All our other counterparties have agreed this: Difference between revisions

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On the table is a patently outrageous contractual term. Accepting it would be potentially ruinous to your firm, and you have just said so. Your salesperson is hyperventilating at the thought of “his legal” resisting this “[[verbiage]]” and torpedoing the commercial aspirations of his “[[platinum client]]”. Your counterparty stares absently out the window, and says: “well, all our other [[broker]]s have agreed to this”. 
{{a|risk|{{c|Red flag}}}}Among the lies habitually told in polite society today, few are more barefaced than “all our other counterparties have agreed this”. It ranks in outrage beside “[[your call is important to us]]”, “no, your bum doesn’t look big in that”, “we are taking back control” and “I can [[Make America Great Again|make America great again]]” and “[[that piece of tech development will cost $750k]]”


What to do?
It is offered in support of a [[contract]]ual term which makes no commercial sense, is unlikely to achieve its intended purpose and might, in extreme cases, ruin your firm altogether.


Amongst the lies habitually told in polite society today, few are more barefaced than “[[all our other counterparties have agreed this]]”. It ranks beside old chestnuts like “''your call is important to us''”, “''no, your bum doesn’t look big in that''”, “''we shall take back control''” and “''I can make America great again''”.
When you make this point your [[salesperson]], a wantonly gullible individual prone to believing anything his client says or does, will begin hyperventilating at the thought of “legal” resisting this “[[verbiage]]” and torpedoing the aspirations of his “[[platinum client]]”. For his part, the [[client]] will feign complete mystification: “But,” he will shrug, “all our other counterparties have agreed this.”
It will be tossed out by an insolent [[hedge fund manager]] without a second thought and, by and large, he will get away with it. This has much to do with the craven gullibility of investment banking [[salespeople]], who are prone to believe anything their clients say that will get them between the sheets.


It is a lie, all the same, and can be quickly picked apart. And pick you must, though you will win no thanks from your randy colleague in [[sales]]. He will volubly hate you for doing so, but one of the earthy pleasures of [[mediocre lawyer|advocacy]] is patiently frustrating the carnal designs of ungrateful men for their own good.
Let all your klaxons blare.


Firstly, of all the reasons to advance in support of a proposition, the fact that someone else has given in on it is the weakest there can be.
It is a preposterous lie, of course, and must be quickly picked apart. In doing so you will win no thanks from your [[salesperson]], who will volubly hate you for your trouble: yet, one of the great pleasures of advocacy is frustrating the carnal designs of the ungrateful for their own good. For if you had a better reason for insisting on a commercial term — and any reason would be better than that — why would you not mention it?


A [[counterparty]] who wheels this one out has either no judgment or nothing else in the locker. By all means, ask him what else he does have in his locker: if there is a good reason, let him advance it. But let’s assume he doesn’t, because there won’t be, so he can’t.
You can rely on the [[in-house lawyer]]’s stock answer – “last I heard, we hadn’t outsourced our internal [[control function]] to our competitors” – and that should be the end of it.<ref>Well, you would like to think so. But at least one genius [[general counsel]] has toyed with this exact idea: outsourcing his own control function and marketing it to competitors. You think I’m making this up, don’t you.</ref> Or you could call your client’s bluff. Ask which of your peers has agreed such suicidal terms. Ask for copies of the [[contract]]s in which they did so.


You could rely on the [[mediocre lawyer|in-house lawyer]]’s stock answer - “last I heard, we hadn’t outsourced our internal control function to our competitors” - and that should be the end of it. But if you’re in a playful mood, there is more fun to be had on a different tack.
This will outrage your [[client]] (and, on his behalf, your [[salesperson]]) but he really has only himself to blame: he brought it up. He can hardly appeal to the confidentiality of contracts which, in his previous breath, he was happy to tell you all about.


Instead, call his bluff. Ask ''who'' among your peers has agreed such suicidal terms.  Ask for a copy of the contract in which they did so.  
Now another broker may have agreed these terms. Perhaps it really was as supine or foolish as your [[client]] is asking you to be: it is always nice to know your competitors’ weaknesses. But that doesn’t mean you should follow suit. Most likely, the concession was subject to a giant [[quid pro quo]] your counterparty has neglected to mention. And the [[broker]] may have only ''appeared'' to concede the point, skilfully burying a countermeasure in a schedule, [[side letter]] or a crafty [[double negative]] in the definitions section.


