I was working on an agreement yesterday with a contract specialist. Many companies have contract “specialists,” especially in the procurement area, who vet language and negotiate with vendors or buyers up to and until the point where legal assistance becomes necessary.
The problem with this model is that as these specialists, especially in procurement, become proficient in their positions, they can fall into the trap of thinking they are lawyers….
I readily acknowledge that anyone can get a law degree and most can pass a state bar exam, but far fewer become good lawyers. A specialist’s basic (or even more in-depth) knowledge of the law — enough to be dangerous — can be a hazard against which in-house attorneys must remain vigilant. I ran up against just such a specialist in a recent negotiation. He was overly prideful in his work, to the point of arrogance, but he was no lawyer. Anyone who states unequivocally “my company will never agree to that” is not very skilled in negotiation. In my experience, very few issues are not up for discussion. And one who starts the first round of talks by informing those on the call what is and is not up for negotiation is signaling not only that the next few weeks (or months) are going to be difficult at best, but that he doesn’t really know what he is doing.
Rather than accede to this “strategy,” I will immediately ask that an attorney become involved. Usually, the procurement person becomes quite reluctant to involve legal, either because they have been instructed to do so, or because they know that they have blundered. I don’t care one way or the other -– this isn’t personal, after all. I just want to bring the deal to closure. However, the Field may have a vastly different view of what my perception of timeliness may be. As you know, in-house departments are often referred to as the “Department of ‘No.’” I have tried diligently to change this perception for my clients. I believe that this strength is borne of my litigation background. Clearing the decks no matter what is a habit that was ingrained in my litigation departments, as well as my clerkships. And hopefully, the perception has changed somewhat. I view our task as saying no only when required; the overarching objective is to obtain closure.
Back to my friend above, who informed me that his company would never agree to this or that. I explained that the law was changing in the area of contention, and recent court cases were holding a different view than the proposed vestigial boilerplate language would suggest. It got quiet on the other end of the phone. I was able to speak with an attorney the next day. I am not suggesting that contract specialists and procurement people have no place in contract negotiations; they clearly do, and we on the sell-side also make use of them. However, it is important for the OGC to keep in mind that passing off seeming grunt work, without proper supervision of the process, can ultimately result in more work for everyone involved.
Risk assessment is one area where experienced attorneys have a leg up over those who have never seen the inside of a courtroom. I can more readily assess not only the probability of an issue blowing up, but how a judge, state or federal, is likely to handle such a scenario, based on the drafted language. Coming up against attorneys who are able to quote contract law chapter and verse doesn’t help the situation. If they’ve not dealt with the issue from a practical standpoint, you end up debating like a couple of 1Ls, and progress comes to a standstill.
Certain people hold the view that litigators don’t know how to assess risk properly and have no business in contact negotiations. Obviously, I have a different take. The goal is to bring closure; you’re not going to improve your share price by insisting on certain provisions. And yes, I understand that for financial securitization purposes, certain language must be included, or else. But really, aren’t we trying to sell you something, and aren’t you interested in buying? Let’s not muck up the works with posturing. You may feel the adrenal glow of winning a point or two, but the agreement will still be replete with redlines, and our respective business units will be wondering what is taking so long.
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[email protected].