Let’s Change Every Word Of The Proposed Lease And Send It Back To the Other Side

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One technique Ruminations and other blogs use is to write only about what they know. That minimizes the risk of being wrong and gives the impression that the writer has figured everything out. Yes, that time-honored technique hides the truth.

If you’ve found the disclaimer at the bottom of our “front page,” you’ll see that our goal is to trigger a discussion or discussions. To a greater extent than we could have imagined, we’ve achieved some piece of that goal. We get comments on the Ruminations site and many more through Linked In and similar sites. We also get direct emails and telephone calls.

Today, in violation of the first principle revealed above, we’re going to step out of our blogger’s shell and confess our inability to know where to “draw the line” when it comes to preparing agreements or preparing comments (suggested changes) to those agreements. And, in keeping with the second principle above, we’re going to urge readers, as Ernest Tubb and Loretta Lynn sang (and Dean Martin closed his shows with), to “keep those cards and letters coming in.” That’s enough prologue. Here’s what we can’t figure out.

How “perfect” does the agreement (lease, mortgage, etc.) have to be? Where does one stop? We are sure that if we were still writing our leases, mortgages, and other agreements out as manuscripts, they’d be shorter and with far, far fewer post-writing “corrections” or changes. Even when these were typed as typewriters became common business machines after the 1860’s, legal documents, by reason of practicality, if not by necessity, still had to be shorter than today’s documents. Nowadays, there is no practical limit to the length of our documents. “Cut and Paste,” global replacement, “search,” “search and replace,” retained forms, and all other manner of technical help make it a cinch. Further, we no longer have to consume trees; we just rearrange electrons.

Just because we can do it, should we? Have we failed to accept Voltaire’s: “The best is the enemy of the good? [Yes, we know, that’s not how you would have quoted him. But, it wasn’t original with him. He republished the Italian expression: “Il meglio è l’inimico del bene.” Feel free to translate that for yourself.]

How often, in real life, does the exculpation limitation found in leases ever make a difference? On top of the rarity of this ever coming up in practice, how many landlords are there any more that aren’t single purpose entities? Yet, why do some of us feel obligated to tweak what is presented to us and then fight for our position? How many other common provisions in leases or other agreements are like that? How about “pieces” of an agreement. Is it necessary to increase (or decrease, as the case may be) every time period in the document put in front of us? If a lease says that the tenant has to furnish a copy of its insurance policy within 10 days after a request for it, why do we change that to 15 days when, had the document given 5 days to furnish it, we would have increased it to 10 days? Yes, Ruminations knows that there are times and circumstances when it really “needs” to be a certain number of days, such as “15,” but that’s not the point. If 10 is good enough, how about just leaving it.

Our readers are almost all “in this business” and you can’t be in the business beyond a few document negotiations without having experienced this going on. So, all of us can tell “war stories” about deals where this just went on and on. We don’t need to make a long list today.

What’s wrong with this? Well, it isn’t only “time and money,” it is that this kind of negotiating process leads to bad feelings between negotiators. Woe, that they meet again. Also, is that how we want spend our days?

There is a parable we heard a long time ago, but can’t find any source for it. That, however, has never stopped Ruminations. There is a story about a recently-graduated history scholar who set out by steamer to China with the intention of travelling the country and collecting a definitive list of cultural customs. Two years (730 days) later, he wrapped up the project and returned to the port for a return trip. At the inn before debarkation, he heard a story he had never heard before. He cancelled his return trip and went back to the hinterlands to track down that story and perhaps gather some more like it. A year later, now convinced he had done a very complete job, he returned to the same inn. The story repeats, and repeats, and repeats, and he has neither left China nor completed his book. One day it will be finished just the way he envisioned it. Just, not in our lifetime.

That parable (or story) might resonate with some readers, though not to the extent that it would have had their deal not get done, but it will resonate anyway.

[Did the Ruminations disclaimer say, “rambling”?] We read something about loneliness and remember some of it, though in a sketchy way. We’d like to give credit where credit is due, but can’t remember the author. So, with apologies to whoever said this (or something close to this), here we go. None of us has a monopoly on the best way to do something and we shouldn’t insist that others agree with us so that it is “our way.” Lets’ not get angry just because somebody questions us. It isn’t so just because we think it is so.

