues that really take up our time: the negotiation itself. A clear and concise one-sided standard indemnification clause does not do that. A clear and concise standard indemnification clause that is designed to reflect a likely compromise in an arms-length negotiation? Much likelier to get our attention if you can demonstrate that we will save substantial time.
“If you want the attention of in-house attorneys” sounds to me like a buyer sitting back and saying, “impress me with your goods”, “add some bells and whistles that increase the appeal of your offering” and so on.
I don’t think it is Ken’s job to go to in-house lawyers like a supplier touting his wares. If they see merit in the principles that he is drawing to their attention, they should respond accordingly. If they don’t, more fool them.
I recognise much of what Uninterested Observer is saying about the pressures of in-house life, but to my mind these pressures shouldn’t count as a block to deciding to improve a set of template agreements. We should be ambitious to do the best we can in all spheres of our professional life, not say we are too busy to bother. Even if we go through 40 years of lawyering, draft and negotiate thousands of contracts, and never have one of them litigated, that is not an excuse for producing dross.
Mark Anderson writes: “We should be ambitious to do the best we can in all spheres of our professional life, not say we are too busy to bother. Even if we go through 40 years of lawyering, draft and negotiate thousands of contracts, and never have one of them litigated, that is not an excuse for producing dross.”
I don’t think U.O. was saying (or implying) the latter portion of either of these couplets. It’s just that it’s not always a neat dichotomy. One might indeed be too busy to bother — not due to lack of ambition, but by direction of the client; and it’s the client, after all, who gets to decide where the priorities lie and what risks to take.
But we’re debating without a factual context: We don’t know what event(s) triggered the near-philippic in Ken’s main post, and so it’s hard for us to respond except in abstract generalities. If we knew more about the facts, we might find it easier to make judgments. Who knows, we might even agree on more.
We have a different view of lawyering. In my world, you keep plugging away at quality and accuracy, every time, even if you strongly suspect you will get overruled by the client’s commercial decision.
Perhaps so. In my world, I’m sometimes asked, e.g., to adapt a precedent contract that has suboptimally-drafted portions, with the client in a hurry to get to signature. If in my judgment the suboptimal portions are “good enough,” then I won’t bother fixing their problems, because the client has made it known that getting to signature quickly is more important. In such a situation, plugging away at accuracy and quality until overruled would amount to disregarding the client’s stated wishes. I mean no offense, but in U.S. bars that would be ethically problematic.
DC: As others have pointed out, we are at cross purposes. My comments specifically mentioned preparing template agreements.
As for what happens during a deal process, of course there are conflicting pressures. And of course you follow your client’s instructions (though general comments about wanting to do the deal quickly always need to be treated with caution; how often does a client want a deal done slowly?)
Mark, we agree, as I responded to Chris Lemens, that “an in-house lawyer should, at every opportunity, plug away at improving the company’s forms — assuming that one has the time (or the budget to hire an outside consultant) in view of other, business-directed priorities.”
It’s a very different situation, though, when an outsider like Ken comes along and says “let me rewrite your templates,” or even “use my published templates instead of your own.” An in-house counsel will immediately recognize that such a proposal will _always_ entail some degree of in-house cost (not least opportunity cost) to scrutinize Ken’s work and very possibly to get approval for particular changes from other stakeholders.
By analogy: A contract-template improvement project is not like driving your old car up to a dealer; handing the dealer your keys and a check; and driving off in a shiny new model. Such an improvement project would be more akin to first taking the new car to a garage; tearing apart the engine and transmission; and getting some level of comfort that all the parts fit together and interacted at least as well as they did in your old model. (As the old nuclear-Navy saying has it, you get what you inspect, not what you expect.)
Such a teardown-and-inspection effort would inevitably entail in-house time and resources that are also being claimed by many other competing priorities of the business.
Certainly I wish Ken the best in his efforts. But equally certainly, U.O. is right — indeed, it seems self-evident — that if Ken wants to persuade a client to undertake such an effort, then the burden is on him (Ken) to make the case that the eventual R.O.I. is likely to justify that cost. That can be a tough sell.