This will outrage your counterpart but he has only himself to blame: he brought it up. If he doesn’t want to be cross-examined on his commercial relations around town, he should not mention them.  
There are many commercial and legal reasons to agree to unpalatable terms. That “all your competitors have agreed it” is not one of them.


To be sure, it may not be a bluff. Another broker ''may'' have agreed it. All the more reason to see the contract:
''[[disclaimer]]: The descriptions of [[salespeople]] in this article are all fictional. Any resemblance to any [[salesperson]], alive or dead, is entirely coincidental. Like, totally.''
 
{{egg}}
*The other broker really may have been as supine or foolish as your client is asking you to be. It is always nice to know your competitors’ weaknesses.
{{published}}
*It may have conceded subject to important conditions, or in return for an enormous concession on another point. Your counterparty will almost certainly neglect to mention this.
{{sa}}
*It may have only appeared to concede the point, skilfully burying a countermeasure in a schedule, side letter or by means of a crafty double negative in the definitions section. [[Investment bank]]s hire good lawyers too, you know. If so, this would make your counterparty look an idiot, which why he’ll never show you the [[contract]].
*[[But this is a really important client]]
 
*[[Straight from central casting]]
There are many commercial and legal reasons to agree to terms that, in isolation, rankle. Don’t let the lie “all your competitors have agreed it” be one of them.
{{ref}}

Latest revision as of 10:01, 14 June 2023

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Among the lies habitually told in polite society today, few are more barefaced than “all our other counterparties have agreed this”. It ranks in outrage beside “your call is important to us”, “no, your bum doesn’t look big in that”, “we are taking back control” and “I can make America great again” and “that piece of tech development will cost $750k”

It is offered in support of a contractual term which makes no commercial sense, is unlikely to achieve its intended purpose and might, in extreme cases, ruin your firm altogether.

When you make this point your salesperson, a wantonly gullible individual prone to believing anything his client says or does, will begin hyperventilating at the thought of “legal” resisting this “verbiage” and torpedoing the aspirations of his “platinum client”. For his part, the client will feign complete mystification: “But,” he will shrug, “all our other counterparties have agreed this.”

Let all your klaxons blare.

It is a preposterous lie, of course, and must be quickly picked apart. In doing so you will win no thanks from your salesperson, who will volubly hate you for your trouble: yet, one of the great pleasures of advocacy is frustrating the carnal designs of the ungrateful for their own good. For if you had a better reason for insisting on a commercial term — and any reason would be better than that — why would you not mention it?

You can rely on the in-house lawyer’s stock answer – “last I heard, we hadn’t outsourced our internal control function to our competitors” – and that should be the end of it.[1] Or you could call your client’s bluff. Ask which of your peers has agreed such suicidal terms. Ask for copies of the contracts in which they did so.

This will outrage your client (and, on his behalf, your salesperson) but he really has only himself to blame: he brought it up. He can hardly appeal to the confidentiality of contracts which, in his previous breath, he was happy to tell you all about.

Now another broker may have agreed these terms. Perhaps it really was as supine or foolish as your client is asking you to be: it is always nice to know your competitors’ weaknesses. But that doesn’t mean you should follow suit. Most likely, the concession was subject to a giant quid pro quo your counterparty has neglected to mention. And the broker may have only appeared to concede the point, skilfully burying a countermeasure in a schedule, side letter or a crafty double negative in the definitions section.

There are many commercial and legal reasons to agree to unpalatable terms. That “all your competitors have agreed it” is not one of them.

disclaimer: The descriptions of salespeople in this article are all fictional. Any resemblance to any salesperson, alive or dead, is entirely coincidental. Like, totally. Published on LinkedIn

See also

References

  1. ↑ Well, you would like to think so. But at least one genius general counsel has toyed with this exact idea: outsourcing his own control function and marketing it to competitors. You think I’m making this up, don’t you.
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