Translated to the world in which we negotiators and document craftspeople live, not every provision of an agreement has to change just because our way is “better.” First, it may not be better except in our own minds, and second, being “better,” doesn’t mean that the other alternative isn’t good.

Fifty years ago, this author solicited essays from CEOs of a bunch of major engineering and technical companies for inclusion in an undergraduate engineering school’s magazine. The response was overwhelming. Yes, some submissions were written by the company’s public relations department, but there were a goodly number that seemed to have been written specifically for us. The messages in all but one of those essays have been lost along with millions of grey cells, but one message still stands out. It wasn’t about “nose to the grind stone.” It wasn’t about “technical proficiency.” It wasn’t about any similar things. Its title was: “Think Green.” This particular CEO told us that, at the end of the day, the task wasn’t to win awards for the best design; it was to do a good job and one that makes “money” – yes, that kind of “green.” Isn’t that where we ought to be?

OK, here’s the epilogue. Readers, please share your thoughts about the question posed. How much is good enough? When do you stop the back and forth and make the deal? You can add your thoughts by doing so where we ask you to “Leave a Reply.”

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Comments

  1. After many years of practice you know what is reasonable and or achievable in a lease, contract or other legal document. There is no badge of honor to push for modifications that are unnecessary, unreasonable or non realistic. However sometimes it is a productive exercise to suggest or request a modification that is totally off the chart to commenced a discussion that leads to a novel or unusual solution to a perceived problem.shgary

  2. Randall Gunn says:

    As your article indicated, most of your clients and readers are “in the business” . The word “business” is the key. I have had an adage since before law school that “you can turn a business person into an attorney, but, you can not always turn the attorney into a business person.” Those who believe in one more change and/or, I will change every line of the lease since it is not “my” base lease document that we are working from, are the attorney’s who never got what it went to be a business person. There is a deal that the business person/client want’s to make not a blood sport litigation.

  3. Henry Pharr III says:

    Great post Ira!! I agree also with Randall’s comments about the dichotomy of attorneys and the businesses we represent. That should be kept front and center. Many “great” attorneys i know miss this boat on the goal at hand in these situations. How many folks do you know who help get deals done and how many win the drafting battle only to lose the war not only with other parties to the negotiation but also their own clients. Lesson that cannot be repeated too often!

  4. A good attorney knows the business of his client. A good and experienced attorney knows which issues are worth fighting over to get the deal done and achieve the client’s business objectives. Good and experienced attorneys on both sides know what a balanced lease looks like. How many of us feel that there is not enough of any of that?

  5. If the first iteration of the Lease draft to the other side finds wholesale slaughter of the paper including business points from the other side, whether attorney or a ‘superior’ leasing person stepping in to show the other how to Hammer, then the other side needs to be walk away with a big NO and a polite explanation of why. Another option might be carrot n stick…$5000 toward other side’s legal fees IF the deal is done, signed in thirty days with no more than two drafts exchanged…and Zero toward legal fees after that? I am amazed at how many landlord don’t seem to track how their attorneys bill or perhaps they are all just on retainer and time is somehow not viewed as money. To every attorney I’ve deal with they seem to have a paradox..billable hours mean MONEY but getting the deal done is the goal. How to get BOTH seems to be the goal of some in the profession and they need to be controlled. Also, a Pox on the ‘bosses’ on each side who allow LOI’s go to out, get signed then try to show the Leasing Person ‘how to be tough’ by reneging on the deal points.

    • Randall Gunn says:

      I have a solution. Flat fee based on the size of the SF being leased and/or rent dollar tiers. Thirty days to complete the lease negotiations is disgraceful. 14 days/ 2 weeks max.

      At one time when I was the business/real estate and legal person for the retailer, I responded to an in house counsel that most attorney;s who pull his garbage are trying to justify their fee. He was trying to justify his miserable existence. The other side changed every line in a thirty page/legal size paper ground lease. The retailer was doing 100% of the construction/demolition, etc. Landlord just collected rent and granted access for ingress and egress.

  6. Your post is on the money. Although I too often tend to edit everything, I have a few basic standards: (1) what does my client need the document to accomplish; (2) is the provision clear enough to avoid misinterpretation; and (3) how likely is this issue to become a practical problem. We must all resist the temptation to change “happy” to “glad” while remaining sensitive to where the drafting can affect our client’s deal. To borrow a phrase, there is no bright line but only 50 shades of grey.

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