When negotiating an agreement, clients are often happy to hear that the other side’s lawyer is going to do the drafting. They assume that their lawyer will spend less time reviewing an agreement than he or she would have spent drafting the agreement in the first place, and that allowing the other side’s lawyer to draft the agreement will be cheaper for them. Lawyers who are overwhelmed with work, or who are inexperienced, or who are lazy, or who are just not that bright, will readily agree with this approach.
On the other hand, good business lawyers know that most of the time it is to their client’s advantage to take control of the drafting.
Here is how the game is played:
First, the lawyer drafting the agreement will load it up in their client’s favour. (If you do not believe that to be true, you have never read a commercial lease, software license agreement, franchise agreement or banking document. In fact, when it comes to banking documents, I used to summarize 5 inches thick of loan and security documents for my clients by saying that there were essentially only two provisions; One: The Bank is right. Two: The borrower is wrong.)
Second, when the other side’s lawyer reads the agreement and comes up with a hundred suggested revisions intended to make the arrangement somewhat commercially reasonable, the drafting lawyer expresses shock and horror that “they want to change everything” even though “everything is standard” and similar nonsense.
The psychology of the negotiation becomes that the non-drafting lawyer has to justify every change being proposed to the agreement, and to do so against a constant stream of pressure from the drafting lawyer and his or her client about how many changes are being requested and how unreasonable it is to ask for them. Ultimately there is pressure to settle for fewer changes.
I recently heard a lawyer handling a bitterly contested negotiation put it very well. The other side had drafted the agreement and was now whining about how many changes were being asked for. The lawyer asking for the changes said: “What nonsense. The first draft had the arrangement start on our client’s goal line. All I am trying to do is to get it back toward mid-field.”
I once worked with a senior real estate lawyer in my firm who acted for a large municipality against a developer. The developer was represented by a team of lawyers at a large Toronto firm. A lawyer named Andy was the point person for the developer. The partner in charge of the deal in my firm was George who well understood the importance of doing the drafting, as did the inhouse counsel for the municipality for which we acted. It was agreed upfront that our firm would draft the principal documents. It was up to me to do all of the drafting.
Time after time, the following scenario would play out. We would be sitting at a meeting with clients and counsel, and it would be decided that an agreement had to be drafted or revised. Andy would ask me how soon I could get the draft done. I would think about how much work was involved and what my other commitments were and propose a delivery date that I could probably achieve if I worked evenings and weekends. Andy and his client would look very concerned about how long it was going to take me to do the drafting and would talk about how important it was that it be done more quickly. Then Andy would say something like: “Here at [insert name of big Toronto firm], we have a lot of resources. If you would like us to take over the drafting, we could get this done sooner.”
The client, having decided to retain our medium sized Mississauga firm on a major transaction would buy into this nonsense and agree with how important it was for the drafting to be done more quickly. George would worry that next time the client might go with a larger firm.
Then George, who generally worked from 9 to 5, would cave in, and say that we could get it done sooner. Usually there was some much simpler document that also needed to be drafted and everyone would agree that Andy and his team could do that document.
I would move heaven and earth and somehow meet the deadline. Andy would always miss the deadline on the simpler document.
At the next meeting Andy would do the same thing. I hated Andy.
Sophisticated clients usually see the advantage in having their own lawyers do the drafting. As mentioned above, clients who have less experience working with lawyers often believe that it will be cheaper if the other side does the drafting. In theory, this is true. (Also, in theory, I have a 50/50 chance of winning an argument with my wife.)
For example, if a really good lawyer drafts a document in a manner that he or she fully intends to be as fair and even-handed as possible, it will in fact be cheaper for the other side’s counsel to review and comment on it than it would have been for the other side’s lawyer to produce the document in the first place. This happens sometimes. People also win the lottery occasionally.
Gambling that the other side’s lawyer is both really good and will try to be as fair and even-handed as possible is just not a safe bet.
In most cases, the cost of reviewing a badly drafted and/or very one-sided document, commenting on it and proposing revisions will be at least as much as it would have cost to draft it in the first place, and probably more.
In summary, when the other side drafts, your client will likely not save any money and will probably end up with a worse agreement. Good lawyers know this and try to seize control of the drafting whenever they can, and smart clients let them.