In my last post, I mused a bit on the subject of reflective practice and on what reflective practitioners may be able to contribute towards the goal of helping law students begin to “do” as well as “think” law. In similar vein, I’ve decided that the time has come to try a little legal education crowd-sourcing experiment. It’s more than likely this will fall flat on its face… but, what the hell; I don’t have anything to lose, so I’ll try it anyway…
Here’s the problem for the educator. Imagine a law student or young lawyer who is asked to draft a business contract for a client (hypothetical or real) for the very first time. How does the educator equip that law student or young lawyer, faced with a client on the one hand and a blank page on the other, to meet the challenge? Where to start? Is it possible, at least in general terms, to generate a set of principles, steps or processes – call it a professional guide or modus operandi or what you will – that our apprentice lawyer can meaningfully grasp and operationalize?
In the spirit of the endeavour, I throw out a few random and disorganized thoughts by way of an initial brainstorm:
- Understand the client, the business context and the relevant business relationship. Goes without saying?
- Understand there is invariably a delicate balance to be struck between the client’s desire to limit length, complexity and legal costs and the need to protect the client’s interests effectively. In my experience, clients favour “short and sweet” (which they associate with lower cost) over “long and winding” (which they associate with higher cost). How to strike the balance is tricky but it needs to be worked out client by client and assignment by assignment. One possible litmus test is to ask whether you can convincingly explain and justify each and every clause in the draft – what’s it for, why’s it necessary etc. For an excellent account of how to think about and manage the cost-versus-protection trade-off I recommend this recent post by Brian Rogers, aka the Contracts Guy.
- Recognize and source high quality forms and precedents and understand their set up and slant. OK, so if you are working in a law firm environment, there will likely be a precedent bank. Even so, it’s clearly not a great idea to work uncritically and unthinkingly from precedents. From which party’s perspective is the precedent drafted? Why is what’s in there in there and why is what’s not in there not in there? The discerning of quality is a harder task for the novice. And even for the initiated it can be a bit like the proverbial elephant (i.e. easy to spot but difficult to describe in words). Best then to give you an example. Here’s Brian Rogers again with a sample B2B sale of goods agreement drafted from the standpoint of a seller.
OK, crowd. Over to you. Please go ahead and add to the list as you see fit!
Adrian,
You pose excellent questions. Transactional attorneys all too often must learn how to draft contracts by “osmosis.” But I agree that there should be a systematic approach toward contract drafting that starts in law school, that continues in practice, and that never ends for so long as one continues to practice. That approach should distinguish between two aspects of contract drafting: (1) the universe of substantive concepts to be included or excluded from a contract and (2) the manner of expression of the concepts that are included. Usually, when we are taught or are called upon to draft or analyze a contract, these two ideas are jumbled together; it becomes difficult to evaluate the quality of a draft based upon its substance or its “expression efficiency.” If you’re interested, I discuss idea #1 in the context of knowledge management projects in a blog post that can be found here: http://www.draftingpoints.com/2012/11/05/the-beauty-of-concept-mapping/.
Thanks for posting this!
-Vincent R. Martorana
Vincent: thank you very much for your insightful comment! There is an interesting question about what can be taught versus what can only be learned. But my experience too was that we learned by “osmosis”. Your distinction between “concepts” and “manner of expression” is potentially very fruitful. The concept mapping (including elements of boilerplate clause recognition) can actually be introduced at quite an early stage. It may be possible to move quite quickly from contract comprehension and clause recognition exercises (which I do with 1L) to “building blocks” exercises falling within your idea of concept mapping with the actual drafting “expression” coming later.
Adrian: I’ll start with a small, easy piece: Develop a checklist of possible boilerplate provisions. Then consider each provision on the checklist in turn to determine whether it’s appropriate for the project at hand. You should do this both when drafting a contract and when reviewing a contract presented by the other side to ensure nothing important is missing. Too often we rely on feel and on our memory.
Brian: thank you for adding to the list! I am very much in favour of working in small increments. Simple, practical steps like the one you suggest are always easier to operationalize in classroom settings than grand, abstract schemes.
