Hindsight Isn’t Always 20/20

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Guilty! Ruminations and its author have done this, though we’ve long been conscious of its flaws. What is “this”? It is that we’ve criticized documents prepared by others when we “weren’t there.” Before we proceed with today’s rant, a small clarification is in order. There will be no apology for our pointing out unnecessarily vague or ambiguous language. In fact, we think there is a place for intentional ambiguity and remain firmly behind the thoughts we expressed seven years ago in a piece titled: The Artful Use of Intentional Ambiguity in Document Drafting. It can be seen by clicking: HERE. What we are pleading guilty to is to the crime of criticizing others based on business terms that have included or omitted from their documents. Often, that’s the wrong thing to do. Let the ones among us, those who have not done this, throw the first stone.

Experience and intellect qualify us to analyze a lease or purchase agreement or loan document or whatever. Those qualify us to question why some things have been included and others omitted. We are not alone. Many, many readers (and non-readers) of Ruminations are similarly or even better qualified. But, having the ability to do so doesn’t mean we should be doing so. Why do we feel that way?

Deal documents are the result of back and forth. They result from trades. They aren’t broadsides. They aren’t executive orders by one side or the other. “Give and take” means not everything you would have wanted will show up at the end of the day. It also means that things you wouldn’t have wanted will be in the executed document. The goal of “dealmaking” is to get something that can be signed, not to insist on what won’t be signed. You have to give to get.

Yet, how many times have each of us been questioned by someone looking at an old deal, one from two, five or ten years later? Why didn’t you “get” a liquidated damages provision? Why did you allow the landlord to pass on roof replacement costs? These are perfectly valid questions in the abstract or as an academic matter, but not when they reveal a deficiency in the questioner’s understanding. What they forget or never knew is that the answer will be: “To make the deal in the first place.” We aren’t suggesting there is an evil motive on the part of these hindsight interrogators or critics. Most come about this honestly. Many in our professions (using the plural because we aren’t only lawyers, there are other professions in this business) live within a “gotcha” environment. Many have grown up in a culture that teaches us that you can lift yourself up by putting others down. All of that is wrong. Honest questions, courteously asked, help everyone learn.

There are legitimate reasons to ask these questions. Those are when the “asker” really needs to know the “why” because the “why” matters. What we are railing against are those who begin with the assumption that the people who made the original deal did not know what they were doing. That premise could be correct, but starting with that assumption is, to say it pleasantly, “unhelpful.”

We think there is another fuel feeding these fires and that is the way we get our information. There are industry newsletters that lead with articles of the “10 Things Every Landlord (Tenant) MUST Include In Its Leases” variety. These pieces threaten the arrival of the apocalypse for those who fail to integrate the published list within their documents. Similarly, though less common, are live and recorded programs with speakers who seem to presume that “dealmaking” is the process of imposing business and legal terms on weak, ignorant counterparties.

OK, we know that today’s blog posting is much too harsh. In fact, we suspect that some readers will think we here had a particularly bad week and were attacked more than once by these “hindsight” critics. No, that isn’t the case. At this point, we aren’t the target of this complained-about behavior more than once every couple of years and once it grows old, you just take it in stride. You can learn from legitimate questions and ignore the “hidden” message behind others. But, this behavior has a secondary aspect, one with an implication for working with a very helpful dealmaking tool: the “conformed” document, often a lease.

To get us all on the same page, by “conformed” document, we mean one that that has been carefully negotiated by two parties with the intention of using it as the starting point for future, similar transactions. These are tremendous timesavers. Done correctly, they reflect careful thought by negotiators who understand the broad implications of the provisions they’ve negotiated. There are many aspects of a document, such as a lease, that can universally apply to future deals. Our silliest example is the “gender” clause. Others might be the “no consequential damages” provision or the “notice” provision. More seriously, the parties may negotiate long and hard over insurance provisions or fundamental default rights and remedies.

BUT, people who weren’t there when a conformed document (say, a lease) was negotiated shouldn’t presume either of two things. First, they shouldn’t presume that the absence of something they believe should be in the document is because the item was never negotiated or was poorly negotiated. Second, they shouldn’t presume that what they believe to be an “improper” provision is because the document was poorly negotiated. What is proper is asking “why” something is missing or “improperly” included while, at the same time, expecting to hear that there was a legitimate reason and that the parties, at the time, knew that a compromise had been reached.

The “why” is important because, despite best efforts, a conformed document is tied to the deal from which it was generated. Often it is obvious that a particular provision was not meant to be “set in stone.” The rental amount is an obvious example. Another might be the presence or absence of a co-tenancy provision. Sometimes the specific remedy for violation of a co-tenancy provision needs to be adapted to the on-the-ground situation. A change in business terms justifies modifying a conformed document. A change in personal negotiating philosophy does not.

If we were to sum up our thoughts, we would conclude with the following. Ask the questions if you really want to know the answer. Otherwise, don’t.

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  1. RLGunn Associates LLC says:

    Deal making is business. It’s negotiation. It’s mediation instead of litigation. The transactional attorney is zealously representing their client who has determined they want to make a business deal. Too many attorney’s believe they exist to be deal breaking attorneys. You can turn a business person into an attorney but you can not always make an attorney a business person. Unfortunately, not understanding this adage is where the pontificating “every deal must have” attorneys make their mistake.

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