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 (like this Johnson County family lawyer) 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.