All our other counterparties have agreed this

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 brokers have agreed to this”.

What to do?

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”. 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 advocacy is patiently frustrating the carnal designs of ungrateful men for their own good.

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.

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 could 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. But if you’re in a playful mood, there is more fun to be had on a different tack.

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.

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.

To be sure, it may not be a bluff. Another broker may have agreed it. All the more reason to see the contract:

• 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.
• 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.
• 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 banks 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.

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.