Beyond Boilerplate

Workable Legal Documents

I was contacted by a friend last year. She and her business partner were considering a drastic change in their relationship and they wanted my help.  I asked her if they already had an agreement that defined their relationship and responsibilities.  She sheepishly paused before admitting that two years earlier another lawyer had drafted some documents.  The documents were full of legal jargon and boilerplate paragraphs which they didn’t understand and they weren’t even sure those issues applied to them. One document alone was over 30 pages of fine print. The documents didn’t capture the love and hope of their partnership or say anything about who they were and why they were creating the business. It didn’t even mention their relationship, except in reference to ways they might take advantage of each other. It was a scary document, not one full of possibility.

They were embarrassed to admit that they had been afraid to sign on the dotted line and now that they were at a crossroads where the agreement was needed, they had nothing as a guideline.

I spent a few hours with the business partners, sorting out the agreements they’d already made between them, writing those down, and figuring out how the new changes would be handled.  We wrote up the new agreements and they breathed a sigh of relief.  Their friendship was preserved.  The roles were clear. They had a plan that worked for both of them. Eventually, the business was transferred to one of the partners.  The other went on an international trip.  When she returned, she went to work as an employee of the company.

Too often, businesses either cede their power to their lawyers or they avoid lawyers, thinking they will endanger the deal.  Policies, procedures, operating agreements, shareholder agreements, and contracts are all legal documents that are designed to make your business work! They’re there to serve you and the business.  Often, the real agreements and relationship are lost in the legalese.  That doesn’t have to be so.  Just as businesses are evolving to a more conscious approach, so are many lawyers.  Instead of being the obfuscators of information, integrative lawyers are facilitators and problem-solvers who make things work. There is a trend in legal practice that focuses on values-based legal documents.

Here are some of the guidelines for these more conscious agreements:

1.  They use plain language that everyone can understand.

My clients’ initial embarrassment about not understanding the agreement was misplaced. It was probably best that they didn’t sign the other agreement.  In the attempt to cover everything, boilerplate documents don’t fit anyone. Legal jargon doesn’t clarify issues for non-lawyers, it obscures meaning and sometimes prevents people from keeping the agreements because they don’t understand what they are supposed to do.  They showed me the unsigned agreements. With over 20 years as a lawyer, I still had a hard time deciphering what their documents were trying to accomplish in some paragraphs.  How could a business owner with no legal training possibly use this agreement to run her business?

2.  All business documents should be working documents that serve the business.

Contracts, policies and procedures are about creating clear understandings so everyone can work together better. They should reflect and embody the values of the company.

While providing a foundation, they are not inflexible. Business agreements should be organic, to the extent possible. If there are two parties working together every day, changes to the agreements may be constant and responsive to the changes that will happen in any business. At the same time, the agreements help to ensure that one person does not go off in a different direction and that changes can be on an agreed-upon schedule.

3.  They should cover both the context and content.

Legal documents are written records of what is agreed and sometimes what is un-said but assumed. They help us see what was not understood and to clarify and align.

In law school, there is a lot of conversation about a “meeting of the minds” but boilerplate contracts have not reflected the mindful relationship. This Meeting of the Minds includes information about who the parties are, why they are entering the agreements, their values and principles. Of course, legal documents also cover the basic terms:  How will profits be divided? Who will be responsible for making sure that taxes are filed?  How often will payments be made?  What is the expected duration of the project?

Legal documents should cover the most likely issues then create a plan for how to handle the unlikely ones.  The trouble with a lot of boilerplate is that it attempts to predict every possible issue that could come up but almost always fails. The likely events will vary with the type of business and the circumstances.  For example, a standard boiler plate personnel policy that prohibits hiring family members is irrelevant in a mom and pop business but may be something to think about in a less personal environment where family relationships could complicate matters.

4.  Focus on maintaining a good working relationship with your business associates.

A business partnership is like a marriage and can be very intimate. Deep hopes and fears can be triggered. Conflicts are inevitable and you need a foundation for resolving them, something short of dissolving the company or heading to court in the business equivalent of divorce. The agreement should lay the groundwork for addressing change and managing conflict.

The purpose of the conflict and change provision is to set out a system to interrupt a situation before it escalates. Too much focus on legal documents, policies and procedures can be a sign that something isn’t working with the relationships in your business. Don’t lean on your legal documents and create new rules when a face to face conversation is what is needed.. Sometimes businesses pass more rules about behavior to try to control behavior rather than exploring the underlying motivations.

5.  Find a lawyer who shares your values…or at least understands them.

Not all lawyers are like those you see on television. Only around 2% of cases are actually settled in courtrooms.  The integrative law movement is a more holistic, system-based approach that is preventive and oriented toward meeting your needs. Such lawyers can help you avoid pitfalls and legal traps while bringing clarity and workability to your relationships. That being said, make sure you interview your lawyer to make sure they have the holistic, preventive and coaching approach to law practice.  If not, find one who does.

