Mastering commercial drafting is an essential skill for every experienced lawyer, and may make all the difference between a positive and negative outcome for a client. Chris Bland, a seasoned top-tier solicitor, general counsel and principal of Legal Tradecraft Consulting, specialises in helping lawyers develop their drafting skills and advisory services. Chris will be presenting three skills workshops for The College of Law throughout 2018, focusing on drafting preliminary agreements, drafting elements for commercial agreements, and drafting and negotiating damages and indemnity clauses.
Insights spoke to Chris on what common drafting mistakes lawyers make, what lawyers can expect to learn from his workshops, and advice to improve their legal tradecraft.
Know how to draft
“Improving our drafting skill is integral to improving our overall skill as a lawyer,” said Chris. “We draft documents that are vital to court process (such as statements of claim, pleadings, witness statements). We draft forms, applications and submissions for our clients on many key public sector and government processes, such as applications to a planning department, ASIC or the ATO. We draft formal memoranda of legal advice on complex legal issues. Above all, as deal lawyers, we draft contractual documentation.
“The central role we play on a deal is to translate our client’s business objectives into contract concepts. This translational skill rests directly on how well we draft. Improved drafting gives clarity to complex legal advice. It makes legal advice open and accessible. It helps lift the quality of our communication both with our client, and their business customers and counterparties. It avoids the very uncertainty and ambiguity in contracts that leads to litigation.”
Common drafting mistakes
Despite the central importance of effective drafting, Chris often sees lawyers make several common drafting mistakes.
“For preliminary agreements, lawyers may underestimate both their legal and business significance, failing to grasp the big, valuable opportunity these agreements present and skimping on care.”
Preliminary agreements can also be a challenge when lawyers fail to clearly distinguish between what obligations are binding from ‘day 1’ and pre-contractual terms which are non-binding but may yet evolve into a deal.
“Common mistakes in commercial drafting include: failing to accurately record the business deal, failing to resolve the client’s problems pragmatically with user-friendly contractual solutions, failing to draft clear and specific obligations understood by all parties (which may lead to litigation), failing to be flexible to changing circumstances, or failing to achieve a client’s goals and thereby unnecessarily increasing a client’s legal risk or liability.”
Think about the end game
Overzealous lawyers may also risk drafting an agreement so one-sided it blows up a client’s negotiation of the deal.
To avoid these common errors, Chris advised planning, use of a good precedent, and clarity around one’s understanding of the deal.
“Choose the right tool for the job,” advised Chris. “Select or create a good base precedent, then adapt it carefully to fit the specific circumstances and demands of the deal and its particular legal context. Think about the end game.”
Just as important is learning how to use precedents.
“Learn their pros and cons, the tips and traps for safe and productive use. For example, be aware of the ripple effect in changing one clause in a standard precedent document that flows through a number of other key provisions and definitions.”
To this end, Chris promotes a six-step process authored by US practitioner and academic Proferssor Tina Starke (c.f. Drafting Contracts: How and Why Lawyers Do What They Do 2nd Edition, Kindle Edition) to review and approve the complex drafting of another lawyer: explicate (unpack), create clarity through format, create clarity through sentence structure, clarify any ambiguity, get rid of any legalese, then check substance – back to the deal.
“Learn the anatomy of a contract,” said Chris. “Learn all the basic body parts so that you really develop the skill of translating each key business objective into the right contract concept. This needs to become second nature. What is a recital used for? What are the ‘main action clauses’ or ‘operative provisions’, in an agreement? How do we use representations, warranties and indemnities to allocate and reposition risk? How do we correctly draft key covenants and obligations? What are the ‘contours’ of performance? How is performance actually measured, and by what standards? How do we confer discretionary authority on a party? How do we handle the so-called boiler plate and declaratory (policy making) clauses in every contract? What about the default and termination provisions? Is this a standalone contract, or just one in a family of agreements on a deal? If so, how do we deal with flow-down and flow-up issues, linked claim clauses and the like?”
Remember to plan
Planning plays an important role in ensuring a legal document is clear and effective. Chris encourages lawyers to consider the micro-elements of planning – sentence, subparagraph, and clause structure – as well as the macro-elements of planning – how to arrange and locate provisions, telescoping, chronological technique and thematic arrangement.
To this end, Chris uses and promotes Tina Clarke’s five prong tool – covering money, risk, control, standards, and endgame - to ensure lawyers fully analyse client instructions and understood the four corners of the deal.
For preliminary agreements, Chris cautions against haste.
“Don’t try and shoehorn those parts of a deal that are still evolving into the same place and function as those parts of an MOU that are already fully agreed and intended to operate as soon as it is signed. Contrast, for example, the key term of price in a major joint venture tender with a state government department to build and operate a new toll road. The price can only be known once the tender is called, finalised and awarded, with an immediate requirement for confidentiality and exclusivity between the JV team during the Project’s tender period.”
Chris brings a wealth of experience to the College’s skills workshops, having worked as an in-house lawyer, senior executive for Transfield Holdings, Campus Living Villages, North Connex Road Toll Project and Prisma Investment and adjunct lecturer for the College’s Master of Laws (Applied Law).
“Drafting sits at a ‘T junction’ of three skills: language, legal, and business,” said Chris. “Learning to draft is like learning to drive: you have to get behind the wheel. I have worked on confidentiality agreements, NDAs, term sheets, MOUs, heads of agreement, comfort letters, indicative offers, contracts for the sale and purchase of land, leases, subleases, assignments, deeds of novation, deeds of variation, deeds of amendment and restatement. I have drafted provisions and adapted precedents for project deeds, bank facility agreements, tax sharing agreements, company constitutions, trust deeds, unitholder agreements, shareholder agreements, incorporated and unincorporated joint venture agreements, partnership agreements, sale of business agreements, D&C contracts, operations and maintenance agreements and defense contracts.
“Some documents have been for ‘single point in time’ matters like the sale and purchase of land, or the sale of business agreement for a big construction business. Others have been for long term infrastructure projects (toll roads, water treatment plants, power stations and railways) that will last for forty years.”
For more information or to register for Chris Bland’s skills workshops:
Skills Workshop: Drafting Documents
Skills Workshop: Drafting preliminary agreements
Skills Workshop: Drafting and negotiating damages and indemnity clauses