Incidentally, the tough-sell challenge is a principal reason that, in putting together the Common Draft materials, I’m (i) intentionally making the materials available for anyone to use under a Creative Commons license, and (ii) working with Tim Cummins and the IACCM to see if we can come up with some de facto industry standards, thus reducing the need for individual companies to go through the teardown-and-inspection effort. Sure, that means I’ll have less near-term opportunity for monetization. I’m more interested, though, in a long-term streamlining and facilitation of the contract-negotiation process, à la the INCOTERMS.
OK, no more comments please, D.C.
I’ll take you at your word and admit that I missed the mark by guessing at your motivations.
But there’s no reason why Ken or the MSCD should address the issues of negotiation. That’s your world (and mine). Ken’s not proposing to be the propounder of effective negotiation tactics, just the propounder of effective contract language.
I’m in-house, I draft and negotiate contracts all the time, and I understand what you say about the different aspects of a deal taking different priorities in the negotiation. But you overestimate the cost of using the MSCD standards (maybe in real life, certainly in your argumentation above).
If you’re prepared to use the MSCD, the cost of imposing clearer contract language into that process is usually negligible at worst. It’s rare to spend 3 weeks arguing over any single contract provision. If you’re spending more than an email or two, you’re probably dealing with an important provision that deserves some additional scrutiny. And opposing counsel rarely objects that language is too simple. If there ever were a reason for “Indemnify, defend, and hold harmless” (or other such legalese) to be present, the MSCD standards provide an opportunity to clarify what is needed, thus improving the contract (and I can count on 1 hand the number of times where, after discussion, opposing counsel insisted that we return to the legalese).
So, while best may be the enemy of good enough, “it’s too hard” is often enemy of making it better.
D.C.:
I think you’ve unintentionally changed the focus in a way that ignores the original point. You say:
> They loathe delaying a deal (and thus possibly jeopardizing
> their personal KPIs, bonuses, etc.) just to let the lawyers
> strive for some theoretical “best” in contract language.
I think we are talking about form agreements, where all of the work happens before the business people are involved. Using MSCD can accelerate deal closure because the documents are easier to read. That means that some percent of business people receiving them don’t bother to go for legal review on their side. An even within negotiations, there are fewer instances of “I thought your language implied this, but you are saying that’s not your intent, so we need to re-write it.”
I would tend to agree with you much more outside the context of writing forms.
Chris
Chris, now _there_ we’re in violent agreement, as one of my clients used to say. And in that context I agree completely with Mark: an in-house lawyer should, at every opportunity, plug away at improving the company’s forms — assuming that one has time (or money to hire Ken) in view of other, business-directed priorities.
> (i) it’s unlikely that a dispute will ever arise where “best”
contract >language would be materially better than “good enough”
language;
>(ii) if such a dispute ever did arise, the dispute would likely be worked out >”on a business basis” anyway; and
>(iii)
the risk associated with using mere “good enough” language is just >one
of the countless risks of doing business; many business people are
>willing to assume that particular risk if it gets them to signature
sooner.
Cases get litigated, so (ii) is provably false. Cases get litigated when there is a dispute over facts – no helping that one – or when there is a dispute over what the contract requires, so (i) is also provably false.
(iii) – the idea that business risk is common, is half true. People often accept risks that are unacceptably large without thinking about it. I have a client that recently agreed to a non-familiar foreign choice of law, choice of forum, and local court venue. They are used to making choice of law concessions in other agreements. But with no knowledge of what that foreign law or court system are like, they took one of the “countless risks of doing business.” Taking a risk vs. deciding to accept an explicit risk in exchange for an explicit reward are two different things. I’d say only one of those scenarios satisfies the business judgment rule.
UO:
I think ROI is exactly something you determine after the fact. You do something ahead of time that is somewhere between scientific estimate of ROI and wild-ass guess. Then, if you are systematic about it, you come back after the fact, measure what the actual ROI was, and use the difference to improve your forecasting int he future. I knew I wasn;t going to do that, so I didn’t bother to track it.
