Good lawyers draft contracts in clear English. Bad lawyers draft contracts
in dense legalese. But here’s the thing: sometimes dense legalese gets the job
done, where clear English would serve only to clarify the fact that the parties
to an agreement don’t actually agree.
Lee Buchheit, in his book
How to Negotiate Eurocurrency Loan Agreements, explains what the problem
Exceptionally poor contract drafting can actually convey an unfair negotiating
advantage to the proponent of a document. Rather than set out plainly what
is intended and engage, if necessary, in a candid defence of that proposition,
the truly inept drafter can suppress all meaningful discussion about his work
product. Defined terms are scattered throughout the agreement. Each defined
term incestuously references four other defined terms, with the result that
even the diligent reader quickly runs out of page-marking fingers. The number
and obscurity of the cross-references to other sections of this (or some other)
agreement would bring a crimson blush of shame to the authors of the US Internal
Revenue Code. Each sentence is clogged with the arteriosclerosis of unnecessary
words and distracting parentheticals, provisos and exceptions. In short, only
counterparties and their counsel willing to acknowledge the painful limitations
of their own reading comprehension will have much to say about the document.
In the specific case of M&A deals, Steven Davidoff is quite explicit about
Avoid complex drafting. If any section of your agreement has one
or more "to the extent applicables", "Notwithstanding",
or otherwise has too many caveats redraft it to make it clearer and unambiguous.
Stay awake the extra two hours to do this.
The Epicurean Dealmaker has an
interesting take on all this:
Surely, a great deal of such poor drafting can indeed be attributed to laziness,
haste, or sheer incompetence, as Professor Davidoff implies. But I have another
theory for you. Based on my experience, I believe a non-trivial amount of
such obscure legal drafting is in fact intentional. I believe some lawyers
draft clotted legalese or do not attempt to clarify others’ scribblings because
they realize, at a conscious or subconscious level, that the confusion in
the text reflects a fundamental disagreement or misunderstanding between the
parties to the agreement in question. Haste, pressure of time or events, or
sheer wishful thinking encourages such lawyers to whistle past a particular
graveyard, or let a particular sleeping dog lie. After all, virtually no-one—not
even most lawyers—actually wants or expects an agreement to end up in
litigation, and that is usually where the parties’ differing intent and interpretations
of sloppy contractual language is aired and ultimately resolved.
You can see this as cowardly, or lazy, but I prefer to view it as reasonably
pragmatic. After all, the great majority of merger agreements do not end up
in court, and you can bet that is not because they are all drafted to an ABA-approved
level of clarity and precision. Furthermore, lawyers understand that they
work for businessmen, who want to strike deals, but who themselves may not
have a good understanding of all the risks and issues involved in a particular
M&A transaction, much less how they feel about them. In such circumstances,
is it really so bad to cross your fingers and whistle past that nasty contractual
briar patch wherein lie all sorts of differing intentions and interpretations
of, e.g., specific performance? Not only is the perfect the enemy of the good
in contractual law, but arguably the bad is not necessarily the enemy of the
good, either. The intent of M&A dealmaking, after all, is to make deals.
The upshot from all of this is that sloppy drafting can be used, in practice,
to advance the interests of one of the parties under cover of utter incomprehensibility.
Any good lawyer who has removed that weapon from his arsenal has every right
to feel aggrieved that others might use it against him.
But at the margin, it is certain that deals have been done only by means of
expediently sweeping intractable issues under a rug of impenetrable prose. And
from the point of view of many bankers and even some lawyers, a done deal is
nearly always better than the alternative. It’s inelegant, but it’s hard to
deny that it can be effective. And TED would have you believe that if the agreement
doesn’t end up in litigation, then no harm, no foul.
My take on this is that it’s not a lawyer’s job to sweep anything under a rug
– that has to be a decision made by the principals involved. Lawyers work
for the principals, and if the principals are happy with sloppy drafting, then
so be it. Still, I wouldn’t employ a law firm which used this tactic. You end
up on public shit-lists like Davidoff’s. If a potential client sees a respected
lawyer writing "do not retain Wilson Sonsini," they’re unlikely to
retain Wilson Sonsini. And the one thing lawyers want even more than getting
a deal done is getting more retainers in future.