Excellent points by the Professor, and by Vinnie and Brian. I’d add (although my point is already generally covered by “business context” and “substantive concepts” above), that junior attorneys need to fully understand the structure of the transaction (“deal structure”) before starting the assigned task, whether it be due diligence, contract drafting or contract review (including boilerplate). Just one example, let’s say a junior associate is working on an asset purchase agreement, and he wordsmiths a best-in-class “mutual” indemnification provision in the “APA”. Problem is, I’m not entirely confident that even half of the junior associates in BigLaw fully appreciates that in most plain vanilla asset purchase transactions. the target company dissolves after cashing out the target shareholders and paying off unassumed liabilities. That is, soon after the closing, one of the parties to the APA (the target) completely disappears (in the ordinary course), leaving the iron-clad indemnification provision with no obligor and no obligee (on the flip side). On the obligee side, the former target shareholders, not being parties to the APA, don’t have much to hang their hats on (tenuous third party beneficiary status notwithstanding). I hope I’m right (my above basic analysis of an APA), but that’s not even my point. The point is that juniors need to appreciate that understanding deal structure will help them become better contract drafters 🙂 Best regards, Lawrence
Lawrence: Many thanks for adding further flesh to Vincent’s general notion of concept mapping with specific reference to M&A transactions. One of the real challenges for educators like me is to find the sweet spot somewhere between general principles (a theory?) of transactional practice that can provide meaningful lessons across a range of different transactional contexts and the particularities of a given transaction in a clinical setting. I suspect that in keeping with our training the best way to find the sweet spot is to work from particular instances of transactional practice in various settings and seek to identify commonalities. An understanding of the deal/deal structure is clearly one such commonality. Thanks again!
A systematic approach is certainly useful. I have to say, though, that to me the biggest difficulty lies in teaching students how to approach novel contracting scenarios and think outside the box. In other words, I wouldn’t give short shrift to Adrian’s #1. How do you figure out what the client really needs when the client often doesn’t know? How do you help a client take emotion out of the contracting scenario? How do you predict what difficulties might come up down the line that the parties themselves are not anticipating? While the actual drafting can be difficult, particularly where students and young lawyers have limited access to samples, I struggle with the earliest steps in the process the most. How do we teach our students broader business skills so that they can come up with a plan (and get client buy-in) for what needs to make it into the contract in the first place?
Wendy: Thank you for adding these great points and raising a series of pertinent questions. I can do no better than echo Professor James Moliterno at Washington & Lee, a key player in the development of the experiential 3L curriculum at that law school:
“Generally speaking, legal academics are excellent law analyzers and theorists. We are critical thinkers and precise analysts of law and its theoretical underpinnings. Students need this same talent and we are best at conveying it, especially in the traditional first-year courses and teaching modes. But to be successful lawyers, students need more than that foundational thinking skill. They need to learn how to problem solve when some of the factors are not strictly law-related; they need to learn to work in teams and to manage projects; they need to acquire a measure of business sense whether they serve as business counsel or manage their own law shop; they need to learn how to manage risk and assess the risk adversity level of clients; they need to communicate the law and its constraints to non-lawyers; they need to acquire bedside manner. In short, there is a multitude of talents and skills and attributes that students need to acquire that are not the skill-domain of academics (with many academics being an exception to this rule).”
See further: http://bit.ly/WmTPE8
Two that I’d add:
1) Understand that (in a corporate environment at least) contracts are not so much drafted as negotiated. An appreciation of the commercial realities of the envisaged relationship from both sides and a non-rigid approach will make the relationship that the contract is there to facilitate much better for everyone. In other words… each clause needs to be considered in itself and as part of the larger whole. Don’t forget the big picture.
2) If you are ever tempted to invest time in producing a ‘users guide’ to a contract… stop. Ask yourself why it’s needed, and spend the time re-writing tricky areas instead.
Tim: Thank you for your adding so thoughtfully the list. On a personal note it is particularly gratifying to have a former student give me the benefit of his experience! I’d like you to elaborate on 2). Are you saying that we shouldn’t bother with lengthy explanatory letters sent out with drafts (i.e. a client-facing point) or are you referring to internal drafting guides. I’d be interested in an example. Thanks again!
