The Upside of Sloppy Drafting

Good lawyers draft contracts in clear English. Bad lawyers draft contracts in dense legalese. But here's the thing: sometimes dense legalese gets the job done, where clear English would serve only to clarify the fact that the parties to an agreement don't actually agree.

Lee Buchheit, in his book How to Negotiate Eurocurrency Loan Agreements, explains what the problem is:

Exceptionally poor contract drafting can actually convey an unfair negotiating advantage to the proponent of a document. Rather than set out plainly what is intended and engage, if necessary, in a candid defence of that proposition, the truly inept drafter can suppress all meaningful discussion about his work product. Defined terms are scattered throughout the agreement. Each defined term incestuously references four other defined terms, with the result that even the diligent reader quickly runs out of page-marking fingers. The number and obscurity of the cross-references to other sections of this (or some other) agreement would bring a crimson blush of shame to the authors of the US Internal Revenue Code. Each sentence is clogged with the arteriosclerosis of unnecessary words and distracting parentheticals, provisos and exceptions. In short, only counterparties and their counsel willing to acknowledge the painful limitations of their own reading comprehension will have much to say about the document.

In the specific case of M&A deals, Steven Davidoff is quite explicit about what this means:

Avoid complex drafting. If any section of your agreement has one or more "to the extent applicables", "Notwithstanding", or otherwise has too many caveats redraft it to make it clearer and unambiguous. Stay awake the extra two hours to do this.

The Epicurean Dealmaker has an interesting take on all this:

Surely, a great deal of such poor drafting can indeed be attributed to laziness, haste, or sheer incompetence, as Professor Davidoff implies. But I have another theory for you. Based on my experience, I believe a non-trivial amount of such obscure legal drafting is in fact intentional. I believe some lawyers draft clotted legalese or do not attempt to clarify others' scribblings because they realize, at a conscious or subconscious level, that the confusion in the text reflects a fundamental disagreement or misunderstanding between the parties to the agreement in question. Haste, pressure of time or events, or sheer wishful thinking encourages such lawyers to whistle past a particular graveyard, or let a particular sleeping dog lie. After all, virtually no-one—not even most lawyers—actually wants or expects an agreement to end up in litigation, and that is usually where the parties' differing intent and interpretations of sloppy contractual language is aired and ultimately resolved.
You can see this as cowardly, or lazy, but I prefer to view it as reasonably pragmatic. After all, the great majority of merger agreements do not end up in court, and you can bet that is not because they are all drafted to an ABA-approved level of clarity and precision. Furthermore, lawyers understand that they work for businessmen, who want to strike deals, but who themselves may not have a good understanding of all the risks and issues involved in a particular M&A transaction, much less how they feel about them. In such circumstances, is it really so bad to cross your fingers and whistle past that nasty contractual briar patch wherein lie all sorts of differing intentions and interpretations of, e.g., specific performance? Not only is the perfect the enemy of the good in contractual law, but arguably the bad is not necessarily the enemy of the good, either. The intent of M&A dealmaking, after all, is to make deals.

The upshot from all of this is that sloppy drafting can be used, in practice, to advance the interests of one of the parties under cover of utter incomprehensibility. Any good lawyer who has removed that weapon from his arsenal has every right to feel aggrieved that others might use it against him.

But at the margin, it is certain that deals have been done only by means of expediently sweeping intractable issues under a rug of impenetrable prose. And from the point of view of many bankers and even some lawyers, a done deal is nearly always better than the alternative. It's inelegant, but it's hard to deny that it can be effective. And TED would have you believe that if the agreement doesn't end up in litigation, then no harm, no foul.

My take on this is that it's not a lawyer's job to sweep anything under a rug – that has to be a decision made by the principals involved. Lawyers work for the principals, and if the principals are happy with sloppy drafting, then so be it. Still, I wouldn't employ a law firm which used this tactic. You end up on public shit-lists like Davidoff's. If a potential client sees a respected lawyer writing "do not retain Wilson Sonsini," they're unlikely to retain Wilson Sonsini. And the one thing lawyers want even more than getting a deal done is getting more retainers in future.