Long-time readers may have discerned a certain pattern to the subjects Ruminations Ruminates about week after week. We try to mix up legal, factual, and procedural (negotiation) topics. Whereas we often do multi-part blog postings on legal and factual topics, in our library of 196 prior postings, we’ve not reached into the “procedural” shoebox for a “two-parter.” We’ve always thought that would seem like a rant disguised as a mere screed. Today, we deliver the other shoe to last week’s thoughts.
Last week we raised the issue of why some negotiators are quite parsimonious when mouthing the word, “Yes.” You’ll want to see that posting if you missed it. That’s easily done by clicking: HERE. Today, we continue by looking at some corollaries.
We posited that the word, “Yes,” is often withheld because of inexperience combined with a fear of disapprobation from the “boss,” whether that is the one that signs the paycheck or the one that signs the fee check. Unfortunately, even when a “Yes” is tendered it turns out to be a “No.” How often does one party, usually the one that didn’t draft the document, explain why something is important and hear from the other side: “OK,” and then when the redrafted document arrived, it sure doesn’t look “OK.” To minimize the variables in what follows, we’ll paint the picture with a little more detail.
How many times have you been involved in a “four-way” call with a business person (decider) and her or his negotiator-draftsperson on one side and a team similarly composed on the other side? Then, after some discussion, one side or the other says, “OK, that makes sense, we agree”? You hang up thinking that that and many other issues have been resolved. Then, the redraft comes and, “Yes,” the provision now starts out giving you what was agreed, but is followed by narrowing provisions and conditions and whatever crafted by the negotiator-drafter. Is that because you didn’t understand the deal? No, it’s because the person who redrafted the subject provision is still afraid to say, “Yes.” She or he is afraid that if the provision simply conforms to what was agreed-upon, she or he will have made some error – “I’m obligated to abide by the agreement made by the principals, but I’m afraid to do so.”
When an agreement is reached in “conversation,” one should honor the concept, not merely give lip service to it. Not every right given to a borrower or to a tenant needs to be conditioned on the absence of a default or upon the right-holder having fresh breath. Sometime a cigar is just a cigar. For example, if it is agreed that one party will pay money to the other when a certain event occurs, it makes sense that the payment should be withheld if the recipient is in default of material obligations at the time payment is due. So, deferring the payment kind of makes sense. No one discussed that when the “deal” was made, but the approach isn’t very offensive. On the other hand, when a document comes back and says that in the event of a default at the time payment is due, the right to collect the five million dollars will be forfeited, that’s just plain offensive. If “forfeit” were the “deal” it would have been said.
Experienced, confident negotiator-draftspeople don’t do that.
Similarly, when it is agreed that one party or the other will have a certain “right” to do something, how about honoring the “spirit” of the agreement? For example, when the agreement is simply that a tenant can have exclusive use of the three parking spots in front of its store, the re-draft should come back saying that and adding that the tenant will notify the landlord of the license plate numbers of the three vehicles that will be there and that the right isn’t transferable to assignees. No one who has been negotiating agreements for at least a year will have any trouble adding their own examples.
Now, while there are exceptions, experienced, confident negotiators don’t do those things. That’s because they respect the concepts that have been agreed-upon. They know what the standard solutions are to standard agreements. Rarely is an agreement made, say between a landlord and a tenant, that isn’t the same kind of agreement that’s been made thousands and thousands of times over all the years. Experienced negotiators know what a lease’s provision should say when one of those standard agreements is reached. Inexperienced ones, and that isn’t measured by how many years one has worked or how many agreements one has worked on, just are afraid to “give away the store.” More about this “theory” later.
A similar situation arises when delivering comments by “blackline.” Here, one would hope that recipient of the comments would either understand the “why” behind a suggested (requested) change or asks her or his counterpart, “what are you asking for here?” Here’s an example. Suppose a lease draft, in its insurance article, calls for each party to “waive subrogation” and the other negotiator changes that to say that each party will obtain a “waiver of subrogation” from its property insurance carrier. [If such a “waiver” is a mystery to any reader, that reader might want to click: HERE followed by HERE.] Now, when the original draftsperson changes the text back to what she or he originally wrote, what have you learned about that person? It certainly isn’t that she or he knows anything about insurance and how subrogation waivers work because policyholders don’t waive subrogation; their insurers waive their own right of subrogation. So, what you’ve learned is that the “naysayer” doesn’t understand what she or he wrote and is ashamed (or something like that) to ask the other “side” why the change is being requested.
Similarly, sometimes a drafted provision isn’t clear and the other “side” asks for a small change in an effort to rectify that, not to make any change to what was intended. A typical example is when it isn’t clear if a modifier such as “material” applies to all of the words (separated by commas) that follow or just to the first one. When that suggestion is rejected, you know you are in trouble.
At the beginning, we wrote of a certain kind of “experience” when it comes to drafting negotiated documents, pointing out that it isn’t defined by years or deals. Experience comes from learning from every deal. Experience comes from discussing issues with others. It comes from reading books. It comes from attending programs. It comes from achieving your potential. The cure for “fear of saying ‘Yes,’” whether manifested directly in negotiations or showing up in the way a document is revised, is by becoming engaged in the work, by getting good at the job. That means knowing what you don’t know and having the strength to ‘fess up.
If today’s posting doesn’t qualify as a good old fashioned rant, what will? Don’t expect a part three to this rant. Next week, we’re planning on the mundane.