Yes, I was referring to the client-facing materials, and in particular, guides written to help future users of the contract who weren’t around at the time of drafting.
My experience is in project finance and public sector contracting. Typically the main PA would stretch to over 250 pages with 25 or so further Schedules before even getting to what services are actually being provided in a separate Schedule of Requirements. Even so, I’d only envisage giving three ‘deliverables’ to the client:
1) A transmission letter (by which I mean a short and sweet covering letter [“Dear , In accordance with our agreement dated , please find enclosed a copy of the Project Agreement for . If you have any questions or issues please call me. If you have any compliments call my boss.”])
2) The contract itself
3) A negotiation log (a record of *why* positions were agreed – what were the arguments put forward by the other side, and as part of what wider consideration were any concessions made – essentially a sanitized version of the document you’d have been maintaining in-house anyway)
If a ‘user guide’ (or any description) is going to be shorter than the contract it supplements, it has to be one of two things:
1) a simplification of language (in which case, invest the time in making the contract language better. Contracts can be precise without being impenetrable.)
2) a simplification of concepts
This second one is a risk. Ask yourself why a client or future user would want such a guide. Will they be acting in reliance on it instead of the main contract provisions? If so, what will they miss? Will they use it to help interpret what was meant by the provisions? If so, have you accounted for the guide as part of the order of primacy in the Schedules, etc? Have you been as robust and comprehensive as you would in any other element of your drafting?
Don’t get me wrong – sometimes long and particularly complex contracts require a bit more than just a contents page to help users find their way around. I’ve turned a 115 page payment mechanism schedule into a one page flowchart diagram as an elaborate contents page (although that one was quite the feat of engineering). Just make sure you ask: By whom and how will this be used in the future (including how will it be misused)? What am I simplifying to produce this? Am I okay with all of that?
Adrian, I’d also double underline your point 3 (use quality precedent). Standard contracts, familiar clauses and such represent understood risk profiles to the parties (especially important for banks). This leads to faster negotiation and more efficient pricing.
Tim: Many thanks for taking the time to clarify your point about “user guides”. What you say is invaluable. And it is very helpful to be reminded of the importance of focusing on the whole package, not just the drafting. Your precedent transmission letter also reminded me of your wry sense of humour!
Whenever I hear phrases such as “What you say is invaluable” or my other favorite “You can’t put a price on advice like that” I always think “Great, I’m not getting paid again…” !
Happy to help, as ever.
Prof. Walters,
Its Andrew from class. After reading your most recent post I can’t help but think of an exercise Prof. Batlan is doing for her 1L K’s class (I’m her TA this semester). She’s having the students draft a contract between climbers/sherpas for a service contract for the climb up Mt. Everest. I’m going to forward on you site to Prof. Batlan. Thanks for the great post.
Andrew: Many thanks for your comment. I’m very pleased that you got the TA gig. Prof. Batlan has helped me greatly since I returned to teaching 1L Contracts. She has many terrific ideas that have a direct bearing on the issues I raise in the original post.
I think we are finding the same two or three issues are at the front of our minds – what does the client want? What does the client need? Are the clauses readable (can the client understand them? Where can I get the clauses from (to avoid trying to re-invent the wheel).
It is difficult to teach “what does the client want” as it demands sensitivity and communication skills in the drafter primarily. However, one approach (to pick up the checklist idea from the ContractsGuy) is to have core terms in mind (along the lines of preparing for a negotiation – what is crucial for the client, what is less important). So, price is always important, but is it crucial? Or is time of delivery more important for this client? Obviously the type of contract (goods, services, carriage, real estate, security, company purchase) is one source of “core terms”. Other sources are the client, and the nature of the client’s business. As Tim has already noted drafting is not necessarily a solitary process – it may be important to recognise the interests of the other party!
