Contracts, In-House Counsel, Rudeness

House Rules: Leverage Abuse

David Mowry thinks that bluster can begin as soon as the adversary reads your bio and decides that you are not quite a peer. This inappropriate elitism only worsens when one side gains the upper hand....

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By the time I made the switch to in-house work, I was burned out on litigating. Some of my friends and colleagues live for the fight, or as Wallerstein recently said, “have a fire in their belly.” In my case, I just couldn’t draft yet another motion to compel, interrogatory, etc. I had been doing it so long that it had become mundane. Appearing in court was always a kick, and depositions could be entertaining, but the day to day fun had dissipated.

Due to the economy and firm billing practices, I found myself at times resorting to noting “.1s” on my time sheets. So, when my bio says I don’t miss litigation, I really don’t. And what I don’t miss most of all is the bluster of the powerful down to the less leveraged.

In litigation, bluster can begin as soon as the adversary reads your bio and decides that you are not quite a peer. This inappropriate elitism only worsens when one side gains the upper hand for whatever reason; the bluster ends, and the bludgeoning begins….

In business, the same can be true for two sides of a negotiation. Let’s take a completely fictional example that I am making up out of thin air. Say that I am representing my company in a small deal with one of the largest technology corporations in the world. The goal is to get the deal to completion no matter what. A relatively small inroad that pleases the purchasing folks at said corporation could lead to more deals and more revenue long term. This is when the fun begins.

After months of negotiation on pricing, crafting an appropriate solution, and the like, the terms and conditions begin to flow back and forth. Legal is then brought in to negotiate contentious issues. I’ve discussed the common ones before — limitation of liability, indemnity, confidentiality, etc. It is around this time that I begin to assess what I am up against; either an adversary, or a business partner.

The adversarial lawyer will bluster on the first call with me, telling me that our paper is poorly written, barely understandable, and on and on. A business partner will tell me that they’ve reviewed the documents, and while there is certainly work to do, they feel that we can work together on the issues outstanding. This is not to say that there won’t be discussions about potential deal breakers, but I now know that I am dealing with an attorney who is reasonable and who at least partially shares the goal of bringing the deal to closure. And yes, the names Goofus and Gallant did pop into my head as I wrote that last bit.

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The blustery type (BT) will continue to waste time criticizing semi-colon placement, as well as alerting me that “there will be absolutely no sub-contractors allowed on this deal, as we expect your company to be the only company to perform the tasks set forth in the SOW.” Yet, the funny part, to me at least, is the fact that my company is one of the main subcontractors for BT’s company. If BT had only taken a small amount of time to understand the entities in this deal before getting on the phone, BT wouldn’t look so disingenuous. It should be no news to most of you that credibility can be everything in a negotiation. If you say you can deliver X, you’d better deliver X. More credibility in reserve can actually begin to add some equality to an imbalance of leverage.

In the meantime, my business partner and I have spent hours working on the details of the other deal that absolutely positively has to close by quarter-end. We’re very close to finalizing, and when final exception approval comes through, we thank each other for the time and energy spent, and go our separate ways. BT, on the other hand, could not care less about time lines, and is now carrying on about intellectual property indemnity. In the event that some aspect of our technology is the basis of an infringement suit, we agree to indemnify BT’s company. This is so that they don’t have to be bothered with a suit which names them as a party, but is based in reality on our technology. Well, BT wants to argue that they will not only demand indemnity, but they will demand approval of counsel. Um, no. We’ll handle our own lawsuit that we’ve now taken off your hands, thank you.

You get the picture. It’s far better to work deals as business partners, to the extent that is possible. Being a blustery type gains little traction, especially in a relatively simple deal. Just because you are the biggest whatever in the room, doesn’t mean you have to show everyone.

I have seen this in private practice, in countless courtrooms, and in-house. Exceedingly powerful and intelligent attorneys command respect not by being the loudest, or most brash. They are often the ones who listen most attentively, respond with measured and reasoned responses, and more often than not, end up as business partner types.

I was once blessed to work for one of the smartest attorneys I have ever met. Early in our relationship, I turned in what I thought was a well-reasoned, and thoroughly researched memo. He called me in and told me that I had reached a conclusion 100% antithetical to our client’s position. But he did it in such a professional and guiding way, that I actually walked out feeling good about having been dressed down. Business partner or BT — you choose. But, choose carefully.

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After two federal clerkships and several years as a litigator in law firms, David Mowry is happily ensconced as an in-house lawyer at a major technology company. He specializes in commercial leasing transactions, only sometimes misses litigation, and never regrets leaving firm life. You can reach him by email at dmowry00@gmail.com.

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