How To (#12 December 2018)

Contracts and Legal Drafting Where Obsession and Rationality Collide

Vitalii Kacherovskyi

Law is one of the best and oldest professions. And, to be frank, one of the most crucial in the modern world. It helps us be more adapted for life difficulties, be well-educated and look cool, kind of like superheroes.

All of us who decided to study law and dive into this interesting adventure, had their own reasoning and motivation. Someone went to help others, someone went to make life of other people easier and protect their rights, while someone just wanted to make money or just because it was a prestigious career path.

However, I guess everyone who studied law faced this situation, when the classes, their content and the way in which they are presented was boring, irrelevant or outdated.

Moreover, when young graduates face the reality of jurisprudence, face law on a practical level, there may very often be a shock because what we learned does not correspond to how law and business works in practice.

In this situation, the best of us start to adapt to this situation, do their best to get new knowledge, to develop themselves. While others start to reduce their activity and may switch to doing something else.

In this situation, the best we can do is to provide more information to law school students, to modernize the approach to education and knowledge development opportunities.

Simply by adding more practical tips, lifehacks, we can drastically upgrade law education and business satisfaction, as more lawyers will be aware from the start of expectations and the needs of business, rather than investigating this after years of practice.

As for experienced business lawyers, we can only share experience with others as how it is reasonable to do and when its not time to stress words and it makes sense to show some business acumen.

What we were taught

I remember that when I was a law school student I was studying all those clauses from different Codes, all those legal theory topics and aspects. And I can say that I gave a lot of time to this and learnt them very carefully. We were told that this or that clause of the Civil Code governs a specific issue or contains a respective obligation. We were told how to reflect the operation in accounting.

On the one hand, you cannot proceed and be successful in this career if you dont know the basics and main theories. This is especially true regarding attorneys and lawyers, who work in litigation. However, on the other hand, we cannot develop ourselves, our professional skills without relevant up-to-date information, new approaches or just by working as we used to do or we did it in that manner before you. As result of such a careless attitude we have risks that our legislation will not develop, business will not update their attitude and services they provide. This is how legal work invisibly at a glance influences our everyday life, countries and lives.

As Ive already mentioned, nobody cares at law school level as to why we teach students?, what is our goal, what the final goal we want to achieve? In the global perspective (above personal incentives), there is no real necessity in simply teaching and providing knowledge. It is now much easier for a person to get the basics of any subject from the Internet. Simply look at all a whole variety of platforms we have: Coursera, edX, Udacity, Prometheus, etc.
So now is the time to take a step forward into a more thoughtful education. We need to teach new skills, methodologies, something that creates value for business.

It is no longer enough to just know the rules of law or court practice for your question. Without any doubt, this is the engine of our career, the starting point. At the same time, this is just the first layer and there are a lot of other interesting things that we can learn and use. You need only to want to take the next step.

What do we want to convey may the force be with you

For all of my career I have been lucky enough to work with great managers who give the opportunity to learn (from my mistakes too) and in companies that works with foreign companies. Taking into account the young spirit that I had after graduation and enthusiasm, it was easy to learn at the beginning. After the 8th year of work, I found out that some things Ive learned, lets call them Power are very important for a successful business and that I would have been happy to know them from the very start. By gaining this Power, we are not only assisting business, various stakeholders, but also gain authority and raise our value in a Company.

If I were asked to give just one piece of advice, how to act, what to look for or how to be successful? I would say that there is no one right answer or magic bean. No really, every situation is different, and ones entourage can drastically influence various aspects of our lives. However, I would definitely suggest be dynamite. Whats that means? Be proactive, focus on a result or expectations, by rejecting something always propose an alternative. These 3 simple recommendations can be used anytime, regardless of any environment and, I can assure you, will be appreciated in 90% of situations. Why are these things important? First of all, you should not be afraid of unknown fields, it is absolutely normal. But, by doing something new you will only gain: new experience, skills, positive feedback. Secondly, without knowing where you want to finish you cannot plan how to get there and, whats even more important, to understand that something went wrong and its time to do something to mitigate consequences. And thirdly, if you merely reject initiative and business incentives you will end up a problematic person, a so-called Dr.Evil who breaks all business flows and processes in companies.

This is in addition to the fact that a lawyer must know the subject of ones work (the companys business area), how the business works, what processes and energy flows it has.

Of course, you should never forget that lawyers must be somewhere in the middle of a good cop-bad cop game, balancing between Jekyll and Hyde, between light and dark.

What are business needs and what it needs Dont underestimate the power of the dark side

Every business wants to be successful and profitable. More developed ones understand that without building strong and healthy relationships with clients it will be difficult to be successful. Thats why, we as lawyers, those who help a business to meet their goals, must understand that and be able to help to achieve such goals.

Business needs and expectations understanding is a very complex and fundamental aspect thats required from an effective business lawyer. You can be the best expert in issues of fields of law or court practice knowledge, but without knowing what stakeholders expect, what your goal is, you wont be able to help a business, and so expectations wouldnt be met and client satisfaction will be low.