All of these issues can be incorporated into a checklist approach at one level e.g: price, delivery or completion, quality concerns, reliability, relationship between the parties [not a lot of point in putting in nuclear clauses for breach if the relationship means they can never be used and to refer to them would jeopardise a vital business relationship].
However, the key skill is identifying the “core terms” that are most likely to need careful attention. In effect the key skill is asking the client the follow up questions. Given what the client has identified as core terms – what other terms may need to be handled carefully? It is a question checklist and must be used with sensitivity or it becomes a source of client irritation.
So we come to: “what questions do you need to ask the client (or ask the file to avoid irritating the client) before you settle down to the drafting?”
So to conclude this already overly long post – the key issue is to identify ignorance. Wendy has already called out attention to the importance of questions. I think the key questions are: what do I not know and how can I find out?
So the checklist becomes a list of questions (which is how checklists work best) and it is not the business environment that has to be learnt (because it is not constant – each particular business or commercial context is just a particular example) but the “generic skill” of asking the right questions. That is about sensitivity to the client, the relationship between the parties, the transaction, and how to handle the client interaction.
Get that right and the next stage: seeking appropriate forms to capture the core terms, and probably some standard terms where pure boilerplate can be used to support the contract – if it is not an important matter then deal with it in the way one usually deals with it. Development of decent boilerplate is a whole new task I think, and an important one. However, this post is already too long.
I think the right starting point for addressing the issues that keep coming up in the posts (and thus what teaching or facilitating should aim to get the student or new lawyer to ask) are: what do I not know and how do I find out?
Graham: Thank you for the further reminder that it isn’t just about drafting and for doing a great job of helping me to synthesize many of the other comments!
Adrian: Kuala Lumpur chapter checking in!
I suggest that deal guidance for junior lawyers can being either conceptual or specific. By way of conceptual guidance, I’d recommend asking fundamental questions along the following lines: What does the client want to accomplish? What are the risks? Does the law prohibit, impose conditions on, or favor certain arrangements? What are the tax implications? What are the default rules? What are the remedies?
But the problem is that once you try to turn these questions into deal provisions, you immediately get into the realm of the specific, and the possible permutations multiply exponentially. So recommending that junior lawyers compile a checklist is to in effect say, Good luck out there! The junior lawyer turns scavenger, copying and pasting on a wing and a prayer.
The only alternative is to shift from the conceptual end of the scale and offer guidance that is relentlessly detailed. Allow me to trot out the only example available to me: If any junior lawyer wants to know how confidentiality agreements work, I wouldn’t offer them generalities. Instead, I’d point them to the document-assembly confidentiality-agreement template that I developed for my venture Koncision Contract Automation. (It’s free.) The questionnaire comes with copious guidance, so completing the questionnaire in effect involves training. And the resulting contract contains state-of-the-art language and substance.
Obviously, that’s just one kind of transaction, and nothing of the sort exists for other kinds of transactions. But I think that’s what we need in order to get away from asking junior lawyers either to regurgitate or to wing it. Compiling a library of such guidance would require modest resources, but mostly it would require that someone with those resources get fed up with the endless ham-fisted improvising that goes on.
Ken
Ken: Many thanks for posting. As I’ve said before, with students in so-called “doctrinal” classes I think it is a case of a finding a sweet spot between theory and practice. I don’t find a high level of generality or abstraction sufficiently concrete or useful. At the other end of the scale, clinical settings are highly concrete but very situated and difficult to generalize from (though I wholeheartedly adhere to the view that clinical education is a necessary component of a good legal education — and am happy to give a shout out for the great work going on in the Entrepreneurial Law Clinic in my own Law School: http://bit.ly/XCuLtn) My increasing sense is that it is a very good idea for 1Ls to gain (i) an understanding of the basic concepts & categories of contract language and (ii) some experience in evaluating and drafting simple contracts. This is foundational conceptual work that, in curricular terms, could be built upon subsequently through clinic and/or the kind of class that you teach at Penn: http://bit.ly/101cudc From there, I agree that different kinds of transaction have different characteristics and different structures and require a much greater degree of specificity in terms of guidance and understanding. Which is where your “library” comes in.
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