I agree that I don’t have a lot of protracted negotiations over language — because I use MSCD to impose consistency and conciseness on my language. When using someone else’s form, I often run into provisions where I can’t tell how it would apply, because it doesn’t follow that model. When that badly drafted language intersects with some of the regulatory requirements for my business, I have no choice but to push on it to get it clarified. And that extends the negotiation, needlessly: if we had started with my agreement, the language would have been sufficiently clear that the other party would have known exactly what was up.
And again, just because the negotiation over the substance of the indemnity takes up 90% doesn’t mean that it isn’t worthwhile to eliminate the needless 10%.
I’d suggest that, within your model of pairing a conciseness goal with a something-else goal, the something-else goal might be to raise the percent of contracts that require no negotiation. Whether that’s achievable depends on your industry. It was in ours. And they are intimately connected: a contract that is easier to read is more likely to simply get signed.
Chris
You want ROI? Here’s ROI: take any conventional usage–you like “defend, indemnify and hold harmless”–and find dozens of cases in which these words have been construed. Ken has been advocating for a completely different approach now for, what, 20 years? Has there been one case in which Ken’s language has been litigated? If not, that tells you that *it’s too clear to generate litigation*! Explain how much it costs to litigate a contract case, even if you win; explain how many deals result in either early termination or settlements costing Big Bux™. That’s ROI for language that a) doesn’t require a lawyer to interpret for the business person and b) explains stuff clearly so that everybody’s obligations are understood.
Vance, your implicit syllogism doesn’t hold up. The language from Tina Stark’s boilerplate form book has never been litigated, either (so far as I know). That doesn’t mean that Tina’s language is superior, because (again, so far as I know) we have no way of knowing the extent to which Tina’s language has actually been used in real-world contracts. The same is true of your argument about Ken’s approach.
Ken:
On a completely separate topic, when I read the title to this post, I thought its content would be about how a good contract drafter has to be a generalist: they have to know a little about a lot of subjects in a lot of jurisdictions in a lot of business models.
I think most in-house lawyers who write contracts don’t really think of themselves as specialists in anything. There are some in-house who are clearly specialists in employment stuff or in corporate stuff.
For a generalist like me, the concept of “tested language” isn’t really relevant when it means that the language went to court and some result came from it. That would be a specialists’s view, I suppose. The more important concept for me is whatever the label is for “I’ve been able to get a very high percentage of counter-parties to accept that language.” That’s the kind of testing that matters for me. Of course, that language might be just as dysfunctional as anything else. The challenge is to remove the dysfunction and keep it something that people will sign without negotiating (for all the right reasons).
Chris
I use “specialist” only with respect to knowledge of contract usages. Nothing else. In that regard, only traditionalists invoke the notion of “tested” contract language, not contract-language specialists.
A few comments:
1/ The aesthetic and practical aspects of concision are not severable. To quote William Strunk, Jr., who is not on Ken’s good list, ‘A sentence should contain no unnecessary words … for the same reason that … a machine [should contain] no unnecessary parts’. Going from A to B by the directest route — a rough definition of concision — avoids the risk and waste of a meandering route.
2/ Ken’s practical program seems to be:
(a) If you’re the drafter, send the other side an MSCD-compliant draft with a cover note saying that you’ve done so and why and discouraging non-substantive mark-ups;
(b) If you’re the recipient of a non-MSCD-compliant first draft, don’t revise it comprehensively to comply. Follow existing courtesy traditions and request only required substantive changes. Result: a ‘good enough’ contract.
3/ There’s really no reason not to make one’s templates MSCD-compliant. MSCD-style drafting, like masonry, may be a specialized skill and it may be work, but it isn’t brain surgery or rocket science. The worse your existing templates, the bigger the gains from revising them under MSCD guidelines. Even if you pick only the low-hanging fruit, you still gain, although Ken reasonably asks, ‘Why pick and choose? I’m the specialist!’
To be fair, Strunk isn’t on any of my lists. I just permit myself to note that he’s on Geoff Pullum’s bad list.