04:10, November 08 312 0

2017-11-08 04:10:09
E-learning: Brush up on contract drafting to avoid disputes

The Lawyer is launching an e-learning course on contract drafting. Course leader and ex-Freshfields partner Ben Staveley talks about why the subject is a passion of his.

I was a tax lawyer at Freshfields for 20-odd years. I joined the firm straight after university and was a partner from 1987 until 2002. Before then I studied English, and I suppose a love of language drew me to a heavily technical subject like tax law and its intricacies.

During my practising life I became increasingly intrigued by how contract drafting was done, as part of a wider interest in the written product that lawyers create for their clients.

I formed the view that the profession didn’t always live up to the standards it thought it was setting itself. I have seen quite a lot of contract drafting which, even if it (just about) “worked” and didn’t contain howling errors, was expressed in obscure language that the user of the contract couldn’t possibly be expected to understand first time: indigestible, old-fashioned, elaborately drafted, not set out sympathetically, over-reliant on old precedents that nobody thought to question.

Talking to lawyers in my post-practice life, I’ve continued to be surprised by how little time they typically spend reflecting on how to refine their contract drafting skills – a set of skills that everyone knows to lie at the heart of what lawyers are paid to do. I have tried in an academic kind of way to work out how to categorise the drafting errors that lawyers tend to make. I have been looking closely at the many contract dispute cases that arise each year: what has happened which led to those cases ending up in court? What could and should the lawyers have done differently to prevent their clients getting into a dispute?.

I think it’s fair to say that if you ask the people in charge of law firms, most would acknowledge that the standard of contract drafting produced by their firm as a whole is patchier than they would like.

The people who rise to the top of a law firm tend to be effective drafters. Lawyers promote the most able practitioners to high positions. Those people will recognise that their firm doesn’t always produce drafting that is Premier League standard. They know that this causes a reputational and financial risk for their firm, but not one that it’s very easy to mitigate.

Below that, most lawyers, even at quite a junior level, tend to have quite a lot of confidence in their own drafting. In fact, sometimes the most confident are those who should be most worried. The lawyers  who realise drafting is tough to get right are those who are good at it in the first place, as they are sensitive enough to realise that subtle differences in language can lead to material differences in meaning. The weakest drafters are often oblivious that they have a problem.

In between the two extremes, there are plenty of lawyers who take pride in their professionalism and who would love to have time to polish the contract drafting skills that they’ve developed over their careers so far. They’ve typically developed them in a slightly haphazard way, learning as they go and without having had the time or the opportunity to reflect on techniques more advanced than the ones they learned when they started out in law.

Although I’m sure most lawyers wouldn’t deliberately choose obscure language, the law is by nature a conservative profession, and it somehow feels safer for lawyers to stick to familiar language – however unappealing it is to a non-law reader – than to have the courage to launch out into something simpler and clearer.

One overriding conclusion is that when contracts go wrong, there is usually a failure at a number of levels. One of the hardest things about being a contract drafter is that you have to create a contract that is clear at several different levels.

That involves – first of all – thinking about the way the contract works overall. When looking at a contract like that, the drafter is working like an architect – planning the overall structure. Then you get to the level of drafting a particular clause, where the drafter is working more like a bricklayer or a plasterer creating a room within a house. And below that level again, drafters have to use language at a very precise level. To extend the metaphor, they are working like an electrician doing the fine bits of wiring to make sure the house doesn’t burst into flames.

So drafters have to think at those different levels all the time, and a failure at any of them can cause the contract itself to fail. It’s genuinely difficult for anyone to keep all those aspects in mind when handling a contract of any complexity.

My other conclusion is that what is interesting – and a bit alarming – is it’s usually not just the particular few words that end up being the crux of the dispute. There are often a number of other things in the contract that look as if they could have given rise to a dispute but, for whatever reason, didn’t.

If that’s right, there are many more contracts that could end up in disputes but never do – the ones we see are the tip of the iceberg. If that’s right, it reinforces the point that time spent reflecting on drafting issues may be even more important in reducing risk than most of us have traditionally thought.

There are various categories of things that go wrong. Let me just mention a couple.

One of them is to do with linguistic or grammatical issues. It is very often the rules of the way the English language operates that trip lawyers up – lawyers sometimes draft things which are linguistically ambiguous, and they haven’t identified that the words are capable of being interpreted in two different ways. Problems of this type are easy to miss, but the chances of picking them up are greater if you’ve spent time analysing situations in which they are most likely to arise.

Another thing that crops up quite often is that lawyers don’t make it clear enough how the various provisions in a contract interrelate – if two clauses overlap and partly contradict one another, for example. Or where a particular provision is clearly expressed, but seems to fly in the face of the commercial rationale of other provisions. Which is to prevail? With modern judges believing it is their duty to interpret drafting firmly within its commercial context, it can be playing with fire not to nail down issues like this with extreme care.

Deals tend to move so quickly these days that lawyers find it hard to carve out the time to reflect on the draft contracts they’re dealing with in anything other than a bit of a rush. That may encourage the trend I mentioned, of sticking to language that’s been used before because it seems safer. But there’s no guarantee that whoever came up with the language had any more time for reflection.

Another issue is specialisation. As a qualified lawyer you will specialise in a particular area, and while you will keep up to date by looking at developments in the law in that area, you won’t ever stray far outside that. The last thing you are likely to have time to do is read a case from a completely different practice area where there’s some dispute relating to drafting.

That’s a bit of a shame, because questions of drafting tend to cross practice boundaries. If there is something that goes wrong in a lease, say, the same error might well cause something to go wrong in loan agreement but a finance lawyer might well never read a case about a lease. One of the things I try to do in talking about contract drafting issues is to help lawyers learn from experience across the profession, in a way that modern methods of practice don’t otherwise often encourage. The ideal would be for the profession to develop a culture of learning openly from its own mistakes, in the way some other industries have done (think airline safety). The number of contract drafting cases reaching the courts suggest that there’s a long way to go before that happens.

To find out more about our new e-learning course, please contact us at training@thelawyer.com

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