The next thing to pay attention to is skills. Its not simply enough to be a good specialist. You must possess certain skills (both soft and hard). For example, without good communication skills you wouldnt be able to build strong relationships even in your own team (take a look at what happened to the Lakers in the ShaKobe period), or common goal and readiness to help. Without this skill, your team even with the best lawyers will turn into a list of individuals (you cant say that about the Bulls of the Michael Jordan era).

As you see, Im sticking to the position that you should not become an evil bore that everyones afraid of. It is much more productive to be a partner to your commercial, accountant team. To have a common vision with them and pursue a common thing together.

And this is the place where the light and darkness dilemma is. Some say a lawyer should be strict to protect a business, while being soft and too kind will damage the reputation of the legal department and will cause anarchy. Others say its not effective in the long-term perspective to be strict, everyone will be afraid of you and in so you will miss a lot of initiatives and innovation. Thats why its difficult to undoubtedly say who the good guys and who the bad guys are, whos right and whos wrong.

Reasonableness of contract negotiations and redlining common sense of drafting

If I were given a chance to choose one or two problem fields of an in-house lawyers daily work, I would focus on contract negotiations and contract redlining (working with remarks by the client and their changes).

At first glance this is not the hardest things to do. And this is exactly why lawyers dont pay attention to them and do not develop themselves in this area. Like boilerplate terms in contracts: very often you pass them, as non-important, which can led you to risks or mistakes specifically there.

The current situation with negotiations of contracts is better but still far from ideal. I have often seen lawyers who come to meetings or negotiations with only one approach: to make a fool out of the other side. This is exactly how they see participants. Not partners, who creates opportunities or help each other, but as parties from the different side of a fence, who have nothing to share in common or to create. They dont see opportunities that both sides can create. They are focused on positions, instead of interest. Needless to say, they have not heard a thing about sharing the pie, BATNA or the win-win approach.

So, if we want to acquire benefits for the business we must learn how to look wider afield and how to be focused on opportunities.

The situation with contracts redlining is tough as hell. I will be frank with you, that not so long ago even I was making some mistakes. We all likely know the situation, when you start working with a contract and your start amending letters (putting definitions in upper case), then we continue with words in sentence order and words usage. As a result, we have a Frankenstein that is redlined a million times on every page. Finally, when a client receives such a document, trust me, they are shocked. You can always tell when a contract was redlined by a common law lawyer, or French lawyer and lawyer from Ukraine. We like changing and we were taught in that manner. Such an approach does not help at all. There is no need to do this every time. This comes with practice, but use my advice: change something only if it creates some value, gives you an additional benefit (protection). In other cases, it is useless and can only delay the negotiations process.

I was once told that we lawyers treat our documents as our children, and when someone redlines them too much we want to protect them. In such a situation, we cannot talk about any mutual respect or potentially beneficial cooperation. Everyone will be in a defensive position. Thus, progress in cooperation may stop.

What can we propose? What we can develop and how?

Its good when we know that we have some weaknesses and what they are. However, it is more important to know how to overcome them, in which area we need to develop. Those who work in big companies know about yearly goals and KPIs. In my opinion, this is a good tool that can help us, but only when the assessment is done properly, as it should be. However, as long as the majority of companies/businesses do not use them, there will be in effect only at individual business level. What we need to do is to update our teaching approaches.

We need to add new subjects to law school programs (at least at the level of commercial law departments). However, the effect would be greater if this were to be done among all students. For example, I would suggest adding practical subjects, like drafting (no secret that drafting of claim, contract and NDA are totally different), Effective negotiations, business awareness. Modern commercial lawyers must be aware of lean, agile methodologies. But whats most important is we need to change the mentality from predator mode to creator mode.

University practice. This should be redone from the ground. We need to start from the beginning. Its totally useless as very often students just go to get a mark, and if they can get it without attending even better. Once again, if we cannot create value/benefit for them, its better not to do it. Or do by consent, with those students and companies, who really need this.

Another very interesting thing to do, which can drastically influence business development, is knowledge sharing. Ive visited a lot of training sessions and workshops. Some were cool and interesting while some were boring. The common theme there your theoretical knowledge (you will be lucky to finish with some tool or to-do checklist). And after a week or two you will forget this and continue doing your work as you used to do. But knowledge sharing can be a game changer. The idea is to have a temporary allocation to another company. But you will work there, not just visit and watch. But you will see how the work is built, what CRM tools or other systems are used, what approaches are used by others. However, there are underwater stones to bear in mind. Like, what to do with confidentiality and data protection? What about non-solicitation? How can we protect our ideas or unique features from espionage and stealing?

If we manage to resolve this (maybe at company levels, in exchange for financial benefits or something else), the in-house sphere and business effectiveness will never be the same.

But are we ready for this? Can we take this step to step out of our comfort zone? Only time will show.

Vitalii Kacherovskyi
is a contract management lead, Capgemini (Poland)

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