Lawyer and consultant J. Kim Wright, J.D. is the author of the best-selling Lawyers as Peacemakers, Practicing Holistic, Problem-Solving Law (American Bar Association, 2010). She is the managing editor and publisher of www.CuttingEdgeLaw.com and an international advocate for the integrative law movement.

2 Comments

Filed under Basics, Cutting Edge Law

2 Responses to Beyond Boilerplate

  1. Don Petersen

    A great article! I agree with nearly all of what you write.

    But I disagree that documents should be flexible (I don’t know what organic means, so I can’t comment on that!). Maybe we are interpreting flexible differently, but it seems to be asking for one party to ask a judge to define just how flexible it should be. We should be trying to avoid litigation.

    Also, I think you need to use a cost-benefit analysis while drafting. If there is virtually no chance that a particular situation will arise, there is no point in specifically addressing it in the agreement. Documents don’t have to address every possible contingency. Doing so just adds paragraphs, pages, and legal fees for little reason. And if that unlikely event occurs? Well, there should be a general remedial provision that covers it.

    Finally, I believe the documents should be drafted for whoever will be using them. In the business context, the business person asking you to draft the contract usually is not the person using the contract on a regular basis. They’re assistant often will be doing that. So when drafting a contract, it’s best to confer with that assistant. Not only will you end up with a better document, but the assistant will recognize that you respect their opinion, which can only help in the long run.

    • LawGoddess

      Hi Don,

      Linda Alvarez here. Thanks for your thoughtful commentary. I want to try and clarify what I understand about “flexibility” and the need for asking a judge to define it for the parties in the ‘conscious contract’ context.

      I wholly agree that the best thing we can do is help our clients/the parties avoid litigation. To this end, the ‘conscious contracts’ my clients and I draft include provisions that enable and support the parties to engage their own conflicts in a collaborative and co-creative manner. As part of the formation of their contractual relationship, the parties take a conscious look at what are the core interests, constraints, imperatives, expectations, and requirements that each holds in connection with the proposed transaction/endeavor. This is a time of bringing unspoken assumptions out and calibrating the alignment between the parties. By clarifying these foundational realities and expressing them in writing, the parties create their own, shared “touchstone” for assessing decision-making and problem-solving going forward. With this touchstone in place, the parties then design or designate a collaborative conversational structure for having conflicts between themselves.

      The *parties* have written the touchstone and they have committed to a collaborative conflict structure as a condition precedent to any adversarial conflict proceeding. The *parties* will be the ones called upon to interpret the meaning of their touchstone in their own collaborative conversations. The only element of this conflict resolution mechanism that the court will have to interpret is whether the provision making participation in the designated collaborative process a condition precedent to litigation is effective. The court is never asked to get involved in interpreting or applying the touchstone.

      The flexibility comes from the fact that the parties have established their relationship based on an exploration and calibration of their core motivations, needs, and expectations. Typically, we think that the ‘deal points’ define the parties’ relationship. Indeed, the deal points are where cost/benefit analysis if very important. However, ‘relationship’ is more than deal points (whether we acknowledge it or not); relationship is about how we relate to one another.

      It is my experience, that parties who have established a relationship based on conscious exploration and calibration of their core visions and values (and have this touchstone as a point of reference for all future decisions and conflict-resolution), can treat the ‘deal points’ not as a definition of their identities, but as their Action Plan for achieving the mission they are undertaking together. If something happens that makes the Action Plan unworkable for one or both parties, rather than having to start the battle of contract interpretation– looking backward, assigning blame, arguing about who is going to lose and who is going to win–the parties have their pre-set collaborative structure to support a forward-looking conversation.

      This collaborative structure first asks the parties to review their touchstone, essentially reminding themselves of what really matters to each of them, and what it was they were shooting for when they drafted the Action Plan (deal points) in the first place. After asking and answering, “Where were we trying to go?”, the parties can then ask “Where do we find ourselves?” and “What course corrections do we want to make in order to bring us and our Action Plan back into alignment with our original vision/values/touchstone?” This forward-looking, problem-solving structure makes the relationship and the Action Plan flexible, agile and responsive in a dynamic marketplace. It is far more likely to result in productive conflict than the conventional argument about how the court is likely to interpret terms and who will be coerced into doing the will of the other party.

      I have found that conscious contracts are the epitome of drafting useful documents for those who will be using them. Conscious contracts put the ownership of the deal, the relationship, the conflict, and the resolution of the conflict squarely in the hands of the parties themselves. The conventional litigation system is always there in the background – if the parties find they cannot co-create a solution that serves their needs; but their conscious contract process and structure (embodied in the provisions of the document) gives them a robust opportunity for self-determination and agility.

      — Best regards,
      Lindaa
      (you can find me at DiscoveringAgreement[DOT]com

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