Are there really a lot of ways to skin a cat? Ruminations can’t think of many (or even any, mostly because it doesn’t make for a good picture). Basically, we don’t know. How many ways are there to go from a napkin’s worth of deal notes (a/k/a a letter of intent) to the first draft of an agreement? Will today’s posting have a lot more questions than answers? Who’s asking? Yes, it will.
We think there are three categories of agreements to be considered, each with a different starting point. One is the form agreement, whether designed to be so or by use of an existing one (from a prior deal); another is “from scratch,” and the third being the “hybrid” agreement, one that is partly an existing “form” and partly a blank screen (or piece of paper). Cleverly, our three categories are fully inclusive.
We’ll start our Ruminating with the “adapt the form” approach. Do you take the letter of intent in hand and, point by point, then look for the matching lease provision to change or fill-in? Do you start at the top of the form and read down until you reach a provision that intersects with the letter of intent? Whichever approach you take (and even if you claim to do a little of each and then some), how confident are you that you’ve adapted the form to the deal? What we are asking is how sure are you that you’ve “adjusted” every place in the form that is affected, even tangentially, by any non-standard part of the deal? How well do you “know” the form before you start?
Ruminations concedes that document crafters who work with a single form, over and over, perhaps hundreds of times, have learned what needs to be done. They have probably built a library of “special” provisions previously used (and refined) for common “non-standard” deals, even for the “we never do that” deals. But, that’s a small subset of our readers. Many of our readers have a library of forms, whether for categories of deals or where those documents are all of one purpose (such as leases), but for different clients or properties. To those readers, we ask: “Do you re-read the form before you start drafting, after you have drafted, or never (just making changes, item by item, as you read down the agreement or the deal sheet)? If you do read the entire document at all, how carefully do you do so?
While Ruminations can’t answer any of those questions as to any particular reader, we do know that the overall picture isn’t all that bright. Call this evidence “nitpicking,” but when the drafted document goes out with provisions naming the wrong state, the wrong parties or with provisions that have nothing whatsoever to do with the deal, we know how thorough the final review wasn’t. Of course, when one starts with a form specifically designed for the very “thing” that matches the “thing” in the letter of intent, you’ll find fewer such “nits.” [By the way, they aren’t always mere “nits.”] We know starting with a form lease for the exact same shopping center can minimize the “stupid” errors. But, even then, consider a form lease designed for the most common situation, e.g., the small space tenant at a shopping center, one that is making limited space improvements or none at all. Now, use that form for a large space tenant or even a small-space tenant with measurable bargaining power. How good are you at transforming the “small space, limited bargaining power lease” into a workable one for the second situation? We won’t answer that question, leaving that task for each reader to do so on her or his own.
A more interesting question is, when using a form as a starting point, how do you avoid leaving something out or failing to understand the implications of a non-standard agreement? So, how many readers have their final drafts reviewed by someone else, i.e., someone else with the letter of intent in hand? We’re not asking about having someone on the support staff proofread a document for “typos” or grammar.
So much for starting with a form or adapting a prior agreement for a similar deal; what about doing an agreement tabula rasa? How do you start? Do you review older documents for ideas? Do you have a standard template, such as one that starts with a section identifying the parties, moves into a recitals section, passes through a “terms” section which already has a set of universally applicable “boilerplate, and ends with signatures?
You probably have a library of common provisions for the kind of deal in front of you or you might reach into a document someone once sent to you. Do you start by writing recitals and hope that organizing those recitals will help you identify the actual agreement terms that will follow? Do you start with the easy provisions and hope to be inspired or to “get on a roll” as you transition into the “guts” of the agreement? How do you identify the provisions that are still missing?
Here’s a tough question. How often do you admit to yourself (and maybe to the one paying you) that you don’t have the skill to draft an agreement from scratch? We’re guessing – not very often, if at all. Why is that our guess? Well, it is a gut feeling we’ve reached after seeing far too many agreements that clearly started with (were “inspired by”) someone else’s document, that someone being a person whose document was for the “other side” of the deal. Here’s another way to express that: we’ve seen too many agreements coming from a buyer when the agreement clearly started with one prepared for a seller.
Why has Ruminations not answered these questions? That’s because we asked them so that each individual reader can ask herself or himself the same questions. We don’t know your personal answer or what you should do when you don’t like the answer you’ve supplied for yourself. We don’t even know how we are going to overcome our own deficiencies.
OK, we owe you a nugget of advice or perhaps only a “suggestion.” Here it is. Take a break from producing output. Make an investment. Take an hour or ten to think about all of these questions and the ones you add for yourself. We are all in the problem solving business. Solve your own problem. Be your own consultant. Advise yourself as to what changes you can make to the way you work. And yes, it is permissible, even wise, to engage in conversations with others about this topic. The most successful people mine other people’s minds to reach their own decisions.